Exhibit 10.13
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") by and between Xxxxxx Material
Handling, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx
("Executive").
W I T N E S S E T H:
WHEREAS, the Executive is a valued and important employee of the Company,
and possesses significant information about its strategic plans and other trade
secrets; and
WHEREAS, the Executive has been offered the opportunity to purchase units of
Niles, LLC, in connection with the recapitalization contemplated by that certain
Recapitalization Agreement, among Harnischfeger Corporation, the Sellers named
therein and MHE Investments, Inc., dated January 28, 1998 (the "Recapitalization
Agreement"), and to acquire options to purchase additional units of MMH
Holdings, Inc., ("MMH") the owner of all of the stock of the Company; and
WHEREAS, the Executive desires to purchase such units and to acquire such
options, and understands that the offer to purchase units and acquire options is
contingent upon the execution of this Agreement; and
WHEREAS, the Company wishes to secure the services of Executive after the
Recapitalization, 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. Condition Precedent. This Agreement shall take effect
immediately upon Harnischfeger Corporation or one of its Affiliates (as that
term is defined in the Recapitalization Agreement) selling 50 percent or more of
the outstanding shares of MMH to any party which is an affiliate of Chartwell
Investments Inc., (the "Effective Date"). Should Harnischfeger Corporation or
one of its Affiliates not sell 50 percent or more of the outstanding shares of
the Company to a party which is an affiliate of Chartwell Investments Inc.
prior to July 31, 1998, then this Agreement becomes void ab initio.
Section 1.2. 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 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 postemployment 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 1.3 Title. From and after the Effective Date, the Company shall
employ Executive in the position of General Counsel and Secretary, or such other
title as mutually agreed upon by the Company and the Executive.
Section 1.4 Duties. Executive agrees to serve in the position referred to in
Section 1.3 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 1.5 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.
ARTICLE II: COMPENSATION AND BENEFITS
Section 2.1 Base Salary. During the term of this Agreement, Executive shall
receive an annual base salary of $96,600, subject to annual review by the Board
of Directors.
Section 2.2 Bonus. The Company and Executive shall annually establish an
objective, performance-based bonus plan for Executive. The percentages, targets,
and other terms of the plan will be as mutually agreed upon between the
Compensation Committee of the Board of Directors of the Company and the Chief
Executive Officer of the Company. It is anticipated that, for fiscal year 1998,
the bonus plan will be based on Economic Value Added, while for fiscal 1999 and
after the plan will be based on EBITDA. 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.
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Section 2.3 Equity.
(a) Equity Purchase. Executive shall be eligible to purchase an initial
amount of Equity in Niles LLC for payment as agreed upon between Niles LLC
and the Executive.
(b) Equity Options. Executive shall be eligible to receive an initial
option grant of 88 A Options, 88 B Options and 100 C Options pursuant to the
terms of Schedule A, attached hereto.
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 all 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.
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) or (c) Executive's death or permanent disability (as defined below).
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. The Executive may terminate his employment under this
Agreement for Good Reason, after having given the Company written notice
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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 this Agreement by the Company or an affiliate of the Company; (vi) 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
twenty-four 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.
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(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 his then
current annual Base Salary plus a lump sum payment equal to the Base Salary
which would have otherwise been payable for the balance of the fiscal year
in which termination occurs, 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).
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 B. The provisions of such documents are incorporated
into this Agreement.
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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 if and 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 Wisconsin. In any such litigation, each party hereto waives personal
service of any summons, complaint or other process and agrees that the service
thereof may be made by certified mail directed to such party at his or its
address for purposes of notice under Section 7.1 hereof.
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 all 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.
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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 have the same definition as set forth in the
Recapitalization Agreement.
Section 7.9 Assignment. This Agreement, and the rights and obligations of
the parties hereunder, are personal and neither this Agreement, nor any right,
benefit or obligation of either party hereto, shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party except that
vested rights to payment shall be subject to devise, and shall descend in
accordance with applicable laws of inheritance.
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. Pursuant to the terms of a side letter (the
"Side Letter"), Executive shall be entitled to be reimbursed for reasonable
attorney's fees incurred in the negotiation of this Agreement to the limit
established in the Side Letter. In addition, Executive shall be entitled to
reimbursement of attorney's fees in any litigation between the Company and
Executive with respect to Executive's enforcement of this Agreement to the
extent Executive prevails in such litigation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
XXXXXX MATERIAL HANDLING, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Executive
Acknowledged by
MHE INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Executive
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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 Xxxxxxx 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
on Exercise of Option: employment for any 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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SCHEDULE B
STATEMENT OF PURPOSE
This Worldwide Business Conduct Policy shall apply to all officers,
employees, agents, consultants and directors of HII and of all HII
subsidiaries, operating units and divisions worldwide. References to "HII"
and "Company" in this Policy refers to Harnischfeger Industries, Inc. and all
of its subsidiaries, operating units and divisions. References to "Law
Department" refers to the in-house lawyers located at the HII offices as well
as at the operating unit offices.
Each manager shall review this Policy with all employees for whom he or
she has direct operational responsibility and with new employees as they are
hired. The manager shall have each employee execute the attached certificate
which will certify that the employee has received a copy of the Policy and
that the employee understands the policy and agrees to comply with it. The
executed certificate shall be returned to the operating united Human
Resources Department where it will become a part of each employee's permanent
file.
During each employee's annual performance review, the manager conducting
the review shall review this Policy with the employee. The employee shall
then sign the attached annual compliance certificate which shall also be
returned to the operating unit Human Resources Department. The annual
compliance certificate confirms that the employee has brought to the
attention of his or her immediate supervisor, to management or to the Law
Department all violations of this Policy of which the employee has become
aware during the preceding 12-month period.
WORLDWIDE APPLICATION
This policy applies to all HII operations worldwide, and shall be
translated into the local language to ensure that it is understood by all
employees. Because Harnischfeger Industries, Inc., the parent company, is a
United States corporation, U.S. laws are more likely to apply to its
subsidiaries, operating units and divisions. This Policy therefore
concentrates principally on U.S. laws and regulations. However, employees at
operations outside of the U.S. should adhere to local laws (as distinguished
from local customs) in matters not addressed in this Policy or where local
laws are more rigorous or restrictive than those set forth in this Policy.
REPORTING VIOLATIONS
Each employee shall report to his or her immediate supervisor,
management, or to the Law Department any violation or suspected violation of
this Policy as soon as he or she becomes aware of it. Managers and
supervisors shall then pass along reports of violations or suspected
violations to the Law Department. The Company will maintain the
confidentiality of such disclosures to the extent consistent with the best
interests of the Company and its obligations under law.
To ignore the unethical conduct of others is to be part of the problem,
it is each employee's personal responsibility to bring violations or suspected
violations to the attention of his or her supervisor, management, or the Law
Department.
COMPLIANCE
HII may conduct unannounced internal audits of each of its
subsidiaries, operating units and divisions from time to time to ensure
compliance with this Policy. All HII personnel shall cooperate fully with
such audit efforts.
PENALTIES
This Policy will be vigorously enforced. Conduct contrary to this Policy
shall be considered to be outside of the scope of employment of HII
employees. Failure of any HII personnel to comply with the requirements set
forth in this Policy shall result in appropriate employee sanctions and
disciplinary action, which may include termination of employment. In some
cases the company may have an obligation to call violations of this Policy
to the attention of appropriate enforcement authorities where violations of
this Policy may also be a violation of the law.
THE POLICY
Part I. Conflicts of Interest.
All employees of HII have a duty to HII to further its aims and
goals and to work on behalf of its best interest. No employee should place
himself or herself in a position where the employee's actions or personal
interests may be in conflict with those of HII. While it is not possible to
discuss every circumstance that may lead to a conflict of interest, the
following are examples:
1.1.1. The holding by an employee, or any member of his or her immediate
family, without written approval of the Law Department, of any substantial
financial interest in any enterprise which has material business dealings
with HII (e.g. competitors, suppliers, and customers) or which engages in any
field of activity engaged in by HII. Financial interests in such an
enterprise which are (i) less that $10,000 and (ii) amount to less
than 3% of the total shareholder's equity of the enterprise shall not be
considered "substantial".
1.1.2. Acting as a director, officer, employee, or otherwise for any
business or other institution with which HII has a competitive or
significant business relationship without the written approval of the Law
Department. An employee should report to his or her supervisor any situation
where members of the employee's immediate household hold positions which are
likely to cause the employee to have a conflict between the interests of HII
and another institution.
1.1.3. Competition with HII in the purchase or sale of any kind of
property, tangible or intangible; or diversion from HII, for the employee's
own direct or indirect benefit, or a business opportunity in which HII has or
is likely to have an interest.
1.1.4. Use of HII assets (funds, facilities, property, know-how, or
personnel) by an employee of HII for other business or personal endeavors
from which the employee might materially benefit.
1.2. Antitrust Compliance.
1.2.1. The following business practices, which generally involve collusive
action with competitors, customers or suppliers, may be considered
"unreasonable" restraints of trade in violation of the antitrust laws. These
practices constitute violations of our Policy:
a. Price Fixing. An agreement with a competitor to fix prices or to
fix terms and conditions of sale.
b. Production Restrictions. An agreement with a competitor to limit
or restrict production of goods for the purpose of limiting supply
and keeping prices high.
c. Market Division. An agreement with a competitor to divide
markets through allocation of sales territories, product lines,
or classes of customers or suppliers.
d. Refusals to Deal. An agreement with a competitor or with any
other party to boycott or not deal with one or more third parties.
e. Bid Rigging. Agreements between actual or potential competitors
to limit competition through coordinated or false bidding
practices.
f. Tying Arrangements. Selling a product on the condition that the
customer purchase another product not desired by the customer.
g. Exclusive Dealing. Selling on the condition that the customer
will not deal with a competitor.
h. Monopolization. Practices designed to exclude or destroy
competitors in areas where HII may have a significant market share,
for example through sales at unreasonably low prices or though
restrictive practices.
1.2.2. Acquisition and Distributors. Certain other business transactions
and practices (such as mergers and acquisitions) may violate the antitrust
laws if they "unreasonably" restrain trade or damage a competitor. The legal
considerations involved in these transactions and practices can be very
complex. Accordingly, you must consult the Law Department before entering
into any agreement for (a) the acquisition of a business; (b) the formation,
amendment or termination of any distributor agreement; or (c) the
establishment of or deviation from a formal pricing policy or list.
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1.2.3. "Gentlemen's Agreements". If a business transaction or practice
violates the antitrust laws, the form of the "agreement" which results in the
violation is immaterial. Oral undertakings, handshakes, "side letters",
"gentlemen's agreements", and other kinds of conduct from which agreements
may be implied, regardless of the name they go by, are still violations.
1.2.4. Contacts with Competitors. The antitrust laws do not prohibit all
contacts with competitors-only those which result in agreements,
understandings, plans, or conspiracies to limit or restrict competition. Apart
from the antitrust laws, however, discussions and exchanges of information
with competitors may jeopardize the best interests of HII by prematurely
disclosing our plans and business strategies. Accordingly, all discussions
and exchanges of information with competitors should be approached with great
care-and with prior advice from the Law Department.
1.2.5. Professional or Trade Associations. Certain HII employees
participate either personally or as HII representatives in various government
advisory committees or civic, professional, technical, or industry
associations that exist for legitimate, socially beneficial purposes. When
representatives of competitors attend meetings of these groups-no matter how
formal or informal the meetings may be-HII employees must take special care
to avoid making statements or engaging in conduct proscribed by this Policy.
Should employees have any doubt concerning the propriety of any matters
under discussion at such meetings, they must immediately disassociate
themselves from the discussion and, if necessary, leave the meeting. It is
important in these situations not only to comply with this Policy, but also
to avoid situations which raise suspicions of law violations in the minds of
hostile, prejudiced third parties. Problems arising from meetings of this
type should be reported promptly to the Law Department.
1.2.6. International Dealings. The antitrust laws of the United States
will often apply to international business transactions. Additionally,
foreign countries have antitrust laws of their own. International business of
the Company should therefore be conducted in accordance with this Policy.
1.3. Accounts and Record Keeping.
HII's books, records and accounts shall be maintained in accordance with
all applicable accounting rules and regulations. All transactions affecting
assets, liabilities, shareholders' equity, revenues and expenses will be
recorded on a timely basis in detailed journals and be traceable through the
general ledger and resulting financial statements.
Under no circumstances will any off-the-books funds or other unrecorded
assets be maintained. No false, misleading or artificial entries shall be
made in any financial books, records or accounts. No payment on behalf of HII
shall be approved or made with the intention or understanding that any part
of such payment is to be used for any purpose other than that described by
the documents supporting the payment.
Except as otherwise directed by the Law Department regarding privileged
information, each employee shall supply all information and data requested at
any time by the Company's internal or independent auditors. Each employee
shall promptly advise management of any inaccuracy or deficiency in the
accounting records.
Be aware that special record keeping rules apply where HII is providing
goods or services to the U.S. Government Record keeping procedures for such
projects shall be approved by the controller for the unit involved.
The HII "Internal Accounting Control Standards Manual" should be
consulted by unit management in order to ensure that (a) transactions are
authorized; (b) transactions are recorded completely, timely and accurately;
(c) access to assets is controlled and assets are safeguarded; and (d) assets
are verified periodically.
1.4. Entering into Contracts and Other Binding Commitments.
HII employees who receive or generate contracts, subcontracts, purchase
orders, letter agreements or other binding commitments are responsible for
determining that they specifically describe the goods, duration, and
commercial terms, and should solicit the assistance of the Law Department
whenever questions arise.
Commercial terms for the sale of HII products should include at a
minimum:
- A written document signed by authorized representatives of Buyer and HII.
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-- A clear description of what documents comprise the agreement, and what
documents, such as the buyer's standard terms, are excluded.
-- Price, payment and delivery terms.
-- A statement of HII's warranty commitment, excluding any implied
warranties.
-- A "Limitation of Liability" clause which should state at a minimum "HII
shall have no liability to [Buyer] for lost profits or for incidental or
consequential damages of any kind whether arising in contract, tort,
product liability or otherwise, or language of equivalent legal effect
(per the Law Department).
Any contracts or other agreements which do not meet these minimum
requirements, or which raise other questions as to their meaning and effect,
shall be submitted to the Law Department for review. In addition, any
documents of a legal nature shall be reviewed by the Law Department prior to
execution, including guarantees, assignments, releases, indemnification
agreements, and financing agreements.
Contracts, subcontracts, purchase orders, letter agreements and other
binding commitments to which HII is a party are to be signed on HII's behalf
only as follows:
(a) By an officer of the business unit involved;
(b) If a purchase, by an authorized purchasing department employee; or
(c) In accordance with the business unit's internal signing authority
policy.
1.5 Dealing with Suppliers and Customers.
1.5.1. Employees must award orders, contracts, and commitments to suppliers
strictly on the basis of merit. Merit, as stated in this policy, means on the
basis of quality, price, performance, and other normal business factors
relating to the product or service to be supplied.
1.5.2. Employees must promote and sell HII's products based on design,
quality, service, dependability, and competitive prices and shall refrain
from making misleading or exaggerated claims about the products.
1.5.3. Sales and purchases shall be made on the basis of merit, not on the
basis of reciprocity. The fact that HII has made or may in the future make
purchases from a prospective customer shall not be used to influence a
prospective customer to buy. HII purchases from its customers are
permissible but must be a matter of unilateral choice, and the products or
services offered must be competitive in price, quality, and service.
1.6. Safety and Health.
Under the Occupational Safety and Health Act, the Occupational Safety and
Health Administration (OSHA) has adopted standards for job safety and health
applicable to employers such as HII. The operating manager of each HII
facility located within the United States shall comply with all applicable
OSHA standards and shall ensure that safe and healthful working conditions
exist for all employees at that facility. Unsafe conditions observed by
employees shall be promptly reported to the operating manager. The operating
managers of facilities located outside of the United States shall comply with
all applicable local standards and shall ensure that safe and healthful
working conditions exist for all employees at such facilities.
1.7. Environmental Policy.
HII recognizes the importance of preserving the environment, conserving
global resources and protecting human health. HII is committed to taking
strong initiatives in these areas by:
-- Complying with federal, state and local environmental laws and
regulations in all of the countries in which we operate.
-- Continuing improvement of our operations to enhance pollution prevention,
minimize waste production, increase recycling, and efficiently use
non-renewable resources.
-- Integrating environmental considerations into all corporate processes,
including strategic planning.
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-- Conducting environmental audits on a regular basis to evaluate
conformance with this policy and applicable environmental laws and
regulations.
-- Including progress toward environmental, health and safety goals as
criteria in business and personal performance evaluations.
-- Striving to anticipate future environmental, health and safety risks and
regulatory requirements and having a positive approach to dealing with
them.
Each employee is expected to adhere to the spirit as well as the letter
of this policy. Managers have a special obligation to be aware of
environmental, health and safety risks and standards and to advise senior
management of any adverse situation which comes to their attention.
All complaints received by any facility from any state or federal agency
alleging that HII is not in compliance with any environmental law or any
permit issued under any environmental law shall be promptly reported to the
Law Department.
1.8. Product Safety.
The Policy of HII is to provider product and services which:
-- Perform their required function safely for their intended use.
-- Perform their required function reliably and with minimum adverse effects
on the environment.
-- Meet or exceed applicable governmental, state and local regulations and
industry standards.
-- Reduce the risk of injury to persons, property and the environment.
-- Are accurately and properly advertised, labeled, promoted, and packaged.
1.9. Media Relations.
HII values its relationships with the media and will take steps to
provide full and prompt disclosure of all material developments or events.
Media relations are the responsibility of the HII Corporate
Communications Department and all statements to the media or responses to
inquiries from the media shall be made by or coordinated with the HII
Corporate Communications Department in Milwaukee. In the event the media
inquiry concerns a pending threatened legal, environmental or safety-related
matter, media communications should also be coordinated with the Law
Department.
Any employee who is asked for a statement by any member of the media
should respond by explaining this policy and encouraging the person making
the inquiry to contact the HII Corporate Communications Department.
1.10. Political Contributions.
1.10.1. No funds or assets of HII shall be used for federal, state or local
political campaign contributions. This prohibition covers not only direct
contributions but also indirect assistance or support of candidates or
political parties through purchase of tickets to special dinners or other
fund-raising events, or the furnishing of any other goods, services or
equipment to political parties or committees.
1.10.2. No funds or assets of HII shall be used, directly or indirectly, for
political contributions outside the United States, even where permitted by
applicable local law.
1.10.3 Both federal and state governments can assist or restrict the
business of HII through passing laws and regulations. It is important that
HII set forth its position regarding these laws and regulations before they
are passed. However, stringent controls restrict contacts with public
officials, lobbying and public affairs. Therefore, no employee should
entertain a public official or otherwise engage in lobbying efforts on behalf
of HII without authorization from the Law Department.
1.10.4. The above prohibitions apply only to the direct or indirect use of
corporate funds or assets for political purposes and are not intended to
discourage employees from making personal contributions to the candidates,
parties or committees of their choice. Under no circumstances shall
employees be reimbursed in any way for political contributions.
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PART II. INTERNATIONAL COMMERCE
2.1. Export Controls.
In general, anything shipped abroad from any of the countries in which
HII does business must be accompanied by an export license. There are certain
statutory licenses which allow us to export nonmilitary and non-high
technology goods to our most-favored trading partners without any specific
license. Export control regulations are, however, quite complex, and
employees involved in export transactions must observe the following:
2.1.1. There must exist a specific export license (or a regulation waiving
the requirement that an export license be obtained) covering the intended
export transaction. This includes exports of technology as well as exports of
goods and services.
2.1.2. Any information furnished to the U.S. government, the government of
any other country, or to companies retained to facilitate HII export
transactions must be truthful, accurate and complete. This includes both
information as to the technology in question and as to the economic value of
the exports.
2.1.3. The export of certain high-technology goods and most
military-related products, services and technology must be reviewed and
approved by the U.S. Office of Defense Trade Controls.
2.1.4. The definition of "export" is quite broad and can include
conversations of a technical nature with a citizen of another country even
thought that conversation takes place entirely within the U.S. An "export"
may also take place during plant tours where foreign visitors may obtain
technical information. Any questions concerning export control laws should be
directed to the Law Department.
2.2. Payments to Government Officials and Personnel Outside of the U.S.
The Foreign Corrupt Practices Act prohibits the making or offering of any
monetary payment, gift or other thing of value to foreign officials,
political parties, or candidates for foreign political office for the purpose
of obtaining or retaining business with a person, business concern or
government agency. Employees of HII shall conduct business in strict
compliance with the requirements of this Act as follows:
- Under no circumstances shall an employee of HII make a payment to a
government employee or official or political candidate if he or she knows
or has reason to believe that it is for the purpose of obtaining or
retaining business for HII. Payments to distributors, sales agents,
consultants or representatives with the knowledge or with reason to
believe that any portion of such payments will be passed along to a
government employee or official or political candidate are also
prohibited. Requests for commissions or payments that are unusual or not
supported by fair consideration shall be reviewed with the Law Department.
- In some countries, certain industries such as paper mills, mines, and
utilities are owned or controlled by government-owned corporations.
Officers, directors, and employees of these industries are therefore
considered government employees. Thus, employees of HII cannot make or
offer payments, gifts, or other valuable consideration to these
individuals in order to obtain or retain business for HII.
2.3. International Boycotts and Restrictive Trade Practices.
U.S. law prohibits HII or any of its employees from refusing to do
business with anyone based upon race, religion, sex or national origin and
from providing information concerning these matters to customers or potential
customers. They also prohibit the providing of information about
relationships that HII may have with a boycotted country. Any document
received by HII which contains any boycott language, whether pursuant to a
specific contract or not, and whether or not HII responds, should be
identified and reported to the Law Department. Examples of boycott language
include:
"Certify that these goods are not of Israeli origin."
"Certify that these goods are not shipped on a blacklisted vessel."
"Certify that you have no dealings with Israel."
"Certify that you have no operations in Israel."
No information with regard to any such requests may be furnished, orally
or in writing, and the mere receipt of a request for such information must be
reported to U.S. government agencies. The complexities of the law in this area
6
are such that HII employees are required to immediately report to the Law
Department any request which calls for, or even appears to involved, any
prohibited information.
PART III: DOING BUSINESS WITH THE U.S. GOVERNMENT
3.1 Conduct of Business with the United States Government.
The conduct of business with the U.S. Government is subject to a
large body of statutory and regulatory requirements. Failure to observe these
requirements can result in criminal prosecution of individual employees and
debarment or disqualification of the Company from Government contracting.
Consult the Law Department for details of these rules.
Employees shall fully comply with all applicable statutory and
regulatory provisions, including but not limited to the following:
3.1.1 The False Statements Act.
The False Statements Act prohibits the making of any statement,
written or oral, which is knowingly false, or the knowing and willful
concealment of a material fact during a transaction with the Government.
Employees shall ensure that all statements made to the Government or its
representatives are true and accurate to that person's best knowledge and
belief.
3.1.2 The False Claims Act.
The False Claims Act prohibits the submission of any claim upon or
against the Government which is known to be false. Employees shall ensure
that all time charges, expense accounts, invoices, or other requests for
payment submitted to the Government are true and accurate and reflect only
those time periods and charges which were actually incurred in performance of
the contract or job order for which they have been submitted.
3.1.3. The Truth-In-Negotiations Act.
The Truth-In-Negotiations Act requires that employees certify that cost
and pricing data submitted to the Government in accurate, complete and
current.
3.1.4. The Procurement Integrity Act.
The Procurement Integrity Act prohibits:
(a) the offering or acceptance of bribes, kickbacks, or gratuities;
(b) the unauthorized exchange of proprietary or source selection
information; or
(c) the discussion, offer or promise of future employment to, from or
with a Government procurement official.
3.1.5. The Anti-Kickback Act.
The Anti-Kickback Act prohibits Government prime contractors from
receiving any fee, commission, gift, gratuity or other compensation from a
subcontractor as an inducement for the award of a subcontract or order.
Employees shall ensure that no fee, commission, gift, gratuity or other
compensation is made by or received from a prospective or current
subcontractor as a result of the receipt or award of any Government
subcontract or job order.
3.1.6. Reporting Requirements.
Employees shall comply with all applicable Government reporting
requirements in an accurate and timely manner, and copies of such reports
shall be retained until destroyed in accordance with Government record
retention requirements.
3.1.7. Time and Materials Charging Policy.
It is the policy of HII that all time actually spent and all materials
actually used in performing government contracts shall be accurately reported
in accordance with established procedures and applicable legal requirements,
7
and that all reported labor and material costs shall be charged only to the
contract(s) for which they were properly incurred.
This Policy expressly forbids (1) the knowing or deliberate mischarging
of costs or time, and (2) the alteration of completed time sheets, except to
correct errors.
3.3 Government Investigations.
Because of HII's broad business base, the company may from time to time
be subject to investigations by government agencies.
It is HII's policy to cooperate with every reasonably and valid request
by federal, state and local government investigators. At the same time, HII
is entitled to all the safeguards provided in the law for person under
investigation, including representation by counsel. Accordingly, if a
government investigator requests an interview with any HII personnel, seeks
information or access to files and records, access to a facility, or poses
written questions, he or she should be told that HII will cooperate, but that
you must first discuss the matter with the Law Department. You should
immediately telephone the Law Department which will then provide advice as to
further action.
Should you personally be approached after business hours by government
officials seeking information, we recommend you decline to respond to any
questions until you consult with the Law Department the next business day.
PART IV: EMPLOYMENT
4.1 Equal Employment Opportunity.
It is the policy of HII to provide equal opportunity for employment
promotion to all qualified persons; to prohibit discrimination because of
race, creed, color, national origin, sex, age, or handicap and to promote the
full realization of Equal Employment Opportunity through a positive,
continuing program throughout the entire Company.
Affirmative Action programs implementing the Company's Equal Employment
Opportunity policy shall exist at each plant location. Employees shall be
made aware of the existence of such Affirmative Action Programs by the
posting of bulletins or by individual communication. At U.S. operations this
communication shall state:
"As a Federal Contractor obligated to meet the requirements of Executive
Order 11246 and any subsequent amendments, an Affirmative Action Program has
been prepared for this Facility. It contains goals, actions and timetables
which relate to Equal Opportunity in all personnel actions. To avail
yourself of the benefits of this Program, you are urged to contact your
Supervisor and the Human Resources Department."
In addition, there shall be no segregation or discrimination due to race,
creed, color, national origin, sex, age, or handicap at any of the Company's
facilities, including without limitation washrooms, restrooms, vending
machine areas, cafeterias, locker rooms or work areas (other than providing
separate wash/rest rooms and locker rooms for each sex).
Managerial employees in all subsidiaries, operating units and divisions
of the Company shall take affirmative action to ensure that this Equal
Employment Opportunity Policy is follows.
4.2 Sexual Harassment.
HII prohibits sexual harassment of its employees in any form. It is both
illegal and against policy for any employee, male or female, to harass
another employee by:
- Making unwelcome sexual advances or requests for sexual favors or other
verbal or physical conduct of a sexual nature a condition of an employee's
continued employment;
- Making submission to or rejection of such conduct the basis for employment
decisions affecting the employee; or
- Creating an intimidating, hostile, or offensive working environment by
such conduct.
8
Other sexually harassing conduct in the workplace, whether committed by
supervisors or non-supervisory personnel is also prohibited. This includes:
offensive sexual flirtations, advances, or propositions; verbal abuse of a
sexual nature; graphic verbal commentaries about an individual's body; sexual
degrading words used to describe an individual; and the display in the
workplace of sexually suggestive objects or pictures.
PART V: CORPORATE ASSETS
5.1 Improper Use of Corporate Assets.
The assets of Hll are much more than our equipment, inventory, corporate
funds or office supplies. They include designs, drawings, software codes,
trade secrets, financial data, and other information about Hll.
These assets are only to be used for the benefit of Hll. They may not be
used for the personal gain of employees or others. Each employee is
responsible for making sure that Hll assets are used only for valid company
purposes.
Thus, employees may not transfer any Hll assets to other people or firms,
except for sale of goods in the ordinary course of business. Intentional
misapplication or waste of Hll equipment, tools, materials, supplies or other
assets is a violation of this Policy. In addition, unauthorized removal of
these assets from Hll facilities may be a violation of the law.
In the event that assets which are no longer needed in the business are
sold to employees, such sales must be approved by management and supported by
proper documentation.
5.2 Trade Secrets and Proprietary or Confidential information.
Employees shall take all steps necessary to appropriately safeguard Hll's
trade secrets and proprietary or confidential information.
Proprietary or confidential information includes any information which is
not generally known to the public and which is useful or helpful to Hll
and/or which would be useful or helpful to competitors. Common examples
include financial data, sales figures, new product information, manufacturing
methods, customer and supplier lists, information concerning corporate
acquisitions or divestitures, capital investment plans, supplier prices,
engineering data and drawings, and computer software and date stored in our
databases.
With respect to Hll's trade secrets and proprietary or confidential
information:
-- Such information shall not be disclosed to anyone outside of Hll except in
conjunction with a written disclosure agreement to be provided by the Law
Department.
-- Employees with access to such information should disclose it to others
within the company on a "need-to-know" basis only.
-- Employees shall be alert to inadvertent disclosures which may arise in
social conversations or in normal business relations with suppliers and
customers.
Employees shall in addition strictly comply with the terms and conditions
of the "Employee Proprietary Rights and Confidentiality Agreement" signed by
each employee.
With respect to trade secrets and proprietary or confidential information
of other companies:
-- Employees shall not receive any such information unless there is a clear
commercial reason for doing so and then only under the terms of a written
confidentiality agreement which has been reviewed by the Law Department.
-- If any employee is approached with any offer of such information which he
or she has reason to believe may have been obtained improperly, he or she
must immediately disclose the matter to his or her immediate supervisor
or to the Law Department.
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5.3. Protection of Trademarks.
The trademarks of HII, its subsidiaries, operating units and divisions,
are assets of considerable value. However, in order to preserve their
validity and value to the company, their use must comply with the rules and
regulations of the governments which have granted trademark registration to
certain words, name or symbols. The following general rules should be
followed in all countries:
- Always use trademarks in a distinctive manner, even in internal memos,
such as by capitalization or by placing the word or symbol in quotes
("MAGNETORQUE").
- At the first use of the trademark in public documents such as ads, use
the registration or trademark notice for the country in which the document
will appear. The registration notice for the U.S. is "-Registered
Trademark-" ("P&H") and the notice for a trademark that has not been
registered is "-TM-" ("TORQUE-LOCK -TM-).
- Only use the trademark to describe a product ("P&H Cranes").
Questions regarding trademark use, and any plans for the creation or
registration of new trademarks, should be directed to the Law Department.
5.4. Software of Others.
Other than software developed by HII's employees, HII licenses the use
of its computer software from outside companies. HII does not own this
software or its related documentation and, unless authorized by the software
developer, does not have the right to reproduce it. Generally, it is
necessary to purchase one software program for each workstation unless a
multiple use license agreement is entered into with the manufacturer.
HII employees shall not make, acquire, use, resell, or transfer
unauthorized copies of computer software. No software shall be installed on
HII hardware other than that licensed by HII or developed by its employees.
With regard to software for local area networks or multiple workstations,
employees shall use the software only in accordance with the applicable
license agreement. Backup copies are permitted if authorized in the software
documentation.
PART VI: PERSONAL ETHICS
6.1. Fraud, Bribery and Kickbacks.
6.1.1. Fraud. HII employees shall not employ or participate in dishonest
methods or schemes for the purpose of obtaining personal or business
advantage or reward, including methods involving fraud, deceit, or
overreaching, or methods which depart from fundamental standards of honesty
and fair play.
6.1.2. Bribes and Kickbacks. HII employees shall not in any way offer, give
solicit or receive any bribes, kickbacks or other illegal or improper
payments, transfers or receipts. No employee shall offer, give, solicit or
receive any money or anything else of value, directly or indirectly, for the
purpose of obtaining, retaining or directing business or bestowing or
receiving any kind of favored treatment or special concessions, including
commissions and finder's fees, to or from employees of other companies or
organizations (except for authorized commissions to HII sales agents in
accordance with the terms of a written agency agreement).
6.1.3. Gifts. HII employees and members of their immediate families shall
not accept, directly or indirectly, any service, payment, loan, discount
(except those offered to employees of HII generally), entertainment or travel
(except that which is customary and of nominal value), vacation or pleasure
trip, gift (other than one of nominal value which is customarily offered), or
gift or money in any amount from suppliers of materials or services to HII.
6.1.4. Government Employees and Politicians. Federal and state laws prohibit
giving a gratuity to a Government employee or politician. HII employees
shall not promise, offer or deliver to an officer or employee of the U.S.
Government or a politician gifts, favors or anything of value, including
meals and travel. The laws could be violated if anything of value is given to
a Government employee or politician even if there is no intent to influence
an official action or decision.
6.2. Inside Information.
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No employee, while in possession of material inside information
concerning HII (including acquisitions or divestitures contemplated by HII),
shall:
(i) purchase or sell any stock, bond or other security issued by HII;
(ii) purchase or sell any stock, bond or other security by any third
party to which the material inside information relates; or
(iii) reveal such material inside information to any person, including
friends and family members, unless that person needs to know such information
in order to carry out duties or obligations to HII. For purposes of this
paragraph, "material inside information" is any information which a
reasonable investor would consider important in deciding whether to buy,
sell, or hold a security and which has not been in the public domain for at
least forty-eight hours pursuant to appropriate disclosure. Improper use of
inside information by either an insider or a "tippee" constitutes a violation
of the Federal Securities laws and could result in the imposition of severe
penalties and imprisonment.
6.3. Travel and Expense Accounts.
HII shall reimburse ordinary and necessary business-related travel and
entertainment expenses in accordance with Company policy and in compliance
with applicable legal and taxing authorities. Each Operating and Business
Unit Controller is responsible for developing travel and expense reporting
procedures which adhere to the requirements of Company policy, and for
implementing a reporting system designed to detect violations.
Company policy regarding the following travel and entertainment expense
reporting categories is set forth in the HII Corporate Accounting Policy
Manual:
- Permanent and Temporary Advances. - Air Travel.
- Lodging and Meal Expenses. - Entertainment Expenses.
- Rental Cars. - Direct Charges.
- Credit Cards. - Miscellaneous Expenses.
- Approval Requirements.
6.4. Maintaining a Drug-Free Workplace.
HII regards drug abuse as a serious medical, business and social problem
which will not be tolerated. In order to ensure the health and safety of
employees, customers and the public and to ensure compliance with all
federal, state and local laws, the following guidelines will be strictly
enforced.
- The possession, use, sale, distribution or manufacture of illegal drugs,
controlled substances, or the paraphernalia associated with such illegal
drugs or controlled substances for purposes other than their legally
permitted use, or the unauthorized use of controlled substances on HII
premises, include parking premises, or outside HII premises while on
company business, is absolutely prohibited. Violations will result in
disciplinary action including possible discharge. If appropriate,
violations will be reported to local law enforcement authorities.
- Off-the-job illegal drug use which could adversely affect an employee's
job performance or which could jeopardize the safety of other employees,
customers, or the public is proper cause for administrative or
disciplinary action including discharge.
- Employees who are convicted of illegal off-the-job drug activity will be
considered in violation of this policy and subject to disciplinary
action including discharge.
6.5. Maintaining an Alcohol-Free Workplace.
The use of alcoholic beverages on company property is prohibited.
Employees shall not report to work while under the influence of alcoholic
beverages. An employee will be considered to be "under the influence"
when consumption of any alcoholic beverage has impaired or is likely to
impair the employee's job performance.
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Any employee who consumes any alcoholic beverage during the work day,
including during the lunch hour, shall not return to work but shall take the
balance of the work day off without pay or as a credit against accrued
vacation time. However, the use of alcohol in moderation by employees after
normal working hours while entertaining customers or in other social settings
involving company business is permitted.
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TO BE SIGNED AND FILED DURING JANUARY, 1998
RETURN TO OPERATING UNIT HUMAN RESOURCES DEPARTMENT
Certificate of Compliance with Harnischfeger Worldwide
Business Conduct Policy -- Annual Certification
I hereby certify that I have reviewed a copy of the Harnischfeger Worldwide
Business Conduct Policy with my supervisor as of the following date. I
understand and agree to continue to comply with this Policy. I further
certify that I have brought to the attention of my supervisor or the Law
Department any and all violations of this Policy of which I have become aware
during the preceding 12-month period.
Signed:
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Print Name:
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Title:
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Date:
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13
Harnischfeger Industries, Inc.
EMPLOYEE PROPRIETARY RIGHTS AND
CONFIDENTIALITY AGREEMENT
In consideration of my employment and, as applicable, my continued
employment, and the compensation paid to me by Harnischfeger Industries,
Inc., or any of its subsidiaries (direct or indirect), affiliates or
divisions and its successors and assigns (hereinafter jointly and severally
referred to as "Harnischfeger"), I hereby agree and warrant as follows:
(1) That for purposes of this Agreement;
(a) "Invention" means any discovery, improvement or idea (whether or not
described in writing or reduced to practice; and whether patentable
or not) made solely by me or jointly with others, while I am
employed at Harnischfeger: (i) relating to any of Harnischfeger's
existing or potential products, processes, manufacturing,
engineering, research, equipment, applications or other activities
or investigations; or (ii) relating to any work or investigations
conceived or carried on by me in connection with or because of my
employment by Harnischfeger.
(b) "Work of Authorship" means any computer program or system as well as
any literary, pictorial, sculptural, graphic or audiovisual work,
whether published or unpublished, and whether copyrightable or not,
in whatever form and in whatever media, originated solely by me or
jointly with others while I am employed at Harnischfeger: (i)
relating to any of Harnischfeger's existing or potential products,
processes, manufacturing, engineering, research, equipment,
applications or other business or technical activities or
investigations; or (ii) relating to ideas, work or investigations
conceived or carried on by me in connection with or because of my
employment by Harnischfeger.
(c) "Trade Secret" means all information possessed by or developed for
Harnischfeger, including any formula, pattern, compilation, program,
device, method, technique, process, unpublished invention or
unpublished Work of Authorship, to which all of the following apply:
(i) The information derives independent economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use;
(ii) The information is the subject of efforts to maintain its
secrecy that are reasonable under the circumstances.
(d) "Confidential Information" means information, to the extent it is not
a Trade Secret as defined herein, which is possessed by or developed
for Harnischfeger and which relates to Harnischfeger's existing or
potential business or technology, which information or technology is
generally not known to the public and which information or technology
Harnischfeger seeks to protect from disclosure to its existing or
potential competitors or others, including, without limitation, for
example: nonpublic business plans, strategies, existing or proposed
bids, costs, technical and engineering developments, existing or
proposed research projects, financial or business projections,
marketing plans, investments, negotiation strategies, and
information stored or developed for use in or with computers.
Confidential information also includes information received by
Harnischfeger from others which Harnischfeger has an obligation to
treat as confidential.
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(2) That, in the even I, by myself or jointly with others, make an
invention, originate a Work of Authorship, create Confidential
Information or create a Trade Secret while employed at Harnischfeger, it
shall, without further payment, immediately become the property of
Harnischfeger throughout the world. In addition:
(a) I will disclose and communicate to Harnischfeger promptly and fully
all such inventions made, Works of Authorship originated and Trade
Secrets and Confidential Information created;
(b) Whether during or after my employment by Harnischfeger and without
charge to Harnischfeger, but at its request and expense, I will
execute patent applications, copyright applications, assignments,
and other documents relating to each Invention and Work of
Authorship necessary or proper to vest ownership in Harnischfeger
and to obtain, maintain and enforce Letters Patent, Certificates of
Copyright Registration, and other proprietary rights to the
Inventions and Works of Authorship throughout the world; and
(c) Whether during or after my employment by Harnischfeger and without
charge to Harnischfeger, but at its request and expense, I will
give affidavits and testimony as to facts within my knowledge in
connection with any such Inventions and Works of Authorship in any
administrative proceedings, arbitration, litigation or controversy
relating thereto.
(3) Except as required in the conduct of Harnischferger's business or as
expressly authorized in writing on behalf of Harnischfeger, I will not,
during my employment and for a period of five years after termination of
my employment, directly or indirectly use or disclose any Confidential
Information. This prohibition does not apply to Confidential Information
after it has become generally known. This prohibition also does not
prohibit my use of my general skills and know-how acquired during and
prior to my employment by Harnischferger, as long as such use does not
involve the use or disclosure of Confidential Information or Trade
Secrets.
(4) In addition to and regardless of my promise made in paragraph 3 hereof,
during my employment at Harnischfeger I will do what is reasonably
necessary to prevent unauthorized disclosure of Harnischfeger's Trade
Secrets and Confidential Information and, after termination of my
employment, I will not use or disclose Harnischfeger's Trade Secrets as
long as they remain, without misappropriation, Trade Secrets.
(5) Immediately upon termination of my employment, I will return to
Harnischfeger all Harnischfeger's papers, documents and things,
including information stored for use in or with computers and software
applicable to Harnischfeger's business (and all copies thereof), which
are in my possession or under my control, regardless whether such
papers, documents or things (or their copies) contain Confidential
Information of Trade Secrets.
(6) Any invention or Work of Authorship relating to Harnischfeger's business
made or created by me or disclosed by me to third parties within one
year following the termination of my employment at Harnischfeger shall
be deemed to be Harnischfeger's property throughout the world, unless
provided by me to have been conceived and made or created by me
following the termination of my employment with Harnischfeger.
(7) All inventions (i.e. discoveries, improvements or ideas) in the field of
Harnischfeger's business made by me prior to my employment at
Harnischfeger and therefore not coming under this Agreement are listed
and described on the reverse side hereof.
(8) To the extent that they exist, I will not disclose any of my previous
employer's confidential information or trade secrets to Harnischfeger. I
further represent and warrant to Harnischfeger that I have not
previously assumed any obligations inconsistent with those of this
Agreement and that, to the best of my knowledge, my employment at
Harnischfeger does not conflict with any prior obligations to third
parties.
(9) This Agreement shall remain in force in the event that my employment
status changes from being employed at one entity to being employed at
another entity within the group comprised of Harnischfeger Industries,
Inc. and its present or future director or indirect subsidiaries,
affiliates or divisions.
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(10) That my heirs, executors and administrators are bound by this Agreement
insofar as possible under its terms.
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I hereby acknowledge that I enter into this Agreement voluntarily and that I
have this day received a copy of this Agreement.
Signed:
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Printed:
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Title:
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Date:
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3
SCHEDULE C
NONCOMPETITION AGREEMENT
This agreement ("Contract") is made and entered into by Xxxxxx Material
Handling, Inc. (the "Company") and Xxxxxx X. Xxxxxx ("Executive") to be
effective on the date of the Closing of the Recapitalization of MMH Holdings,
Inc.
W I T N E S S E T H
WHEREAS, Executive is an executive officer of the Company and will be
offered the opportunity to be an owner of certain shares of MMH Holdings, Inc.
if the attached Employment Agreement and this Schedule C are acceptable to
Executive; and
WHEREAS, by virtue of Executive's relationship to the Company's
business, his knowledge of such business and its trade secrets, his relationship
with its customers, and his experience, Executive acknowledges that his
competition with the business or his solicitation of employees to the business
to leave the Company would be detrimental to the future prospects of the
business; and
WHEREAS, Executive and the Company are entering into an Employment
Agreement to be effective simultaneously with the effectiveness of this
Contract, under which the Executive will be provided certain benefits and rights
not available to employees of the Company in general; and
WHEREAS, Executive, by reason of his ownership of shares in MME
Holdings, Inc. and his continued employment with the Company, shall become privy
to additional trade secrets and proprietary information possessed by the
Company, and further shall gain additional advantages otherwise not available
should he compete against the Company or its "affiliates" (any person or entity
which directly or indirectly through one or more intermediaries owns or
controls, is owned or controlled by, or is under common ownership or control
with, the Company) in the future; and
WHEREAS, Executive acknowledges and agrees that based on the foregoing,
the following agreement is fair and reasonable;
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree and promise as follows:
1. Subject to the terms and limitations contained in the Employment
Agreement, Executive agrees that he will not at any time during his employment
by the Company, or 24 months after such employment terminates, take or engage in
any of the following actions except with the written permission signed by an
officer of the Company (or its successor or assignee):
(a) Directly, or indirectly, own, direct, manage, work for or
consult with, in any executive, managerial, sales, engineering or other
capacity, any hoist or industrial crane designer, manufacturer or distributor
that designs, manufactures, sells or distributes hoists or industrial cranes in
any state or country in which the Company or any affiliate of the Company
designs, manufactures, sells or distributes hoists or industrial cranes. This
provision shall not apply to the Executive's passive investment in a publicly
traded company in which Executive owns less than five percent (5%) of the
outstanding shares.
(b) Solicit or transact any business relating to hoists or
industrial cranes with any supplier, customer or target of the Company or the
Company's affiliates with which Executive had contact on behalf of the Company
or any affiliate in the 12 months prior to the termination of Executive's
employment with the Company or with respect to which Executive received
information from the Company in the 12 months prior to the termination of
Executive's employment with the Company.
(c) Solicit any non-clerical or non-secretarial employee of
the Company or the Company's affiliates to leave the employment of the Company
or such affiliate.
2. Executive acknowledges and agrees that the above are reasonable
limitations given all of the facts, that he has been encouraged to take legal
advice as to the effect of the above limitations, and that full and adequate
consideration for the above has been and is being paid to him by the Company.
3. Should Executive breach any of the above restrictions, the parties
agree that, in addition to actual damages, that the Company may xxx Executive
for an injunction and such other equitable relief as available in a court of
competent jurisdiction including, but not limited to, seeking an order
restraining Executive from further breaches of the above restrictions.
4. It is expressly understood and agreed that the Company and the
Executive consider the restrictions contained above to be reasonable and
necessary for preserving and protecting the Company. Nevertheless, if any of the
restrictions are found by a court to be unreasonable, or overbroad as to
geographic area, time, or scope, or otherwise unenforceable or against public
policy, then the parties intend for the restrictions to be modified by such
court so as to be enforceable to the maximum extent allowable. Further, the
parties agree that this Contract is specifically subject to the severability
provisions contained in the Employment Agreement.
5. This Contract shall be governed by and construed in accordance with
the laws of the state of Wisconsin.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WITNESS:
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Executive
ATTEST: Xxxxxx Material Handling, Inc.
----------------------------------- By:
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Title:
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3
SCHEDULE D
For purposes of this Employment Agreement, a "Change of Control" of the
Company will be deemed to have occurred at such time as (i) any Person
(including a Person's Affiliates and associates) or any Persons acting
together that would constitute a group (for purposes of Section 13(d) of the
Exchange Act, or any successor provision thereto) (a "Group"), other than a
Permitted Holder, becomes the beneficial owner (as defined under rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of
(a) 50% or more of the total Voting Stock of the Company or Holdings or (b)
50% of all classes of Common Stock (whether voting or non-voting), taken as a
whole, of the Company or Holdings, or (c) all or substantially all of the
assets of the Company, (ii) any Person (including a Person's Affiliates and
associates) or Group, other than Chartwell Investments Inc. and its
affiliates, including but not limited to Niles L.L.C. and Xxxxxxx L.L.C. (a
"Permitted Holder"), becomes the beneficial owner of more than 30% of the
total Voting Stock of the Company or Holdings, and the Permitted Holders
beneficially own, in the aggregate, a less percentage of the total Voting
Stock of the Company or Holdings, as the case may be, than such other Person
or Group and the Permitted Holders do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors of the Company or Holdings, as the case may be, or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company or
Holdings (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
or Holdings, as the case may be, has been approved by 66-2/3% of the
directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease to constitute a majority of the board of directors of the
Company or Holdings, as the case may be.
