EXHIBIT 44
CHANGE IN CONTROL AGREEMENT
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AGREEMENT by and between American Precision Industries Inc., a
Delaware corporation (the "Company"), with offices at 0000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxx Xxxx 00000 and XXXX X. XXXX (the "Executive"), an individual
residing at 00 Xxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, dated as of the 15th day
of October, 1999.
WHEREAS, the Company recognizes that the current business environment
makes it difficult to attract and retain highly qualified executives unless a
certain degree of security can be offered to such individuals against
organizational and personnel changes which frequently follow changes in control
of a corporation; and
WHEREAS, even rumors of acquisitions or mergers may cause executives
to consider major career changes in an effort to assure financial security for
themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its
executives in the event of a Change in Control (as defined below) and to allow
them to make critical career decisions without undue time pressure and financial
uncertainty, thereby increasing their willingness to remain with the Company
notwithstanding the outcome of a possible Change in Control transaction; and
WHEREAS, the Company recognizes that its executives will be involved
in evaluating or negotiating any offers, proposals or other transactions which
could result in Changes in Control of the Company and believes that it is in the
best interest of the Company and its stockholders for such executives to be in a
position, free from personal financial and employment considerations, to be able
to assess objectively and pursue aggressively the interests of the Company's
stockholders in making these evaluations and carrying on such negotiations; and
WHEREAS, the Board of Directors (the "Board") of the Company believes
it is essential to provide the Executive with compensation arrangements upon a
Change in Control which provide the Executive with individual financial security
and which are competitive with those of other corporations, and in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW THEREFORE, the parties, for good and valuable consideration and
intending to be legally bound, agree as follows:
1. Operation and Term of Agreement. This Agreement shall be
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effective immediately upon its execution. This Agreement may be terminated by
the Company upon twenty-four (24) months' advance written notice to the
Executive; provided, however, that
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after a Change in Control of the Company during the term of this Agreement, this
Agreement shall remain in effect until all of the obligations of the parties
hereunder are satisfied and the Protection Period has expired. Prior to a Change
in Control this Agreement shall immediately terminate upon termination of the
Executive's employment or upon the Executive's ceasing to be an elected officer
of the Company, except in the case of such termination under circumstances set
forth in Section 2(e) below.
2. Certain Definitions. For purposes of this Agreement, the
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following words and phrases shall have the following meanings:
(a) "Cause" shall mean (i) the continued failure by the Executive to
perform his material responsibilities and duties hereunder (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness), (ii) the engaging by the Executive in willful or reckless conduct
which is demonstrably injurious to the Company monetarily or otherwise, (iii)
the conviction of the Executive of a felony, or (iv) the commission or omission
of any act by the Executive that is materially inimical to the best interests of
the Company and that constitutes on the part of the Executive common law fraud
or malfeasance, misfeasance or nonfeasance of duty; provided, however, that
"cause" shall not include the Executive's lack of professional qualifications.
For purposes of this Agreement, an act, or failure to act, on the Executive's
part shall be considered "willful" or "reckless" only if done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. The Executive's employment
shall not be deemed to have been terminated for "cause" unless the Company shall
have given or delivered to the Executive (A) reasonable notice setting forth the
reasons for the Company's intention to terminate the Executive's employment for
"cause," (B) a reasonable opportunity, at any time during the thirty-day period
after the Executive's receipt of such notice, for the Executive, together with
his counsel, to be heard before the Board, and (C) a Notice of Termination (as
defined in Section 9 below) stating that, in the good faith opinion of not less
than a majority of the entire membership of the Board, the Executive was guilty
of the conduct set forth in clauses (i), (ii), (iii) or (iv) of the first
sentence of this Section 2(a).
(b) "Change in Control" shall mean:
(i) on or after the date of execution of this Agreement, any
person (which, for all purposes hereof, shall include, without limitation, an
individual, sole proprietorship, partnership, unincorporated association,
unincorporated syndicate, unincorporated organization, trust, body corporate and
a trustee, executor, administrator or other legal representative) (a "Person")
or any group of two or more Persons acting in concert who or which becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing, or acquires the right to control or direct, or to acquire through
the conversion of securities or the exercise of warrants or other rights to
acquire securities, 25% or more of the combined voting power of the Company's
then outstanding securities; provided that for the purposes of this Agreement,
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(A) "voting power" means the right to vote for the election of directors, and
(B) any determination of percentage combined voting power shall be made on the
basis that (x) all securities beneficially owned by the Person or group or over
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which control or direction is exercised by the Person or group which are
convertible into securities carrying voting rights have been converted (whether
or not then convertible) and all options, warrants or other rights which may be
exercised to acquire securities beneficially owned by the Person or group or
over which control or direction is exercised by the Person or group have been
exercised (whether or not then exercisable), and (y) no such convertible
securities have been converted by any other Person and no such options, warrants
or other rights have been exercised by any other Person; or
(ii) at any time subsequent to the date of execution of this
Agreement there shall be elected or appointed to the Board any director or
directors whose appointment or election to the Board or nomination for election
by the Company's stockholders was not approved by a vote of at least a majority
of the directors then in office who were either directors on the date of
execution of this Agreement or whose election or appointment or nomination for
election was previously so approved; or
(iii) a reorganization, merger, consolidation, combination,
corporate restructuring or similar transaction (an "Event"), in each case, in
respect of which the beneficial owners of the outstanding Company voting
securities immediately prior to such Event do not, following such Event,
beneficially own, directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of the Company and any resulting Parent in
substantially the same proportions as their ownership, immediately prior to such
Event, of the outstanding Company voting securities; or
(iv) an Event involving the Company as a result of which 33%
or more of the members of the board of directors of the Parent or the Company
are not persons who were members of the Board immediately prior to the earlier
of (x) the Event, (y) execution of an agreement the consummation of which would
result in the Event, or (z) announcement by the Company of an intention to
effect the Event.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Disability," for purposes of this Agreement, shall mean total
disability as defined in any long-term disability plan sponsored by the Company
in which the Executive participates, or, if there is no such plan or it does not
define such term, then it shall mean the physical or mental incapacity of the
Executive which prevents him from substantially performing the duties of the
office or position to which he was elected or appointed by the Board for a
period of at least 180 days and the incapacity is expected to be permanent and
continuous through the Executive's 65th birthday.
(e) The "Change in Control Date" shall be any date during the term of
this Agreement on which a Change in Control occurs. Anything in this Agreement
to the contrary notwithstanding, if the Executive's employment or status as an
elected officer with the Company is terminated within six months prior to the
date on which a Change in Control
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occurs, and it is reasonably demonstrated that such termination (i) was at the
request of a third party who has taken steps reasonably calculated or intended
to effect a Change in Control or (ii) otherwise arose in connection with or
anticipation of a Change in Control, then for all purposes of this Agreement the
"Change in Control Date" shall mean the date immediately prior to the date of
such termination.
(f) "Good Reason" means:
(i) the assignment to the Executive within the Protection
Period of any duties inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements, authority, duties
or responsibilities), or any other action 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 the
Executive;
(ii) a reduction by the Company in the Executive's base
salary in effect immediately before the beginning of the Protection Period or as
increased from time to time thereafter;
(iii) a failure by the Company to maintain plans providing
benefits at least as beneficial as those provided by any benefit or compensation
plan (including, without limitation, any incentive compensation plan, bonus plan
or program, retirement, pension or savings plan, life insurance plan, health and
dental plan or disability plan) in which the Executive is participating
immediately before the beginning of the Protection Period, or any action taken
by the Company which would adversely affect the Executive's participation in or
reduce the Executive's opportunity to benefit under any of such plans or deprive
the Executive of any material fringe benefit enjoyed by him immediately before
the beginning of the Protection Period; provided, however, that a reduction in
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benefits under the Company's tax-qualified retirement, pension or savings plans
or its life insurance plan, health and dental plan, disability plans or other
insurance plans which reduction applies equally to all participants in the plans
and has a de minimis effect on the Executive shall not constitute "Good Reason"
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for termination by the Executive;
(iv) the Company's requiring the Executive, without the
Executive's written consent, to be based at any office or location in excess of
50 miles from his office location immediately before the beginning of the
Protection Period, except for travel reasonably required in the performance of
the Executive's responsibilities;
(v) any purported termination by the Company of the Executive's
employment for Cause otherwise than as referred to in Section 9 of this
Agreement; or
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(vi) any failure by the Company to obtain the assumption of
the obligations contained in this Agreement by any successor as contemplated in
Section 8(c) of this Agreement.
(g) "Parent" means any entity which directly or indirectly through one
or more other entities owns or controls more than 50% of the voting stock or
common stock of the Company.
(h) "Protection Period" means the period beginning on the Change in
Control Date and ending on the last day of the thirty-sixth (36th) calendar
month following the Change in Control Date.
(i) "Subsidiary" means a company 50% or more of the voting securities
of which are owned, directly or indirectly, by the Company.
3. Benefits Upon Termination Within a Protection Period. If, during
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a Protection Period, the Executive's employment is terminated by the Company
other than for Cause or Disability or other than as a result of the Executive's
death or the Executive terminates his employment for Good Reason, the Company
shall pay to the Executive in a lump sum in cash within 10 days after the date
of termination the aggregate of the following amounts and shall provide the
following benefits:
(a) The Executive's full base salary and vacation pay (for vacation
not taken) accrued but unpaid through the date of termination at the rate in
effect at the time of the termination plus an amount equal to the product of the
Executive's normative bonus under the applicable bonus plan for the fiscal year
including the date of termination and a fraction, the numerator of which is the
number of days in such fiscal year through the date of termination and the
denominator of which is 365; and
(b) The amount in the "bonus bank" for the Executive under all
bonus plans in which the Executive participates; and
(c) A lump sum severance payment in an amount equal to 50% of the
Executive's "Annual Compensation." For purposes of this Agreement, "Annual
Compensation" shall be an amount equal to the aggregate of the Executive's
annual base salary from the Company and its Subsidiaries as set by the Board and
in effect immediately prior to the date of termination or Change in Control
(whichever is greater) plus the highest bonus accrued by the Company for the
Executive in any of the Company's three fiscal years preceding the date of
termination or Change in Control (whichever is greater); and
(d) Within 30 days of the date of termination, upon surrender by the
Executive of his outstanding options to purchase common shares of the Company
("Common Shares") granted to the Executive by the Company (the "Outstanding
Options") and any stock appreciation rights ("SARs"), an amount in respect of
each Outstanding Option and SAR (whether vested or not) equal to the difference
between the exercise price of such Outstanding
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Options and SARs and the higher of (x) the fair market value of the Common
Shares at the time of such termination (but not less than the closing price for
the Common Shares on the New York Stock Exchange, or such other national stock
exchange on which such shares may be listed, on the last trading day such shares
traded prior to the date of termination), and (y) the highest price paid for
Common Shares or, in the cases of securities convertible into Common Shares or
carrying a right to acquire Common Shares, the highest effective price (based on
the prices paid for such securities) at which such securities are convertible
into Common Shares or at which Common Shares may be acquired, by any person or
group whose acquisition of voting securities has resulted in a Change in Control
of the Company; provided, however, that this Section 3(d) shall not apply to the
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surrender of any Outstanding Option that is an incentive stock option (within
the meaning of Section 422 of the Code); and
(e) A lump sum payment equal to 25% of the Executive's Annual
Compensation, such payment representing an agreed substitute for three years'
additional entitlement to (A) benefits and service credit for benefits (or
similar payments) under any pension, savings, defined contribution and other
deferred compensation plans maintained by the Company and (B) any medical
insurance, life insurance, health and accident, disability and other employee
benefit plans, programs and arrangements with the Company (including, without
limitation, provision of, or payment in lieu of, an automobile); and
(f) All of the Executive's benefits accrued under the supplemental
retirement plans, excess retirement plans and deferred compensation plans
maintained by the Company or any of its Subsidiaries shall become immediately
vested in full; and
(g) All of the Executive's Outstanding Options shall become
immediately vested and exercisable in full.
4. Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, practices, policies or programs
provided by the Company or any of its Subsidiaries and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any stock option or other agreements with the
Company or any of its Subsidiaries. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan, practice, policy
or program of the Company or any of its Subsidiaries at or subsequent to the
date of termination shall be payable in accordance with such plan, practice,
policy or program; provided, however, that the Executive shall not be entitled
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to severance pay, or benefits similar to severance pay, under any plan,
practice, policy, or program generally applicable to employees of the Company or
any of its Subsidiaries.
5. Full Settlement; No Obligation to Seek Other Employment; Legal
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Expenses. The Company's obligation to make the payments provided for in this
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Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek
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other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, upon written demand therefor by the Executive, all legal
fees and expenses which the Executive may reasonably incur as a result of any
dispute or contest (regardless of the outcome thereof) by or with the Company or
others regarding the validity or enforceability of, or liability under, any
provision of this Agreement. In any such action brought by the Executive for
damages or to enforce any provisions of this Agreement, he shall be entitled to
seek both legal and equitable relief and remedies, including, without
limitation, specific performance of the Company's obligations hereunder, in his
sole discretion.
6. Certain Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution made, or benefit
provided (including, without limitation, the acceleration of any payment,
distribution or benefit and the acceleration of exercisability of any stock
option or stock appreciation right), by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any similar
excise tax) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any Excise Tax, income tax or payroll tax) imposed upon the Gross-Up
Payment and any interest or penalties imposed with respect to such taxes, the
Executive retains from the Gross-Up Payment an amount equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 6(c), all determinations
required to be made under this Section 6, including determination of whether a
Gross-Up Payment is required and of the amount of any such Gross-Up Payment,
shall be made by the independent public accounting firm which is then retained
by the Company to audit its financial statements (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the date of termination, if applicable, or
such earlier time as is requested by the Company, provided that any
determination that an Excise Tax is payable by the Executive shall be made on
the basis of substantial authority. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 6(b), shall be paid to the Executive within
five business days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion that he has substantial
authority not to report any Excise Tax on his Federal income tax return. Any
determination by the Accounting Firm meeting the requirements of this Section
6(b) shall be binding upon the Company and the Executive; subject only to
payments pursuant to the following sentence based on a determination that
additional Gross-Up Payments should have been made, consistent with the
calculations required to be made hereunder (the amount of such
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additional payments, including any interest and penalties, are referred to
herein as the "Gross-Up Underpayment"). In the event that the Company exhausts
its remedies pursuant to Section 6(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Gross-Up Underpayment that has occurred and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. The fees and disbursements of the Accounting Firm shall be paid by
the Company.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but not later than ten business days after the Executive receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this sentence, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and reasonably
satisfactory to the Executive,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
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expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax, income tax or payroll tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial
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jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
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such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax, income tax
or payroll tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
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limitations relating to the payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due shall
be limited solely to such contested amount, unless the Executive agrees
otherwise. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 6(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 6(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 6(c) a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then any obligation of the Executive to repay such advance shall
be forgiven and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
7. Confidential Information. The Executive shall hold in a
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fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
Subsidiaries, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
Subsidiaries and which shall not be or become public knowledge (other than by
acts of the Executive or his representatives in violation of this Agreement).
After the date of termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 7 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
8. Successors.
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(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of
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and be enforceable by the Executive's legal representatives or successor(s) in
interest. The Executive may designate a successor (or successors) in interest to
receive any and all amounts due the Executive in accordance with this Agreement
should the Executive be deceased at any time of payment. Such designation of
successor(s) in interest shall be made in writing and signed by the Executive,
and delivered to the Company pursuant to Section 12(b) hereof. Any such
designation may be made to any legal person, persons, trust or the Executive's
estate as he shall determine in his sole discretion. In the event any
designation shall be incomplete, or in the event the Executive shall fail to
designate a successor in interest, his estate shall be deemed to be his
successor in interest to receive such portion of all of the payments due
hereunder. The Executive may amend, change or revoke any such designation at any
time and from time to time, in the same manner. This Section 8(a) shall not
supersede any designation of beneficiary or successor in interest made by the
Executive, or separately covered, under any other plan, practice, policy or
program of the Company.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and any Parent of
the Company or any successor and without regard to the form of transaction
utilized to acquire the business or assets of the Company, to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
parentage had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid (and any Parent of the Company or any successor) which is required
by this clause to assume and agree to perform this Agreement or which otherwise
assumes and agrees to perform this Agreement.
9. Notice of Termination. Any termination of the Executive's
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employment by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) if the date of termination is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than 15 days after the giving of such notice). The failure by the Executive to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
10. Requirements and Benefits if Executive is Employee of Subsidiary
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of Company. If the Executive is an employee of any Subsidiary of the Company,
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he shall be entitled to all of the rights and benefits of this Agreement as
though he were an employee of the Company and the term "Company" as used herein
shall be deemed to include the
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Subsidiary by whom the Executive is employed. The Company hereby unconditionally
and irrevocably guarantees the performance of its Subsidiary hereunder.
11. Arbitration. The Company and the Executive shall attempt to
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resolve between them any dispute which arises hereunder. If they cannot agree
within ten (10) days after either party submits a demand for arbitration to the
other party, then the issue shall be submitted to arbitration with each party
having the right to appoint one (1) arbitrator and those two (2) arbitrators
mutually selecting a third arbitrator. The rules of the American Arbitration
Association for the arbitration of commercial disputes shall apply and the
decision of 2 of the 3 arbitrators shall be final. The arbitrators must reach a
decision within sixty (60) days after the selection of the third arbitrator.
The arbitration shall take place in Buffalo, New York. The arbitrators shall
apply Delaware law.
12. Miscellaneous.
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(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, to the addresses for
each party as first written above or to such other address as either party shall
have furnished to the other in writing in accordance herewith. Notices and
communications to the Company shall be addressed to the attention of the
Company's Corporate Secretary. Notice and communications shall be effective
when actually received by the addressee.
(c) Whenever reference is made herein to any specific plan or program
of the Company, to the extent that the Executive is not a participant therein or
has no benefit accrued thereunder, whether vested or contingent, as of the
Change in Control Date, then such reference herein shall be null and void and of
no effect, and the Executive shall acquire no additional benefit as a result of
such reference.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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(f) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(g) Except in the case of termination of employment or elected officer
status under the circumstances set forth in Section 2(e) above, upon a
termination of the Executive's employment or upon the Executive's ceasing to be
an elected officer of the Company, in each case, prior to the Change in Control
Date, there shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from the Board, the Company has caused this
Agreement to be executed as of the day and year first above written.
AMERICAN PRECISION INDUSTRIES INC.
By /s/ Xxxx Xxxxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxxxx, President
and Chief Executive Officer
EXECUTIVE
/s/ Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx
-12-
