EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated January 27, 1999, by and
between Xxxxxx Material Handling, Inc., a Delaware corporation (the "Company"),
and Xxxx X. Xxxxxxxx, an individual residing at 00000 Xxxxxxxxx Xxxxx, Xxxxx,
Xxxx 00000 ("Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to secure the services of Executive, and
Executive wishes to furnish such services to the Company, pursuant to the terms
and provisions of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, the Company and Executive agree as
follows:
ARTICLE I: EMPLOYMENT, TERM AND DUTIES
Section 1.1. Term. Unless terminated sooner pursuant to the occurrence of an
"Employment Related Event" or a "Termination Event" (both terms as defined in
Article III) and subject to the other terms and provisions of this Agreement,
the Company agrees to employ Executive and Executive agrees to be employed by
the Company, for the period beginning as of March 2, 1999 (the "Effective Date")
and continuing until the third anniversary of the Effective Date. The Agreement
will be extended for one year on the third anniversary of the Effective Date and
on each anniversary thereafter unless either party gives 60 days' written notice
of failure to renew or termination prior to any such anniversary date; provided,
however, that any such non-renewal by the Company shall void the Executive's
post-employment obligations contained in the Non-Competition Agreement referred
to in Article V of this Agreement. The Executive may voluntarily resign
employment at any time upon providing 60 days' written notice to the Company's
Board of Directors; provided, however, that the obligations of the Executive
under Article IV (Confidential Information) hereof, and the post-employment
obligations of Executive contained in the separate Non-Competition Agreement
referred to in Article V hereof shall survive such resignation. The Executive's
entitlement to any severance benefits or payments following termination of
employment shall be governed solely by Article III of this Agreement, and the
Executive shall have no entitlement to any such benefits or payments other than
as set forth in Article III of this Agreement, or as required to be provided to
the Executive by operation of law.
Section 1.2. Title. From and after the Effective Date, the Company shall employ
Executive in the position of President and Chief Executive Officer, or such
other title as mutually agreed upon by the Company and the Executive.
Section 1.3. Duties. Executive agrees to serve in the position referred to in
Section 1.2 and to perform diligently and to the best of his abilities the
duties and services pertaining to such office, as well as such additional duties
and services appropriate to such office as the Board of Directors of the Company
("Board of Directors") may reasonably assign to Executive from time to time.
Section 1.4. Business Time and Efforts. Executive agrees, during the period of
employment by the Company, to devote all of his business time, energy and best
efforts to the business and affairs of the Company and its affiliates and not to
engage, directly or indirectly, in any other business or businesses, whether or
not similar to that of the Company, except with the prior written consent of the
Board of Directors.
Section 1.5. Board Seat. By its execution of this Agreement, MHE Investments,
Inc. agrees to take all necessary actions to cause Executive to be elected and
maintained as a member of the Board of Directors of the Company and the board of
directors of MMH Holdings, Inc. ("MMH") for so long as the Executive is employed
pursuant to this Agreement. Executive shall receive no additional compensation
for his service on the Board of Directors.
ARTICLE II: COMPENSATION AND BENEFITS
Section 2.1. Base Salary. During the term of this Agreement, Executive
shall receive an annual base salary of $400,000, subject to review by the Board
of Directors.
Section 2.2. Bonus. Executive shall be eligible to receive a target bonus of 50%
of Base Salary (prorated for 1999 in proportion that the number of days from and
including the Effective Date bears to 365) upon the achievement of annually
established performance-based targets established for Executive by the Board of
Directors; provided, that, Executive shall be entitled to a minimum bonus of
$100,000 for the 1999 fiscal year. It is anticipated that, for fiscal year 1999
and after the performance-based targets will be based on EBITDA according to a
plan as mutually agreed upon with the Board of Directors for all senior
executives of the Company. Bonuses will be earned over the Company's fiscal year
ending October 31, and shall be paid by the Company to the Executive as soon as
practicable in accordance with the Company's bonus payment procedures.
Section 2.3. Equity.
(a) Options. Executive shall be eligible to receive an initial option grant of
MMH "Equity Units". Such grant will be for 2% of the Company in the form of A
Options, 1% of the Company in the form of B Options and 1% of the Company in the
form of C Options pursuant to the terms of Schedule A, attached hereto.
(b) Equity. Executive shall purchase an initial amount of
equity in Niles L.L.C. in the amount of $200,000 within 120 days of the
Effective Date. In addition, upon Executive's election, the Company will make a
loan to Executive of up to $300,000 to purchase equity in Niles L.L.C., $150,000
of such loan may be used to satisfy Executive's obligation in the immediately
preceding sentence. The Company loan will be fully recourse against the
Executive and will have a ten-year term, with principal and accrued interest due
upon the tenth anniversary of the loan date; provided, that, such loan may be
repaid, without penalty, and any time during the loan term; provided, further,
that, such loan will immediately become due and payable (including accrued
interest) upon Executive's termination of employment or upon a disposition of
the purchased equity in Niles L.L.C. The loan will have an interest rate equal
to the then current prime rate. Notwithstanding the foregoing, in the event
Executive is terminated by the Company without Cause (as defined below), by the
Executive for Good Reason (as defined below), or the Company provides notice to
Executive such that the Term will expire as provided in Section 1.1 hereof, the
loan will remain outstanding under its original terms until the earlier of such
loan's due date or the disposition of the equity in Niles L.L.C. by Executive.
Section 2.4. Other Perquisites. During his employment hereunder, Executive shall
be afforded the following incidental benefits:
(a) Expenses. Executive shall be entitled to be reimbursed for all
customary and reasonable expenses incurred by Executive in the
performance of his duties and responsibilities, subject to such
reasonable substantiation and documentation as may be required by the
Company in accordance with its normal policies.
(b) Other Company Benefits. Subject to the terms of each plan, program or
arrangement as the case may be, Executive and, to the extent
applicable, Executive's family, dependents and beneficiaries, shall be
allowed to participate in the Company's medical, dental, life
insurance, retirement and all other benefits, plans and programs,
including improvements or modifications of the same, which are now, or
may hereafter be, available to similarly situated employees of the
Company generally. The Company shall not, however, by reason of this
paragraph be obligated to institute, maintain, or refrain from
changing, amending or discontinuing, any such benefit plan or program,
so long as such changes are similarly applicable to employees of the
Company generally.
(c) Vacation. Executive shall be entitled to four (4) weeks of paid
vacation during each year of the Term.
(d) Automobile. Executive shall be entitled to a Company provided
automobile or a reasonable allowance for an automobile during the Term
in accordance with Company policy for other senior executive officers.
(e) Relocation Expenses. Executive shall be entitled to the relocation expenses
as set forth on Schedule B hereto.
Section 2.5. Withholding of Taxes. The Company may withhold from any benefits or
compensation payable under this Agreement all federal, state, city or other
taxes as may be required pursuant to any law or governmental regulation or
ruling.
ARTICLE III: TERMINATION OF EMPLOYMENT
Section 3.1. Employment-Related Event. An "Employment-Related Event" means any
of the following: (a) Executive's resignation for Good Reason (as defined
below), (b) Executive's termination by the Company without Cause (as defined
below), (c) Executive's death or permanent disability (as defined below), or (d)
either party providing notice to the other party such that the Term will expire
as provided in Section 1.1 hereof. Should an Employment Related Event occur, the
Executive shall only be entitled to the benefits and payments set forth below,
and Executive specifically agrees to sign a Release as drafted by the Company
under which the Executive shall agree to waive and release all other rights and
entitlement, whether legal, contractual or equitable (including waiving and
releasing any claims alleging discrimination and/or harassment to the maximum
extent allowed by law) in order to be entitled to such benefits and payments.
(a) Good Reason. Within sixty days after Executive has knowledge of an event of
Good Reason, Executive may terminate his employment under this Agreement for
Good Reason, after having given the Company written notice specifying the reason
the Executive is terminating his employment and having given the Company thirty
days after such notice within which to cure the condition specified. "Good
Reason" means any of the following: (i) a material reduction of the Executive's
duties or authority as provided in the Agreement or as later increased by the
Board of Directors; (ii) a substantial change in work conditions; (iii) a
material decrease in compensation or benefits; (iv) relocation of his principal
workplace over 50 miles from his initial workplace without Executive's consent;
(v) the breach of any material provision of this Agreement by the Company or an
affiliate of the Company; (vi) a termination of employment by Executive for any
reason or no reason within ninety (90) days following the first anniversary of a
change in control of the Company (as defined in Schedule D hereto); or (vii) the
failure by the Company to obtain the assumption of this Agreement by any
successor to or assignee of the Company or any purported termination of this
Agreement which does not satisfy the requirements of this Agreement. If at the
end of such notice period, the Company has not cured such condition, the written
notice shall take effect, and the Executive will be entitled to the following:
(A) continuation of his then current Base Salary (prior to any reduction that
constitutes Good Reason) for twelve months from the date of termination payable
in accordance with Company payroll practice; (B) continuation of health and life
insurance benefits for twenty-four months at the Company's expense subject to
applicable cost-sharing arrangements, co-payments, and deductibles in place
immediately prior the Executive's termination (provided, however, that such
health benefits shall not be counted toward the Executive's entitlement for
COBRA, and that such health and life insurance benefits shall terminate
immediately upon Executive obtaining employment with a third party which
provides health and life insurance benefits); (C) a "pro-rated bonus" for the
fiscal year in which the termination occurs which shall be payable at the time
the Company customarily pays bonuses; (D) the continuation of all other
perquisites for six months; (E) reasonable outplacement assistance for six
months (including out of pocket expenses of the Executive to search for a job
not to exceed $5000); and (F) payment, if requested by the Executive, for all
equity in MMH or the Company owned by the Executive or his family (including but
not limited to Equity Units), payable in equal quarterly installments over the
thirty-six month period following termination, provided, however, that if this
option is requested, the equity shall be valued as of the date of termination at
its fair market value by the Compensation Committee of the Board of Directors
and shall be repurchased so long as permitted under the terms of any financing
documents, including but not limited to indentures or loan agreements applicable
to the Company or any direct or indirect parent entity of the Company at such
time. For purposes of this Agreement, a "pro-rated bonus" means the portion of
the bonus that is arrived at by using the number of days the Executive was
employed by the Company in the year of termination as the numerator of a
fraction of which 365 is the denominator and then multiplying the bonus the
Executive was otherwise eligible to receive by such fraction.
(b) Termination by the Company without Cause. If the Company terminates
the Executive's employment under this Agreement without Cause, the
Executive shall be entitled to the following: (i) a lump sum payment
equal to 1-1/2 times his then current annual Base Salary, and (ii) the
same benefits and compensation and payable at the same time as
provided in clauses (B) through (F) of Section 3.1(a). "Cause" means
any of the following acts by the Executive which, if curable, have not
been cured by Executive within 30 days' written notice thereof: (i)
willful failure to substantially and materially perform his duties as
assigned to him by Board of Directors (other than any such failure
resulting from the Executive's reasonable business judgment or
incapacity due to physical or mental illness); (ii) commission of a
fraud on the Company; (iii) breach of fiduciary duty involving
material personal gain; or (iv) willful misconduct materially and
demonstrably injurious or detrimental to the Company or its
affiliates.
(c) Death or Permanent Disability. This Agreement shall terminate
immediately upon the Executive's Death or Permanent Disability.
Permanent Disability shall have the same meaning as set forth in the
Company's long term disability policy. Upon termination for Death or
Permanent Disability, the Executive, or his estate, shall receive the
following: (i) all accrued Base Salary and other accrued entitlements
earned through the date of termination, (ii) the continuation of Base
Salary for 90 days after such termination, and (iii) the compensation
and benefits set forth in clauses (B), (C), (D) and (F) of Section
3.1(a).
(d) Failure to Renew. This Agreement shall terminate 60 days following
either party providing notice to the other party such that the Term
will expire as provided in Section 1.1 hereof. In the event of a
termination under this paragraph (d), the Executive shall receive his
accrued Base Salary and accrued entitlements through the date of
termination.
Section 3.2. Termination Event. "Termination Event" means the Executive's
resignation without Good Reason or termination by the Company for Cause. In the
event of a termination due to a Termination Event, the Executive shall receive
his accrued Base Salary and accrued entitlements through the date of
termination. In the event the Executive resigns from the Company without Good
Reason, such resignation only becomes effective upon 60 days' written notice to
the Company.
Section 3.3. Resignation from the Board of Directors and Offices. In the event
of Executive's termination of employment for any reason (including the failure
of the Company to renew the Agreement), such termination or non-renewal shall
also be considered a resignation as a member of the Board of Directors, a
resignation from the board of directors of any affiliates or subsidiaries of the
Company and a resignation from any offices held by the Executive with the
Company or with any of its affiliates or subsidiaries.
ARTICLE IV: MISCONDUCT AND CONFIDENTIAL INFORMATION
Executive agrees to be bound by the provisions of the World Wide
Business Conduct Policy and the Employee Proprietary Rights and Confidentiality
Agreement attached hereto as Schedule E. The provisions of such documents are
incorporated into this Agreement.
ARTICLE V: NON-COMPETITION; NON-SOLICITATION; INJUNCTIVE RELIEF
Simultaneously with the execution of this Agreement, Executive shall
execute and deliver to the Company a non-competition agreement in the form
attached hereto as Schedule C (the "Non-Competition Agreement"), which shall
become effective when this Agreement becomes effective as provided in Section
1.1 hereof.
ARTICLE VI: INDEMNIFICATION
The Company shall, to the fullest extent permitted by applicable law
indemnify and hold harmless Executive from all claims or expenses that may be
asserted against the Company and affiliates thereof due to his employment, or
that may otherwise derive from Executive's employment as contemplated under this
Agreement, in accordance with the Company's charter and bylaws. The Company
shall purchase and maintain for the benefit of Executive a director's and
officer's liability policy.
ARTICLE VII: MISCELLANEOUS
Section 7.1. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered, sent by facsimile or when mailed
by United States registered or certified mail, return receipt requested, postage
prepaid, addressed to such address or sent to such facsimile number as each
party may furnish to the other in writing from time to time. Unless notified
otherwise by Executive, copies of notices or other communications sent to
Executive shall be sent to the address noted on the signature page attached
hereto.
Section 7.2. Applicable Law, Jurisdiction and Venue. This Agreement is entered
into under, and shall be governed for all purposes by, the laws of the State of
New York. The parties agree to submit any dispute under this Agreement and/or
arising out of Executive's employment or termination thereof, to binding
arbitration in New York, New York under the then existing rules for commercial
arbitration as established by the American Arbitration Association; provided,
that, to the extent that it is necessary for the protection of either party to
obtain injunctive relief, either party may proceed to a court of competent
jurisdiction for purposes of obtaining the necessary equitable relief until an
arbitration proceeding can be conducted.
Section 7.3. No Waiver. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall (i) be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time or (ii) preclude insistence upon strict compliance in the future.
Section 7.4. Severability. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
Section 7.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
Section 7.6. Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
Section 7.7. Gender and Plurals. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.
Section 7.8. Affiliate. As used in this Agreement, unless otherwise indicated,
"affiliate" shall mean any person or entity which directly or indirectly through
any one or more intermediaries owns or controls, is owned or controlled by, or
is under common ownership or control with the Company.
Section 7.9. Successors and Assignment. This Agreement is binding on Executive
and the Company and their successors and assigns; provided, however, that the
rights and obligations of the Company under this Agreement may be assigned to a
successor entity which assumes (either by operation of law or otherwise) the
Company's obligations hereunder. No rights or obligations of Executive hereunder
may be assigned by Executive to any other person or entity.
Section 7.10. Effects of Termination of Employment. Except as otherwise provided
herein or under any benefit plan or other agreement between the Company and the
Executive, termination of Executive's employment under this Agreement shall not
affect any right or obligation of either party hereto which is accrued or vested
prior to or upon such termination or the rights and obligations set forth
herein.
Section 7.11. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, contains all the
covenants, promises, representations, warranties and agreements between the
parties with respect to employment of Executive by the Company, and supersedes
all prior employment agreements between the Executive and the Company or any of
its predecessors. Each party to this Agreement acknowledges that no
representation, inducement, promise or agreement, oral or written, has been made
by either party, or by anyone acting on behalf of either party, which is not
embodied herein, and that no agreement, statement, or promise relating to the
employment of Executive by the Company, which is not contained in this
Agreement, shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.
Section 7.12. Attorney's Fees. Executive shall be entitled to be reimbursed for
reasonable attorney's fees incurred in the negotiation of this Agreement;
provided, that, such fees do not exceed $5,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXXXX MATERIAL HANDLING, INC.
By: /s/Xxxx Xxxxxx
Name:
Title:
Acknowledged by
MHE INVESTMENTS, INC.
By: /s/Xxxx Xxxxxx
Name:
Title:
/s/Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
