DATED MARCH 30, 1998
▇▇▇▇▇▇ MECHANICAL HANDLING
-and-
K B NORRIDGE
----------------
SERVICE AGREEMENT
---------------
THIS AGREEMENT is made the 30th day of March, One thousand nine hundred and
ninety-eight
BETWEEN:-
(1) ▇▇▇▇▇▇ MECHANICAL HANDLING whose registered office is at ▇.▇. ▇▇▇ ▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
(2) ▇▇▇▇▇▇▇ ▇▇▇▇▇ NORRIDGE of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.
WHEREBY IT IS AGREED THAT:-
1. INTERPRETATION AND DEFINITONS
1.1 In this Agreement the following words, phrases and expressions shall
have the following meanings:-
"the Board" the Directors of the Company present at a
meeting of the Directors or at a duly
convened meeting of a Committee of the
Directors
"the Commencement Date" the date of this agreement
"the Company" ▇▇▇▇▇▇ Mechanical Handling
Limited
"the Executive" ▇▇▇▇▇▇▇ ▇▇▇▇▇ Norridge
"the Group" the Company and its subsidiaries (as
defined in the Companies ▇▇▇ ▇▇▇▇ as
amended by the Companies Act 1989) and any
associated company (which expression shall
mean any company which is not a subsidiary
of which not less than 20% of its equity
share capital is beneficially owned by the
Company) of the Company together with MMH
Holdings, Inc., a Delaware, U.S.A.
corporation.
1.2 Any reference to a statutory provision shall be deemed to include all
re-enactments and modifications of it or the provision referred to and any
regulations made under it or under the provision referred to.
1.3 The headings in this Agreement have been inserted for convenience only.
They are not to affect its interpretation.
2. THE EXECUTIVE'S APPOINTMENT
2.1 The Company will employ the Executive and the Executive will serve the
Company on and subject to the terms and conditions of this Agreement.
2.2 The Executive's employment began on the Commencement Date. The
Executive's period of continuous employment (taking into account any
employment with a previous employer which counts towards that period) began
on 1st January 1979.
2.3 The Executive's employment will continue from the Commencement Date and
thereafter unless and until it is terminated pursuant to clause 10 or by
either:-
2.3.1 the Company giving to the Executive not less than twelve months
written notice; or
2.3.2 The Executive giving to the Company not less than twelve months
written notice.
3. THE EXECUTIVE'S DUTIES AND OBLIGATIONS
3.1 The Executive is to act as Vice President, Europe and Africa Region of
▇▇▇▇▇▇ Mechanical Handling, Inc., reporting to the Chairman.
3.2 Whilst the Executive is employed by the Company he will:-
3.2.1 perform his duties with reasonable skill and care and to the best
of his ability
3.2.2 comply with all reasonable directions from time to time given to
him by the Board and at all times keep the Board properly informed of
matters which come to his attention which may materially affect the
business of the Company or any member of the Group
3.2.3 devote the whole of his working time, abilities and attention to
his duties
3.2.4 work such hours as the Company may reasonably require whether or
not these are outside normal business hours
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3.2.5 at all times serve the Company and the Group well and faithfully.
3.3 Whilst the Executive is employed by the Company he will not:-
3.3.1 do anything which may in the reasonable opinion of the Board bring
any member of the Group into disrepute or harm the goodwill or
commercial image of any member of the Group or which is or is likely to
be damaging or prejudicial to the business and/or commercial interests
of the Company or the Group
3.3.2 be engaged or interested (except with the prior written approval
of the Board) in any other trade, profession, business or occupation
(including any public or private activity which in the reasonable
opinion of the Board may interfere with the proper performance of his
duties) or hold any directorship or other office in any company or other
body whether incorporated or unincorporated.
3.4 Nothing contained in this Agreement shall preclude the Executive from
holding not more than 3% of the issued shares or other securities of any
class of a company which are quoted or dealt in on a recognized Stock
Exchange.
3.5 The initial location of the Executive is at North Road, Loughborough.
The Executive will however travel both within the UK and abroad as may be
necessary for the proper performance of his duties and will spend nights
away from the initial location and/or his home where that is necessary for
the performance of his duties. The Executive will not be required without
his consent to locate his office on a full time basis whether permanently or
temporarily to any place outside a radius of 50 miles from the initial
location.
3.6 There are no disciplinary rules on the date of this Agreement which are
specifically applicable to the Executive (other than the provisions of this
Agreement). The Executive shall be expected to behave at all times in a
manner appropriate to his position and responsibilities and to comply with
any staff rules in force from time to time. The Board may however introduce
and amend such disciplinary rules as it thinks fit.
3.7 If the Executive is dissatisfied with any disciplinary action taken
against him or has any grievance relating to his employment he may apply for
redress to the Chairman of the Company whose decision shall be final and
binding, subject to any recourse to law which the Executive may have.
3.8 Unless the Board prescribes otherwise, and save as expressly
provided in the Agreement there will be no specific terms or conditions
relating to the Executive's hours of work. The Executive shall work
such hours as may be
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necessary or appropriate from time to time to carry out his duties
properly and effectively.
4. RENUMERATION AND EXPENSES
4.1 The Executive will receive a salary at the rate of L79,000 per
annum. This will be reviewed by the Board (or by any Compensation or
Remuneration Committee established for that purpose) at least once a year.
4.2 The salary is payable by equal monthly installments in arrears on the
last day of each month (or such other day as the Board shall from time to
time decide). It will be deemed to accrue from day to day.
4.3 The salary includes all remuneration or fees to which the Executive
shall be entitled as a Director or officer of any member of the Group.
4.4 The Company or the relevant Group member will reimburse all reasonable
travelling, hotel, entertaining and other expenses properly incurred by the
Executive in the performance of his duties. The Executive will provide
whatever receipts or other supporting documentation may be required and will
comply with the Company's policy and rules relating to the incurring and
reimbursement of expenditure as may be in force from time to time.
4.5 The Executive will be entitled to receive a bonus calculated and paid in
accordance with the provisions of the management bonus scheme from time to
time maintained by the Company.
4.6 For each of 1998 and 1999, the Executive shall receive an additional
payment in the amount of L56,250.
4.7 The Company will pay any monies to which the Executive is entitled
pursuant to this Agreement to such person as the Executive shall request in
writing (anywhere in the world).
4.8 The Executive shall be eligible to receive an initial option grant with
respect to _____ "Equity Units" (as defined under the Company's Option Plan
in accordance with the general terms set forth in Schedule A).
5. BENEFITS
5.1 The Company will provide for the private and business use of the
Executive a suitable motor car in accordance with the policy of the Company
as determined by the Board from time to time.
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5.2 The Company will pay the cost of insuring, taxing and maintaining the
car and will reimburse the Executive all the business and private running
expenses thereof. The Executive will ensure that the car is serviced in
accordance with the manufacturer's recommendations and that he complies at
all time with the requirements and provisions of the policy of insurance in
force in respect of the car from time to time.
5.3 The car is to remain the property of the Company. On termination of this
Agreement the Executive is to return it in good condition (fair wear and
tear excepted) to the Company together with its keys and all documents
relating to it.
5.4 The Executive shall be entitled to benefits under such private health
plan as the Board may determine from time to time (on the National Scale
appropriate to the nearest hospital to the Executive's home) under its rules
from time to time in force for the benefit of the Executive his spouse and
his children who are resident in the United Kingdom and are under the age of
21 or who are more than that age but are engaged in a full time course of
education.
5.5 The Company will reimburse the Executive with all reasonable expenses
incurred by the Executive arising out of the Executive's use of his home
telephone.
5.6 The Executive will be paid an allowance of L1,685 per month for
housing, utilities and related expenses (net of taxation and national
insurance which will be payable by the Company). Such sum will cease to be
payable if the Executive ceases to reside in the United Kingdom.
5.7 The Company will support an application for a new or extended work
permit on expiry of the Executive's current work permit.
5.8 The Company will pay the cost of all reasonable professional fees
charged in connection with the Executive taking advice in relation to
personal taxation and work permit matters not to exceed L2,500 per
annum.
6. PENSION
6.1 Subject to the terms of the Trust Deed, the Scheme rules and any other
scheme documentation from time to time in force the Executive will be
entitled to join and be a member of the pension scheme or schemes to be
established by the Company and the Company will procure that the benefits to
which the Executive is entitled pursuant to such scheme or schemes are equal
in value overall to the benefits which the Executive would have been
entitled to under the Trafalgar House Executive Pension Scheme ("the
Scheme") in respect of the Executive's service in the scheme to the
Commencement Date. If he does so he will make
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contributions to and will be entitled to benefits under the Scheme in
accordance with the Trust Deed and rules relating to it for the time being
in force.
6.2 A Contracting-Out Certificate issued under the Social Security ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ is in force in respect of the Executive's employment.
7. HOLIDAYS
7.1 The Executive will be entitled (in addition to normal pubic and Bank
holidays) to 25 working days' paid holiday each year. For these purposes the
holiday year. For these purposes the holiday year starts on the 1st January.
7.2 If the employment of the Executive is terminated during any calendar
year he will be entitled to accrued holiday pay of one day's salary for each
day of his accrued entitlement which he has not taken. These provisions will
not apply if this Agreement is terminated pursuant to clause 10.1 in which
event the Executive will have no claim for accrued holiday pay.
7.3 For the purposes of clause 7.2 holidays are deemed to accrue from day to
day and any holiday entitlement in respect of any holiday year not utilized
by the end of that year shall be forfeit.
7.4 All holidays are to be taken at times approved by the Board.
7.5 The Company may require the Executive to take any unused holiday during
any period of notice given by either party to terminate this agreement.
8. SICKNESS AND MEDICAL EXAMINATION
8.1 If the Executive is prevented by sickness or injury from properly
performing his duties under this Agreement:-
8.1.1 during the first six continuous months of such absence he will be
entitled to continue to receive the salary and benefits set out herein
at full rate. After such period payment (other than payment of any
Statutory Sick Pay to which the Executive may be entitled) will cease
and the provisions of clause 8.3 will apply.
8.1.2 He will claim all state sickness benefits available to him and
account to the Company for these during the period in which he receives
sick pay.
8.2 Any salary paid to the Executive by virtue of clause 8.1.1 shall be
deemed to satisfy any entitlement of the Executive to receive Statutory Sick
Pay for the period to which the salary relates.
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8.3 If the Executive continues for more than six continuous months to be
prevented by sickness or injury from properly performing his duties the
Executive will be entitled to such benefits as are available to him from
time to time under the rules of the permanent health insurance scheme of the
Company and the payment of salary or other benefits shall be at the
discretion of the Board. This clause takes effect subject to clause 10.
8.4 Salary paid by the Company to the Executive in respect of any period of
absence resulting from the negligence of a third party shall be recoverable
by the Company out of any damages he the is paid by or on behalf of that
third party.
8.5 The Board may at its discretion require the Executive to furnish
evidence satisfactory to it of any sickness or injury of the Executive. It
may also require him from time to time to undergo a medical examination by a
medical practitioner nominated by the Company. The Company will bear the
costs of any such examination and will be entitled to full disclosure of the
results.
9. CONFIDENTIALITY
9.1 By virtue of his senior position the Executive acknowledges that he will
acquire detailed knowledge of the commercial affairs and business
transactions of the Company and the Group including without limitation trade
secrets and confidential information about customers, suppliers, terms of
sale, terms of supply, plans for growth and expansion and technical and
product improvements and developments. The Executive is hereby made
expressly aware and agrees that all of such information ("the Confidential
Information") is the property of and confidential to the Company and the
Group.
9.2 The Executive shall keep secret and shall not at any time (either during
the continuance of this Agreement or after its termination howsoever
arising) divulge to any person or use of copy for his own or another's
benefit any of the Confidential Information. The Executive will use
reasonable endeavours to prevent the publication or disclosure of any such
information and will notify the Board forthwith of any instances of
disclosure of which he is aware.
9.3 The restrictions set out in clause 9.2 are not to apply to information:-
9.3.1 divulged by the Executive in the proper performance of his duties
9.3.2 required by an order of the Board any Court of competent
jurisdiction to be disclosed by the Executive
9.3.3 within the public domain through no fault of the Executive.
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10. TERMINATION
10.1 The company may (without prejudice to and in addition to any other
remedy and notwithstanding the provisions of clause 2.3) terminate this
Agreement (and Executive's employment) immediately and without notice or
payment in lieu of notice upon the death of Executive, the expiration of the
term hereof, or for "Cause". Cause shall exist if the Executive:-
10.1.1 becomes a patient within the meaning of the Mental Health ▇▇▇
▇▇▇▇ or is otherwise absent from work through sickness or disability for
a period exceeding six months in any twelve month period
10.1.2 is declared bankrupt by a court of competent jurisdiction,
applies for a receiving order or administration order, has a receiving
order or administration order made against him or enters into any
arrangement or composition with his creditors or otherwise takes the
benefit of any statutory provision for the relief of insolvent debtors
10.1.3 without reasonable cause neglects refuses or fails to perform all
or any of his duties under this Agreement to an extent which is material
and continues to do so after having been warned in writing by the Board
about such neglect refusal or failure
10.1.4 at any time and for whatever reason resigns from any Directorship
which he holds within the Group without the consent of the Board or is
disqualified from acting as a Director.
10.2 A decision to terminate the Executive's employment pursuant to the
provisions of clause 10.1 shall be effective if taken or approved or
ratified by the Board and shall be communicated to the Executive in writing.
10.3 The employment of the Executive and this Agreement will come to an end
automatically on the last day of the month in which the Executive reaches
normal retirement age. This is currently 65 years of age.
10.4 Upon the termination of this Agreement under clause 10.1 or 10.3 the
Executive will be entitled to receive only the Accrued Benefits described in
clause 10.5.3(i). If Executive's employment is terminated during the term
hereof other than for Cause, death or the attainment of age 65, Executive
shall be entitled to receive all of the benefits described in clause 10.5.3.
10.5 The Executive's termination of this Agreement is governed under the
provisions set forth below.
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10.5.1 Upon termination of this Agreement by Executive other than for
"Good Reason" (as hereinafter defined), Executive shall be entitled to
receive only the Accrued Benefits described in clause 10.5.3(i).
10.5.2 Executive may terminate his employment under this Agreement for
Good Reason at any time during the term hereof unless this Agreement has
previously expired or been terminated by reason of (i) the death of
Executive, (ii) attainment by Executive of age 65; (iii) termination of
this Agreement by the Company for Cause, or (iv) voluntary termination
of this Agreement by Executive other than for Good Reason. Termination
by Executive for "Good Reason" shall mean termination by Executive of
his employment hereunder because of:-
(i) the failure by the Company to pay or cause to be paid the base
salary, benefits, and bonus required by this Agreement and a
continuation of such failure for 10 days after the Company receives
notice thereof; or
(ii) a material diminishment in the responsibilities and duties
assigned to Executive by the Company or any other material breach by
the Company of any of the terms of this Agreement and the
continuation of such breach for thirty days after the Company shall
have received written notice of such breach, which notice shall mean
a notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination under the provision so indicated.
10.5.3 Upon any termination by Executive of his employment under this
Agreement for Good Reason, the Company shall forthwith:-
(i) pay or cause to be paid to Executive in cash the following
accrued benefits ("Accrued Benefits"): (A) all salary earned or
accrued through the termination date; (B) reimburse Executive for
any and all monies advanced by the Executive in connection with
Executive's employment for reasonable and necessary expenses
incurred by Executive through the termination date; and (C) pay all
other amounts and benefits to which Executive may be entitled under
the terms of any benefit plan of the Company. Payment of amounts
other than those described in subsection (C) hereof shall be made
within 10 days after the termination date. Payment of amounts under
subsection (C) hereof shall be pursuant to the terms
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of any such plans either by the Company or a trust implementing such
plan; and
(ii) pay or cause to be paid to Executive (a) for one year after his
termination, the annual base salary payable to Executive hereunder
immediately prior to such termination in accordance with the
Company's normal payroll practices, and (b) a lump sum, payable upon
termination, arrived at by multiplying L56,250 by a number
equal to two minus "X", where "X" equals the number of times
Executive received the additional amount payable pursuant to clause
4.6 hereof.
In addition, for purposes of the Company's medical, dental and life
insurance programs, Executive shall be considered and deemed for a
period of one year following such termination or until Executive attains
the age of 65 or until reasonably equivalent benefits are paid or
extended by a new employer, whichever first occurs, to be a full-time
employee of the Company and be entitled to all benefits, rights and
privileges thereunder. If at the end of such year, if Executive has not
attained the age of 65 or has not previously received or is not then
receiving equivalent benefits from a new employer, the Company shall
arrange, at its sole cost and expense (but not including premiums
therefor), to enable Executive to convert the coverage under such
polices to equivalent individual policies.
10.6 On the termination of the Executive's employment for any reason:-
10.6.1 the Executive will at the request of the Company immediately
resign from all directorships within the Group then held by him. The
Executive irrevocably authorizes the Company to appoint some person in
his name and on his behalf to sign any documents and do any things
necessary to effect such resignation should he fail to do so himself.
10.6.2 the Company may deduct from any salary or wages due from it to
the Executive any monies which are due from the Executive to it or to
the Group.
10.6.3 the Executive will return forthwith to the Company all books,
papers, records, correspondence, notes, memoranda, sketches, technical
drawings, specifications, and other documents and all other property
belonging to the Company, to the company's Head Office or as the Board
shall otherwise direct.
10.7 Any provision of this Agreement which is expressed to have effect
after its termination will continue in force in accordance with its
terms.
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11. POST TERMINATION OBLIGATIONS
11.1 The Executive shall not, directly or indirectly, during the period of
twelve months immediately following the termination of this Agreement in any
Specified Capacity:-
11.1.1 solicit or endeavour to solicit orders from or entice away from
any Relevant Company as defined in clause 11.4.3 in connection with any
business falling within the definition of "Specified Business" set out
in clause 11.4.2 or deal with any person, firm, company or organization
who shall have been a client or customer of any Relevant Company during
the twelve months preceding such termination; and
11.1.2 attempt to induce or persuade any person who was employed by any
Relevant Company at the date of the termination of this agreement or at
any time during the twelve months preceding such termination to leave
such employment.
11.2 The Executive shall not, directly or indirectly, during the period of
twelve months after the termination of this agreement within the Specified
Areas in any Specified Capacity carry on or be interested, engaged or
concerned in all or any of the Specified Businesses in competition with (i)
the Company or (ii) any member of the Group.
11.3 The restrictions in clauses 11.1 and 11.2
11.3.1 shall not apply to the Executive if this Agreement is terminated
by the Company in breach of contract or if an industrial tribunal makes
an award of compensation for unfair dismissal against the Company in
respect of the termination of the Executive's employment; and
11.3.2 any period of notice which is worked by the Executive following
termination or notice of termination by the Company shall be deducted
from the twelve month period for which paragraphs 11.1 and 11.2 would
otherwise apply; and
11.3.3 are considered by the parties to be reasonable in all the
circumstances and for the legitimate and necessary protection of the
Confidential Information customer and trade connection of the Company
and the Group. If, however, any restriction is found by a Court to be
void as going beyond what is reasonable in all the
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circumstances the restrictions will apply with such modifications as may
be necessary to render them valid and effective.
11.4 For the purposes of this clause:-
11.4.1 "Specified Capacity" means each of the following capacities:-
11.4.1.1 as principal whether solely or jointly with any other
person
11.4.1.2 as partner with any other person
11.4.1.3 as agent for any other person
11.4.1.4 as an employee of any other person
11.4.1.5 as an officer of any company or
11.4.1.6 as the owner of any interest in any shares or other
securities in any company (other than in accordance with
clause 3.4).
11.4.2 "Specified Business" means each of the following taken
separately:-
11.4.2.1 the design, manufacture, sale and distribution of cranes,
lifting equipment and associated and component products and/or
11.4.2.2 each other business and/or activity of each member of the
Group with or in which the Executive has been involved or had
responsibility for during the 12 months immediately preceding the
termination of this agreement.
11.4.3 "Relevant Company" means (i) the Company; and (ii) any member of
the Group.
11.4.4 "Specified Areas" includes the United Kingdom, Europe and Africa.
11.5 Each of the obligations contained in clause 11.1 above shall be a
separate and several obligation.
12. INVENTIONS
12.1 If at any time during the continuance of this Agreement the Executive
shall discover, make or conceive either by himself or jointly with any other
person or persons any invention, discovery, formula, design, process,
adaptation or improvement ("Intellectual Property") which relates to or is
connected with or
12
capable of being worked or employed in connection with any trade or business
for the time being carried on by the Company and or the Group he shall
forthwith supply in writing full particulars concerning the same to the
Company.
12.2 All ("Intellectual Property") which is either made in the course of the
normal duties of the Executive or in the course of duties falling outside
his normal duties but specifically assigned to him shall upon the discovery
making or conception thereof belong to and vest in the Company absolutely
and beneficially together with all rights to apply for patent or other
protection thereby obtained. The Executive shall if so required by the
Company and at the expense of the Company take all such steps and execute
such documents as may be necessary fully and effectually to vest in the
Company or as it may direct the full benefit of the said Intellectual
Property and to give to the Company or its nominees such protection as it
may require in respect thereof in any part of the world whether by way of
patents or otherwise howsoever.
12.3 In the event of any dispute arising between the Company and the
Executive as to whether or not any invention communicated falls within the
scope of sub-clause 12.2 hereof application will be made jointly by the
Company and the Executive to the Comptroller General of Patents in
accordance with Section 8 of the Patents ▇▇▇ ▇▇▇▇ for determination of the
matter and his decision shall be final and binding.
12.4 The Executive acknowledges that inventions may reasonably be expected
to result from the carrying out of his normal duties and of any duties
specifically assigned to him within the meaning of Section 39(1)(a) of the
Patents ▇▇▇ ▇▇▇▇.
12.5 The Executive acknowledges that because of the nature of his duties and
the particular responsibilities arising from the nature of his duties he has
a special obligation to further the interests of the undertaking of the
Company and the Group within the meaning of Section 39(1)(a) of the Patents
▇▇▇ ▇▇▇▇.
12.6 The Executive hereby irrevocably appoints the Company to be his
attorney in his name and on his behalf to execute such instrument or do such
things and generally to use his name for the purpose of giving to the
Company (or its nominee) the benefit of the provisions of this clause and in
favour of any third party a certificate in writing signed by any Director or
Secretary of the Company that any instrument or act falls within the
authority hereby conferred shall be conclusive evidence that such is the
case. It is hereby agreed between the parties that the provisions of this
Clause 12 shall survive in their entirety the termination of the Executive's
employment for whatsoever reason.
13. PAYMENT
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Subject to applicable law, any payment to which the Executive is entitled to
under the Agreement (including without limitation the bonus to which the is
entitled to be paid pursuant to clause 4.6 and the pension contributions
which the Company is to pay pursuant to clause 6.1) shall be paid to such
person as the Executive shall direct (anywhere in the world).
14. NOTICES
14.1 Any notice to be given under this Agreement to the Executive may be
given to him personally or sent to him by prepaid first class letter
addressed to him at his last known place of residence. Any notice to be
given to the Company may be served by leaving it at or sending it by prepaid
first class letter to its registered office for the time being.
14.2 Any notice served by post shall be deemed to have been served
forty-eight hours after it was posted and proof that the notice was properly
addressed, pre-paid and posted shall be sufficient evidence of service.
15. GOVERNING LAW
This agreement shall be interpreted and enforced in accordance with the laws
of England.
16. SUPERSESSION OF PREVIOUS AGREEMENTS
This Agreement supersedes and is in substitution for any subsisting
agreements between the Company (or any Group member) and the Executive
relating to his employment. All such subsisting agreements are terminated by
mutual consent with effect from the Commencement Date.
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IN WITNESS whereof the parties have executed this Agreement on the date
set out above.
EXECUTED as a Deed by
▇▇▇▇▇▇ MECHANICAL HANDLING LIMITED
in the presence of: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Director
SIGNED as a DEED by the
said ▇▇▇▇▇▇▇ ▇▇▇▇▇ NORRIDGE
in the presence of: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Norridge
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Schedule A
Option Plan
Number of Shares Reserved: 1,186.0849 shares of common stock and 4,328.2500 shares of
Series C preferred stock in MMH Holdings, Inc. (the
"Company"), with a value of $8.1 million on the Closing Date
(such grant to be denominated in 8,100 units, consisting of
0.1464 shares of common stock and 0.5344 shares of Series C
preferred stock units and hereinafter referred to as "Equity
Units").
Amount of Initial Grant: An initial option grant (the "Initial Grant") shall be made
with respect to the number of Equity Units set forth in the
Employment Agreement. Additional option grants shall be
made as determined by the Board of Directors or Compensation
Committee of the Company. The Initial Grant and future
grants shall be from a pool of 8,100 Equity Units set aside
for such grants.
Exercise Price: The exercise price of an Equity Unit shall be equal to: (i)
the fair market value of a share of common stock on the date
of grant multiplied by the number of shares of common stock
covered by the Equity Unit, plus (ii) the liquidation
preference multiplied by the number of shares of preferred
stock covered by the Equity Unit. The exercise price would
have been $1,000 on the Closing Date.
Term: Options, or any portion thereof, not previously exercised or
terminated will expire ten years from the date of grant.
Method of Exercise: Prior to an "initial public offering" of ▇▇▇▇▇▇▇ or any
subsidiary company, cash only; provided, however, the Board
of Directors or Compensation Committee of the Company may
authorize cashless exercises. An option may only be
exercised with respect to whole Equity Units (i.e., as to
all the shares of common stock and preferred stock covered
by the Equity Unit).
Termination of Employment: Upon the occurrence of an "Employment-Related Event,"
options, to the extent vested on the date of the
Employment-Related Event, shall be exercisable for 90 days
from such date. 80% of all A Options and B Options and 100%
of C Options which are not vested on the date of the
Employment-Related Event shall be forfeited.
Upon the occurrence of a Termination Event all options (vested and
nonvested) shall terminate on the date of the Termination Event.
Call on Shares Acquired In the event of the Executive's termination of employment for any
on Exercise of Option: reason (Employment Related Event or Termination Event) prior to an
"initial public offering" of the shares of the Company, all shares of
the Company held by Executive shall be subject to a "call" by the
Company at the FMV on the date of the "call"). In the event that the
Company is restricted from purchasing such shares for cash under any
applicable financing or other agreements, the Company may issue the
Executive a note or such other permissible security (which shall
contain commercially reasonable terms) in full satisfaction of such call.
Tag-along Rights: The Executive will have the same tag-along rights as set forth in
paragraph 8 of the Term Sheet for Equity Investment Stockholders Agreement
(attached as Exhibit E to the Recapitalization Agreement among Harnischfeger
Corporation, the Sellers named therein and MHE Investments, Inc., dated
January 28, 1998).
Restrictions on Transfer: Options will be non-transferable, except without consideration to a trust or
partnership the only beneficiaries or partners (as the case may be) of which are
immediate family member of Executive; shares obtained upon the exercise of options
may be transferred only in accordance with the laws of descent and distribution.
Other than with respect to transfers of options pursuant to the preceding
sentence, no third party shall have any direct or indirect beneficial interest
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in the options or the shares obtained upon the exercise thereof.
Vesting: A Options: 1/3 of the total number of Equity Units subject to the
Initial Grant shall vest ratably (25% a year) on each of the first
through fourth anniversaries of the date of grant ("A Options"),
provided the Executive is in the employ of the Company on each such
date.
If there is a Change in Control (as defined in Schedule D to the
Employment Agreement) prior to the fourth anniversary of the date of
grant, and the Executive is still in the employ of the Company, all
unvested A Options shall vest.
B Options: 1/3 of the total number of Equity Units subject to the
Initial Grant shall vest 25% a year at the end of each of 1999, 2000,
2001, and 2002, subject to satisfaction of the applicable
EBITDA-based "Performance Hurdle" for each such year ("B Options"). In
the event that the Performance Hurdle is not met for any particular
year, the applicable portion of the B Options which did not vest will be
carried over to the next year. Thus, if on a cumulative basis, the
aggregate Performance Hurdles for such two year period are met, any
portion that did not vest previously, shall vest. For example,
if the Performance Hurdle is not met in 1999, but on a cumulative basis
(i.e., the sum of EBITDA for 1999 and 2000 equals or exceeds the sum
of the Performance Hurdles for 1999 and 2000) the unvested B Options
attributable to 1999 and 2000 will vest in 2000. Any portion of B
Options which does not vest because of not meeting the relevant
Performance Hurdle in a particular year or on a cumulative basis in a
subsequent year will be treated like C Options upon the "Determination
Date" (defined below) and will vest if the relevant performance
criterion for C Options is satisfied.
For purposes of the B Options, Performance Hurdle shall mean the
precise EBITDA target attached as Exhibit I for fiscal years
1999-2002, which in the event of any acquisition will be increased by the
pro
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forma projections used in approving any such acquisitions.
The Board shall certify to Executive the attainment or lack of attainment
of the applicable Performance Hurdles with respect to any calendar
year as soon as practicable following the receipt of audited
financial statements of the Company.
If there is a Change in Control prior to the end of fiscal year
2002, and the Executive is still in the employ of the Company, unvested
B Options shall vest only if the criterion for the vesting of C
Options is met, as provided in the next section.
C Options: 1/3 of the total number of Equity Units subject to the
Initial Grant, plus any B Options which did not vest and have been
carried forward, shall vest if the Internal Rate of Return earned by
the Company exceeds 40% by the "Determination Date," ("C Options")
and the Executive is still in the employ of the Company on the
Determination Date.
The Determination Date regarding the attainment of the Internal Rate of
Return shall be the closing date of a "Change of Control".
Initial Public Offering After an initial public offering, and subject to the approval of the
Compensation Committee, the Executive will be permitted to exercise
his vested options and sell his Equity Units.
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