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General Counsel Employment Agreement

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Sectors: Automotive and Transport Equipment
Governing Law: Wisconsin, View Wisconsin State Laws
Effective Date: January 28, 1998
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Exhibit 10.13


EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT (this "Agreement") by and between Morris Material Handling, Inc., a Delaware corporation (the "Company"), and Martin L. Ditkof ("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.


MORRIS MATERIAL HANDLING, INC.


By: /s/ Michael S. Erwin
---------------------------------------
Name: Michael S. Erwin
Title: President


/s/ Martin L. Ditkof
---------------------------------------
Executive


Acknowledged by
MHE INVESTMENTS, INC.


By: /s/ Michael S. Shein
---------------------------------------
Name: Michael S. Shein
Title: Vice President


/s/ Martin L. Ditkof
---------------------------------------
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 Frasier 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.
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