FIRST AMENDMENT TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS FIRST AMENDMENT, dated as of October 31, 1996 (the "First
Amendment"), TO THE EMPLOYMENT AND NONCOMPETITION AGREEMENT dated as of
October 28, 1993 (the "Original Agreement"), by and among HK SYSTEMS, INC.
(formerly known as HARNISCHFEGER ENGINEERS, INC.) (the "Company"), HEI
SYSTEMS, INC. ("Systems") and XXXX X. XXXXXX (the "Employee").
WHEREAS, the Company, Systems and the Employee are parties to the
Original Agreement; and
WHEREAS, the parties wish to set forth in this First Amendment
certain agreements that they have reached.
IN CONSIDERATION herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
AMENDMENTS
1.1 Amendments. The parties hereby agree that the Original
Agreement be and it hereby is amended as follows:
(a) Section 14 of the Original Agreement is deleted in its entirety
and replaced with the following new Section 14:
14. Puts of and Calls on Stock.
a. Puts.
(1) Purchase of Stock at EmploYee's Death. Upon the death
of the Employee, the Representative may require Systems
to purchase all but not less than all of the Stock
owned by the Employee at the time of the Employee's
death, and any Transferee may require Systems to
purchase all but not less than all of the Stock owned
by it at the time of the Employee's death, in
accordance with the provisions of this Section 14 of
this Agreement. This option may be exercised by notice
to Systems given within six (6) months after the date
of death of the Employee. Upon the giving of such
notice, the Person who gave such notice shall be
obligated to sell and Systems shall be obligated to
purchase the Stock at Fair Market Value per share.
Systems shall pay to such Person by cash an amount
equal to the lesser of the Purchase Price or One
Million Five Hundred Thousand Dollars ($1,500,000) of
Life Insurance Proceeds at the closing of any such
purchase. Any remaining balance shall be payable by
Systems giving such Person a promissory note payable in
equal monthly installments over the course of 36 months
at an interest rate equal to the publicly announced
prime rate of interest of M&l Xxxxxxxx & Ilsley Bank,
changing on each day such prime rate changes. In the
event that more than one Person gives Systems such a
notice, the cash paid to each Person at the closing of
any such purchase shall be an amount equal to the
lesser of (i) the Purchase Price or (ii) One Million
Five Hundred Thousand Dollars ($1,500,000) of Life
Insurance Proceeds multiplied by a fraction, the
numerator of which is the number of shares of Stock
owned by such Person and the denominator of which is
the number of shares of Stock owned by all Persons who
have given notice to Systems under this Section
14(a)(1) of this Agreement.
(2) Purchase of Stock Upon Termination of Employment
Without Cause or for Disability. Upon the termination
of the employment of the Employee by the Company
without Cause or for Disability, the Employee may
require Systems to purchase all but not less than all
of the Stock owned by the Employee at the time of such
termination, and any Transferee may require Systems to
purchase all but not less than all of the Stock owned
by it at the time of such termination, in accordance
with the provisions of this Section 14 of this
Agreement. This option may be exercised by notice to
Systems given within six (6) months after the
termination. Upon the giving of such notice, Systems
shall be obligated to purchase and the Person who gave
such notice shall be obligated to sell the Stock at
Fair Market Value per share. Systems shall pay the
amount due by giving such Person a promissory note
payable in equal monthly installments over the course
of 36 months at an interest rate equal to the publicly
announced prime rate of interest of M&I Xxxxxxxx &
Ilsley Bank, changing on each day such prime rate
changes.
b. Systems' Calls.
(1) Purchase of Stock Upon Employee's Death Upon
Termination Without Cause or for Disability. Upon the
Employee's death, or termination of the Employee's
employment by the Company without Cause, or for
Disability, Systems may require the Employee and any
Transferees to sell all but not less than all of the
Stock owned by the Employee and any such Transferees in
accordance with the provisions of this Section 14 of
this Agreement. Systems may exercise such option by
notice to the Employee and any such Transferees given
within six (6) months after the Employee's death or
termination. Upon the giving of such notice, Systems
shall be obligated to purchase and the Employee and any
such Transferees shall be obligated to sell the Stock
at Fair Market Value per share.
(2) Purchase of Stock Upon Employee's Resignation or
Termination with Cause. Upon Employee's resignation of
his employment with the Company for any reason,
including Good Reason, or upon termination by the
Company of the Employee's employment for Cause, Systems
may require the Employee and any Transferees to sell
all but not less than all of the Stock owned by the
Employee and any such Transferees in accordance with
the provisions of this Section 14 of this Agreement.
Systems may exercise such option by notice to the
Employee and any such Transferees given within six (6)
months after the termination or resignation. Upon the
giving of such notice, Systems shall be obligated to
purchase and the Employee and any such Transferees
shall be obligated to sell the Stock at the greater of
its Book Value or the actual purchase price paid by the
Employee for such Stock.
c. Determination of Fair Market Value. In the event that a
notice which requires Systems to purchase the Stock is given
pursuant to Section 14(a)(1), Section 14(a)(2), Section
14(b)(1) or Section 14(b)(2) of this Agreement, Systems and
the Employee (or the Representative, if applicable) shall
attempt to reach agreement on the Fair Market Value. If
Systems and the Employee (or the Representative, if
applicable) cannot agree on the Fair Market Value within
sixty (60) calendar days after the date the relevant notice
was given, then Systems or the Employee (or the
Representative, if applicable) may notify the other that an
Appraiser shall be selected and the Fair Market Value shall
be determined by the Appraiser. If Systems and the Employee
(or the Representative, if applicable) agree on the Fair
Market Value, each Transferee may either (i) sell its Stock
at the Fair Market Value agreed upon by Systems and the
Employee (or the Representative, if applicable) or (ii)
within sixty (60) calendar days after the date the relevant
notice was given notify Systems that an Appraiser shall be
selected and the Fair Market Value shall be determined by the
Appraiser.
d. Closing of Sale.
(1) The Employee or the Representative, if applicable,
and/or any Transferee shall sell the relevant Stock at
a closing to be held at the principal place of business
of Systems on a date which is ninety (90) calendar days
after the date any notice exercising an option
described in this Section 14 is given; provided,
however, that a closing pursuant to a sale under
Section 14(a)(1) of this Agreement need not be held
prior to the time that all Persons who may give notice
to Systems pursuant to such subsection have given such
notice and/or have given notice to Systems that they do
not intend to exercise the option described in such
subsection. At such Closing: (A) Systems shall
deliver to the Employee (or the Representative or
Transferee, if applicable) a bank cashier's or
certified check, or Systems' promissory note (or both,
if applicable), in the full amount of the purchase
price; and (B) the Employee (or the Representative or
Transferee, if applicable) shall deliver to Systems
certificates representing the relevant Stock duly
endorsed in blank.
(2) Notwithstanding anything to the contrary in this
Section 14 of this Agreement, Systems shall not be
required to purchase Stock while, and to the extent,
such purchase would result in a violation of applicable
law or of any contract to which Systems or the Company
is a party (including, without limitation, a violation
of any covenant with may be contained in any loan
agreement in effect from time to time); provided,
however, that Systems and the Company will use
reasonable efforts to cure or avoid such violation in
order to permit such repurchase.
(b) The following new Section 1(v) is added to the Original
Agreement:
v. Transferee. "Transferee" shall mean a person to whom a
"Permitted Transfer" of Stock has been made pursuant to
the First Amended and Restated Shareholders Agreement
dated as of October 28, 1993 as amended and restated on
February 13, 1995, and amended as of the date hereof,
among the Employee, Systems and certain others.
ARTICLE II
MISCELLANEOUS
2.1 Continuance of Agreement. Except as specifically amended by
this First Amendment, the Original Agreement shall remain in full force
and effect.
2.2 Governing Law. This First Amendment shall be governed by the
internal laws of the State of Wisconsin.
2.3 Counterparts; Headings. This First Amendment may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement.
The article and section headings in this First Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
IN WITNESS THEREOF, the parties hereto have executed this First
Amendment as of the day and year first above written.
HK SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Vice President
Attest:
/s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx, Secretary
HEI SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Vice President
Attest:
/s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx, Secretary
/s/ Xxxx X. Xxxxxx (SEAL)
Xxxx X. Xxxxxx
HARNISCHFEGER ENGINEERS, INC.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Employment and Noncompetition Agreement is entered into as of
this 28th day of October, 1993, by and among HARNISCHFEGER ENGINEERS,
INC., HEI SYSTEMS, INC. and XXXX X. XXXXXX.
RECITALS:
WHEREAS, the Company desires to continue to employ the Employee and
to set forth the terms and conditions of the Employee's employment and the
Employee desires to continue to be employed by the Company on the terms
and conditions set forth in this Agreement; and
WHEREAS, during the course of employment, the Employee has learned
and will learn the identities of the Company's customers, their purchasing
needs and habits and the names of the personnel charged with purchasing
responsibilities and the Company's methods of doing business; and
WHEREAS, the Company's list of customers has been compiled by the
Company and the Company's methods of doing business have been developed by
the Company at considerable expense over a number of years; and
WHEREAS, but for his employment at the Company, Employee would not
be able to easily duplicate the Company's customer list or be thoroughly
familiar with its methods of doing business; and
WHEREAS, the Company's customer list and methods of doing business
are of considerable economic value to the Company; and
WHEREAS, Systems owns all of the issued and outstanding shares of
capital stock of the Company and the Employee owns certain shares of the
issued and outstanding shares of capital stock of Systems;
WHEREAS, THE EMPLOYEES HAS REVIEWED THE MATTERS RECITED IN THE SIX
PARAGRAPHS ABOVE AND CONFIRMS THAT HE AGREES WITH THOSE RECITALS.
NOW, THEREFORE
In consideration of the Recitals and of the mutual promises and
covenants set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. Definitions. When used in this Agreement, the following terms
shall have the meanings specified:
a. Agreement. "Agreement" shall mean this Employment and
Noncompetition Agreement, as the same shall be amended from time
to time in accordance with the terms hereof.
b. Appraiser. "Appraiser" shall mean a Person of recognized
standing whose usual and regular business is the determination
of the fair market value of businesses which shall be: (1)
jointly selected by Systems and the Employee (or the
Representative, if applicable); or (2) if Systems and the
Employee (or the Representative, if applicable) cannot agree on
the identity of the Appraiser within ten (10) calendar days
after the giving of a notice from any Person requiring the
selection of an Appraiser under this Agreement, then the
identity of the Appraiser shall be selected by the Chief Judge
of the United States District Court for the Eastern District of
Wisconsin.
c. Average Compensation. "Average Compensation" shall mean an
amount equal to the sum of: (1) the then current base salary of
the Employee; plus (2) the aggregate amount of bonuses paid to
the Employee by the Company during the three full fiscal years
of the Company immediately prior to the date of termination
divided by three.
d. Book Value. "Book Value" shall mean an amount equal to: (1)
all consolidated assets of Systems and the Company (including
goodwill, patents, trademarks, trade names, copyrights and other
intangible assets) determined in accordance with generally
accepted accounting principles; minus (2) all consolidated
liabilities of Systems and the Company determined in accordance
with generally accepted accounting principles; minus, without
duplication (3) the amount of the liquidation value plus all
cumulative and unpaid dividends payable by Systems for all
shares of Preferred Stock of Systems issued and outstanding on
the date of such calculation; minus, without duplication (4) the
amount of the liquidation value plus all cumulative and unpaid
dividends payable by the Company for all shares of Preferred
Stock of the Company issued and outstanding on the date of
calculation.
e. Cause. The following actions on the part of the Employee shall
be considered as "Cause":
(1) Personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than
traffic violations or similar offenses), or habitual use
of alcohol or drugs: (A) which materially impairs the
Employee's ability to carry out his duties; and (B) as to
which the Board of Directors of the Company makes a good
faith determination that such conduct has occurred and
that such conduct meets the standard set forth in Section
1(e)(1)(A) of this Agreement;
(2) Rendering any assistance to any Person in that Person's
competitive efforts with the Company;
(3) Use of the Company's proprietary information or customer
lists for the Employee's own benefit or in a way adverse
to the Company's interests; or
(4) A good faith determination by the Company, after a notice
to the Employee and an opportunity to meet with the Board
of Directors of the Company concerning such matter, that
the Employee has breached any material provision of this
Agreement.
f. Company. "Company" shall mean Harnischfeger Engineers, Inc., a
Delaware corporation.
g. Competitive Product. "Competitive Product" shall mean a product
or service, made or provided by a Competitor, which is the same
as or is directly competitive with one with respect to which the
Employee acquired confidential information relating to the
Company, or its business, products or services by reason of the
Employee's work with the Company.
h. Competitor. "Competitor" shall mean any Person engaged in, or
about to become engaged in, the production or sale, or both, of
any product or service in any part of the United States of
America which is directly competitive with one with respect to
which the Employee acquired confidential information relating to
the Company, or its business, products or services by reason of
the Employee's work with the Company.
i. Creations. "Creations", shall mean all manuscripts, programs,
writings, pictorial materials, and other creations created by
the Employee, either individually or jointly, during the
Employee's employment by the Company, and which relate to the
business of the Company.
j. Disability. "Disability" shall mean that the Employee has been
declared mentally incompetent by a Wisconsin court or shall have
been disabled for a consecutive period of 120 days so that the
Employee is unable to perform the Employee's duties as an
employee of the Company under this Agreement. Any dispute as to
the existence of a Disability or its duration shall be submitted
to a licensed physician agreed upon by the Employee and the
Company or, failing such agreement, to one appointed by the
President of the Medical Society of Wisconsin at the request of
either the Employee or the Company. The Employee shall
cooperate in such determination and the determination of such
physician shall be binding and conclusive upon the parties.
k. Employee. "Employee" shall mean Xxxx X. Xxxxxx.
l. Fair Market Value. "Fair Market Value" shall mean the aggregate
fair market value of the Stock at the date of appraisal
calculated: (1) without any discount of any kind, whether for
lack of marketability, minority holdings, the size of Systems or
any other factor; and (2) as if such value were calculated for
sale of Systems as a whole to a Person who is not an affiliate
of Systems or the Company.
m. Good Reason. "Good Reason" shall mean that the Company has
breached any provision of this Agreement.
n. Inventions. "Inventions" shall mean all inventions,
discoveries, developments, improvements, works, ideas, and other
contributions, whether or not patented or patentable or
otherwise protectable in law, which are conceived, made,
developed or acquired by the Employee, either individually or
jointly, during the employment of the Employee by the Company
and which relate in any manner to the Employee's work, the
research or business of the Company, or fields to which the
business of the Company may reasonably extend.
o. Investors. "Investors" shall mean the owners of shares of the
Class B Cumulative Preferred Stock of Systems.
p. Life Insurance Proceeds. "Life Insurance Proceeds" shall mean
the net amount of cash proceeds actually received by Systems or
the Company as a result of the Employee's death, which are: (1)
not pledged by Systems or the Company to secure any indebtedness
of Systems or the Company; and (2) not required to be paid by
Systems or the Company to other Persons by any contract entered
into by Systems or the Company prior to the Employee's death.
q. Person. "Person" shall mean and include an individual,
partnership, corporation, trust, incorporated organization and a
government or any department or agency thereof.
r. Representative. "Representative" shall mean, after the
Employee's death, the duly appointed and qualified executor or
personal representative of the estate of the Employee.
s. Restricted Area. "Restricted Area" shall mean anywhere within a
twenty-five (25) mile radius of any location in any U.S. city in
which the Company had, at any time while the Employee was
employed by the Company, a place of business or customers.
t. Stock. "Stock" shall mean all shares of Common Stock of Systems
owned by the Employee at the execution of this Agreement or
acquired hereafter.
u. Systems. "Systems" shall mean HEI Systems, Inc., a Wisconsin
corporation and owner of all of the outstanding shares of Common
Stock of the Company.
2. Employment. The Company hereby agrees to continue the
employment of the Employee and the Employee hereby accepts continued
employment with the Company in accordance with the terms and conditions
set forth in this Agreement. Except for illness, vacation periods and
reasonable leaves of absence approved by the Board of Directors of the
Company, the Employee agrees to devote the Employee's full time, skill,
knowledge, and attention to the business of the Company and the
performance of the Employee duties under this Agreement. During the term
of employment, it shall not be a violation of this Agreement for the
Employee to do one or more of the following, so long as such activities do
not interfere with the performance of the Employee's responsibilities as
an employee of the Company in accordance with this Agreement: (a) serve
on corporate, civic, trade or charitable boards or committees; (b) deliver
lectures or fulfill speaking engagements; and (c) manage personal
investments.
3. Term. This Agreement shall commence on the date first above
written and continue indefinitely until effective notice of termination is
given by the Employee or the Company to the other. THE EMPLOYEE'S
EMPLOYMENT WITH THE COMPANY IS ON AN AT-WILL BASIS. Either the Employee
or the Company may terminate the Employee's employment with the Company at
any time and for any reason or no reason at all, subject only to the
parties' obligations as described in Section 8 of this Agreement.
4. Duties. The Employee shall be employed as President and Chief
Executive Officer of the Company or in such other executive position with
the Company as may be mutually agreed to between the Company and the
Employee. The Employee shall perform such services and duties as are
usually and customarily required of a Person holding such position with a
business corporation. The services to be performed by the Employee shall
be principally rendered in or about Milwaukee, Wisconsin or such other
place at which the Company makes its corporate headquarters, together with
such business travel as may be necessary for the Employee to
satisfactorily perform the duties required under this Agreement.
5. Compensation. The Company shall pay to the Employee a base
annual salary of $225,000, which salary shall be reviewed annually by the
Board of Directors of the Company for possible adjustment and shall be
paid in approximately equal installments at the usual and customary times
established by the Company. The annual base salary may not be reduced
unless the reduction is: (a) part of a general reduction for all
employees of the Company who own Stock of Systems or the Company or have
been granted options to purchase Stock of Systems or the Company; and (b)
proportionately consistent with such other reductions. The Company shall
deduct from all payments made to the Employee under any federal, state or
local withholding or other taxes or charges which the Company is required
to deduct under applicable law. The Company shall have the right to rely
upon a written opinion of counsel if any questions arise as to any
deductions.
6. Additional Benefits. The Employee shall be entitled to the
following additional benefits:
a. Vacation/Holidays. The Employee shall be entitled to paid
vacations and holidays as provided to other senior executive
employees of the Company.
b. Expense Reimbursement. The Company shall pay, upon submission
of appropriate vouchers and supporting documentation, all
expenses of the Employee incurred in connection with the
rendering of services to the Company as an employee pursuant to
this Agreement in accordance with the Company's usual and
ordinary practices, provided that such expenses are reasonable
and necessary business expenses of the Company.
c. Automobile. The Company shall provide the Employee with the use
of a Company-provided vehicle in accordance with Company policy.
d. Bonus Program. The Employee will be eligible to participate in
an executive bonus program to be established by the Board of
Directors of the Company, with the input of the Employee,
pursuant to which the Employee may earn up to 50% of the
Employee's base salary in any year. The bonus program will
include a combination of annual performance benchmarks and long-
term benchmarks for both the Employee and the Company.
e. Country Club Membership. The Company will provide the Employee
with one membership in a country club at the Company's expense.
f. Miscellaneous. The Employee shall be entitled to other fringe
benefits generally provided to senior management of the Company,
including health insurance, disability insurance, term life
insurance, pension and profit sharing and other programs
established by the Board of Directors of the Company.
7. Life Insurance. The Company will purchase life insurance on the
Employee's life, payable to the Company or Systems in an amount equal to
at least Three Million Dollars ($3,000,000) in excess of the amount
required by the Company's or Systems' lenders.
8. Termination.
a. Termination Without Cause or for Good Reason. As stated in
Section 3 of this Agreement, the Employee's employment may be
terminated by the Company or by the Employee at any time and for
any reason or for no reason at all. However, if the Employee's
employment with the Company is terminated by the Company without
Cause, or by the Employee for Good Reason, or as the result of
the Employee's Disability, the Employee shall receive the
Average Compensation for the two year period after such
termination, plus continuation in the health, disability and
term life insurance programs of the Company during such two year
period at the Company's expense. The severance pay shall be
paid to the Employee at the same times as the Company generally
pays management employees. If the Employee's employment is
terminated as the result of Disability, any severance payments
shall be reduced by any gross insurance proceeds actually
received by the Employee from the Company sponsored disability
insurance. The severance payments shall not be reduced by any
other compensation received by the Employee during the severance
period unless such compensation is received from Competitors.
The Employee shall have no obligation to seek other employment
or otherwise mitigate damages hereunder.
b. Termination for Cause or Without Good Reason. In the event that
the Employee's employment with the Company is terminated by the
Company for Cause or by the Employee without Good Reason, the
Employee shall be paid compensation only through the date of
such termination and all other financial obligations of the
Company to the Employee under this Agreement and all benefits
under this Agreement shall cease as of the date of such
termination.
c. Return of the Company's Materials. Upon termination for any
reason, the Employee shall immediately return to the Company all
files, credit cards, keys, computers, instruments, equipment,
vehicles, and other materials owned or provided by the Company.
9. Confidential Information. The Employee acknowledges that
through the services to be performed for the Company, the Employee will
obtain confidential information regarding the Company's business affairs,
including such matters as computer programs, research, customer lists,
customer development, planning, purchasing, finance, marketing, customer
relations, and other information of a similar nature not available to the
public. This information may be oral or written and may be that which the
Employee originates as well as that which otherwise comes into the
possession or knowledge of the Employee. The Employee agrees to treat all
matters relating to the business activities of the Company as confidential
and not to divulge or disclose any information gained in connection with
the employment of the Employee by the Company to any other Person except
upon the written request or instruction of the Company or in the normal
course of the duties as an employee of the Company. The Employee agrees
not to use or disclose, for purposes of marketing or otherwise, any of the
customer information the Employee receives while working at the Company
(including, but not limited to, customers' identity, financial status and
holdings), either on behalf of the Employee or as a representative, agent,
employee, officer, director, trustee, stockholder, or creditor of, or
partner, joint venturer, or investor with or in any Competitor, except for
any information which is or becomes generally available to the public, or
otherwise comes into possession of the Competitor, other than as a result
of disclosure by the Employee. This Section 9 is intended to protect
confidential information and customer relationships, both during and after
the period of the Employee's employment with the Company, and not to limit
the Employee's right to seek and obtain employment in competition with the
Company after termination of the Employee's employment with the Company,
which is covered by Section 13 of this Agreement.
10. Relationship with Others. The parties agree that the
profitability and goodwill of the Company depend on continued amicable
relations with its suppliers and customers, and the Employee: (a) except
on behalf of the Company, will not approach for any reason, nor solicit
any business of any kind from, any former, present or future customer of
the Company; or (b) cause, request or advise any suppliers or customers of
the Company to curtail or cancel their business with the Company. Nothing
in Section 10(a) shall, after termination of the Employee's employment
with the Company for any reason, prevent the employment of the Employee by
a customer or supplier of the Company unless such employment violates
Section 13(a) of this Agreement. This provision shall apply to any
customers or suppliers of the Company during the three (3) year period
prior to the termination of the Employee's employment or to Persons with
an active proposal from the Company on the date of the termination of the
Employee's employment. This provision shall apply for five (5) years
after termination of the Employee's employment with the Company if the
termination is for Cause and for one (1) year if the termination is for
any other reason.
11. Inventions and Creations.
a. Inventions. The Employee agrees that all Inventions shall
belong to the Company. The Employee agrees to and does hereby
assign and transfer to the Company the entire right, title, and
interest of the Employee in and to all Inventions. The Employee
further agrees to promptly and fully disclose all Inventions to
the Company, in writing if requested by the Company, and to
execute and deliver any and all lawful applications,
assignments, and other documents which the Company requests for
protecting the Inventions in the United States or in any other
country. The Company shall have the full and sole power to
prosecute such applications and to take all other actions
concerning the Inventions, and the Employee agrees to cooperate
fully, at the expense of the Company, in the preparation and
prosecution of all such applications and in any legal actions
and proceedings concerning the Inventions.
b. Creations. The Employee agrees to and does hereby assign,
convey, and transfer to the Company all Creations. The Company
shall have the full right to seek and procure copyrights on the
Creations, and the Employee shall cooperate fully, at the
expense of the Company, in securing copyrights and in any legal
actions and proceedings concerning the Creations.
c. Presumption of Company Ownership. Without diminishing any
rights granted to the Company in Sections 11(a) and 11(b), if an
Invention is described in a patent application or is disclosed
to third parties by the Employee within two (2) years after
leaving the employ of the Company, or if a Creation is published
or is disclosed to third parties by the Employee within two (2)
years after leaving the employ of the Company, the Employee
agrees that it is to be rebuttably presumed that the Invention
or the Creation was conceived, made, developed, acquired, or
created by the Employee during the period of employment of the
Employee by the Company, and the Invention or Creation will
belong the Company.
12. Noncompetition While Employed By The Company. The Employee
agrees not to compete with the Company in any territory in which the
Company sells its products or provides its services, either on behalf of
the Employee, or as a representative, agent, employee, officer, director,
trustee, stockholder, or creditor of, or partner, joint venturer, or
investor with or in, any other Person, during his employment with the
Company.
13. Noncompetition After Termination of Employment.
a. Scope of Noncompetition. The Employee agrees that for two (2)
years after the termination of the Employee's employment with
the Company, regardless of the reason for such termination, the
Employee will not:
(1) Render services, either directly or indirectly, to any
Competitor in connection with the development,
manufacture, sale, merchandising or promotion of any
Competitive Product; or
(2) Engage, either directly or indirectly, within the
Restricted Area, for the Employee or as an investor, in
the development, manufacture, purchase or sale of any
Competitive Product.
b. Exceptions to Scope of Noncompetition.
(1) Nothing in Section 13(a) of this Agreement shall prohibit
the Employee from owning or acquiring securities of
Systems, the Company or of any corporation or other
business enterprise that may be engaged in activities
described in Section 13(a), provided that: (A) the
Employee is not an officer, director or employee of, or
consultant to, such corporation or business enterprise;
(B) such securities are held by the Employee for
investment purposes and represent less than five percent
(5%) of the total equity interests of such corporation or
business enterprise; and (C) such securities are listed on
a national securities exchange or are regularly quoted in
the over the counter market by one or more members of the
National Association of Securities Dealers.
(2) It shall not be deemed a violation of Section 13(a) if the
Employee accepts employment with a business entity which
is diversified and made up of separate divisions and
which, as to parts of its business, is not a Competitor,
provided the Company shall be furnished prior to such
employment definite written assurances satisfactory to it,
separately from the Employee and such business entity,
that the Employee will not be expected, required or
permitted to and in fact does not render services directly
or indirectly to a division or a part of such business
entity which division or part is a Competitor.
c. Notification to the Company. During the period of time that the
Employee is subject to the provisions of Section 13(a) of this
Agreement, the Employee shall notify the Board of Directors of
the Company of any occupation or employment which the Employee
proposes to take up after termination of employment with the
Company and shall furnish to the Company such written or oral
information as it may reasonably request concerning such
proposed occupation or employment. Upon request of the
Employee, the Company agrees to notify the Employee promptly,
and in any event within thirty (30) days after receipt of the
requested information, whether or not the Company considers such
occupation, based on the information so furnished or derived
from its independent investigation, to come within the
provisions of Section 13(a) and, if the Company considers such
occupation to come within the provisions of Section 13(a),
whether the Company will waive any of the provisions thereof.
14. Puts of and Calls on Employee's Stock.
a. Employee's Puts.
(1) Purchase of Employee's Stock at Death. Upon the death of
the Employee, the Representative may require Systems to
purchase the Stock owned by the Employee at the time of
death in accordance with the provisions of this Section 14
of this Agreement. The Representative may exercise such
option by notice to Systems given within six (6) months
after the date of death of the Employee. Upon the giving
of such notice, the Representative shall be obligated to
sell and Systems shall be obligated to purchase the Stock
at Fair Market Value per share. Systems shall pay to the
Representative by cash an amount equal to the lesser of
the Purchase Price or One Million Five Hundred Thousand
Dollars ($1,500,000) of Life Insurance Proceeds at the
closing of any such purchase. Any remaining balance shall
be payable by Systems giving the Representative a
promissory note payable in equal monthly installments over
the course of 36 months at an interest rate equal to the
publicly announced prime rate of interest of M&I Xxxxxxxx
& Ilsley Bank, changing on each day such prime rate
changes.
(2) Purchase of Employee's Stock Upon Termination Without
Cause or for Disability. Upon the termination of the
employment of the Employee by the Company without Cause or
for Disability, the Employee may require Systems to
purchase all but not less than all of the Stock owned by
the Employee in accordance with the provisions of this
Section 14 of this Agreement. The Employee may exercise
such option by notice to Systems given within six (6)
months after the termination. Upon the giving of such
notice, Systems shall be obligated to purchase and the
Employee shall be obligated to sell the Stock at Fair
Market Value per share. Systems shall pay the amount due
by giving the Employee a promissory note payable in equal
monthly installments over the course of 36 months at an
interest rate equal to the publicly announced prime rate
of interest of M&I Xxxxxxxx & Xxxxxx Bank, changing on
each day such prime rate changes.
b. Systems' Calls.
(1) Purchase of Employee's Stock Upon Death. Upon Termination
Without Cause or for Disability. Upon the Employee's
death, or termination of the Employee's employment by the
Company without Cause, or for Disability, Systems may
require the Employee to sell all but not less than all of
the Stock owned by the Employee in accordance with the
provisions of this Section 14 of this Agreement. Systems
may exercise such option by notice to the Employee given
within six (6) months after the termination. Upon the
giving of such notice, Systems shall be obligated to
purchase and the Employee shall be obligated to sell the
Stock at Fair Market Value per share.
(2) Purchase of Employee's Stock Upon Resignation or
Termination with Cause. Upon Employee's resignation of
his employment with the Company for any reason, including
Good Reason, or upon termination by the Company of the
Employee's employment for Cause, Systems may require the
Employee to sell all but not less than all of the Stock
owned by the Employee in accordance with the provisions of
this Section 14 of this Agreement. Systems may exercise
such option by notice to the Employee given within six (6)
months after the termination or resignation. Upon the
giving of such notice, Systems shall be obligated to
purchase and the Employee shall be obligated to sell the
Stock at the greater of its Book Value or the actual
purchase price paid by the Employee for such Stock.
c. Determination of Fair Market Value. In the event that a notice
which requires Systems to purchase the Stock is given pursuant
to Section 14(a)(1), Section 14(a)(2), Section 14(b)(1) or
Section 14(b)(2) of this Agreement, Systems and the Employee (or
the Representative, if applicable) shall attempt to reach
agreement on the Fair Market Value. If Systems and the Employee
(or the Representative, if applicable) cannot agree on the Fair
Market Value within sixty (60) calendar days after the date the
relevant notice was given, then Systems or the Employee (or the
Representative, if applicable) may notify the other that an
Appraiser shall be selected and the Fair Market Value shall be
determined by the Appraiser.
d. Closing of Sale.
(1) The Employee or the Representative, if applicable, shall
sell the relevant Stock at a closing to be held at the
principal place of business of Systems on a date which is
ninety (90) calendar days after the date any notice
exercising an option described in this Section 14 is
given. At such Closing: (A) Systems shall deliver to the
Employee (or the Representative, if applicable) a bank
cashier's or certified check, or Systems' promissory note
(or both, if applicable) in the full amount of the
purchase price; and (B) the Employee or the
Representative, if applicable, shall deliver to Systems
certificates representing the relevant Stock duly endorsed
in blank.
(2) Notwithstanding anything to the contrary in this Section
14 of this Agreement, Systems shall not be required to
purchase Stock while, and to the extent, such purchase
would result in a violation of applicable law or of any
contract to which Systems or the Company is a party
(including, without limitation, a violation of any
covenant which may be contained in any loan agreement in
effect from time to time); provided, however, that Systems
and the Company will use reasonable efforts to cure or
avoid such violation in order to permit such repurchase.
15. Remedies. In addition to other remedies provided by law or
equity, upon a breach by the Employee of any of the covenants contained
herein, Systems and the Company shall be entitled to have a court of
competent jurisdiction enter an injunction against the Employee
prohibiting any further breach of the covenants contained herein. The
parties further agree that the services to be performed by the Employee
hereunder are of a unique, special, and extraordinary character.
Therefore, in the event of any controversy concerning rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of competent jurisdiction at law or equity by a
decree of specific performance or, if Systems or the Company elects, by
obtaining damages or such other relief as Systems or the Company may elect
to pursue. Such remedies, however, shall be cumulative and nonexclusive
and shall be in addition to any other remedies which Systems or the
Company may have.
16. Assignment. This Agreement and the respective rights, duties,
and obligations of the Employee hereunder may not be assigned or delegated
by the Employee.
17. Notice. Any notice (including notice of change of address)
permitted or required to be given pursuant to the provisions of this
Agreement shall be in writing and sent by registered or certified mail,
return receipt requested, or by hand delivery to the parties at the
following addresses:
If to Systems or Harnischfeger Engineers, Inc.
the Company: Attention: President
00000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy to: Xxxxxxx & Xxxxx
Attention: Xxxxxxx X. Xxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to the Employee: Xxxx X. Xxxxxx
Personal & Confidential
c/o Harnischfeger Engineers, Inc.
00000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Notice properly given by mail shall be deemed effective one (1)business
day after mailing.
18. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between Systems, the Company and the Employee
concerning the Employee's employment by the Company, and supersedes the
letter agreement dated August 31, 1993 between Systems and the Employee
and any and all other previous agreements or understandings, whether
written or oral, among Systems, the Employee and the Company concerning
such employment. This Agreement may not be modified orally.
19. Waiver. The waiver by any party of the breach of any covenant
or provision in this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party.
20. Invalidity of any Provision. The provisions of this Agreement
are severable, it being the intention of the parties that should any
provision hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining
provisions hereof, but the same shall remain in full force and effect as
if such invalid or unenforceable provision were omitted.
21. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Wisconsin.
22. Headings. Headings in this Agreement are for informational
purposes only and shall not be used to construe the intent of this
Agreement.
23. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same agreement.
24. Expenses. If any legal proceeding is necessary by the Employee,
Systems or the Company to enforce or interpret the terms of this Agreement
or to recover damages for the breach of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys fees and necessary
costs and expenses incurred in such litigation from the losing party in
addition to any other relief to which the prevailing party may otherwise
be entitled.
25. Reasonableness of Restrictions. THE EMPLOYEE HAS READ THIS
AGREEMENT AND AGREES THAT THE CONSIDERATION PROVIDED BY THE COMPANY IS
FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE
COMPANY OF THE CUSTOMER LIST AND THE COMPANY'S PARTICULAR METHODS OF DOING
BUSINESS, THE POST-EMPLOYMENT RESTRICTIONS ON THE EMPLOYEE'S ACTIVITIES
ARE LIKEWISE FAIR AND REASONABLE.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
and Noncompetition Agreement as of the date first above written.
HARNISCHFEGER ENGINEERS, INC.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Vice President
HEI SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, Vice President
(SEAL)
