-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OtWC2+F7U+0Kn3VLtvw9e9+zTRrQT4g93F43Oz4W0pbx1PGRIKPPO6uy1FfMCKCK 7Xi8t1LowidFb8bOAha9bw== 0000801898-96-000003.txt : 19960131 0000801898-96-000003.hdr.sgml : 19960131 ACCESSION NUMBER: 0000801898-96-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960129 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARNISCHFEGER INDUSTRIES INC CENTRAL INDEX KEY: 0000801898 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY) [3550] IRS NUMBER: 391566457 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09299 FILM NUMBER: 96508224 BUSINESS ADDRESS: STREET 1: 13400 BISHOPS LN CITY: BROOKFIELD STATE: WI ZIP: 53005 BUSINESS PHONE: 4146714400 MAIL ADDRESS: STREET 1: P.O. BOX 554 CITY: MILWAUKEE STATE: WI ZIP: 53201-0554 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 1995. / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . Commission file number 1-9299 HARNISCHFEGER INDUSTRIES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 39-1566457 (State of (I.R.S. Employer Jurisdiction of Identification No.) Incorporation or Organization) 13400 Bishops Lane, Brookfield, Wisconsin 53005 (Address of Principal Executive Office) Registrant's Telephone Number, Including Area Code: (414) 671-4400 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange On Title of Each Class Which Registered Common Stock, $1 Par Value New York and Pacific Stock Exchanges Preferred Stock Purchase Rights New York and Pacific Stock Exchanges Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of Registrant's Common Stock held by non-affiliates, as of January 26, 1996, based on a closing price of $32 7/8, was approximately $1,607.6 million. The number of shares outstanding of Registrant's Common Stock, as of January 26, 1996, was 48,901,618. DOCUMENTS INCORPORATED BY REFERENCE 1995 Annual Report to Shareholders (Parts I, II and IV). Proxy statement for the 1996 annual meeting of stockholders to be filed within 120 days of the end of the Company's fiscal year (Part III). HARNISCHFEGER INDUSTRIES, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K For The Year Ended October 31, 1995 Page ---- Part I Item 1. Business................................................. 3 Item 2. Properties............................................... 11 Item 3. Legal Proceedings........................................ 14 Item 4. Submission of Matters to a Vote of Security Holders...... 14 Part II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters...................................... 16 Item 6. Selected Financial Data for the Registrant for Each of the Last Five Fiscal Years................................... 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................ 16 Item 8. Financial Statements and Supplementary Data.............. 16 Item 9. Disagreements on Accounting and Financial Disclosure..... 16 Part III Item 10. Directors and Executive Officers of the Registrant....... 16 Item 11. Executive Compensation................................... 16 Item 12. Security Ownership of Certain Beneficial Owners and Management............................................... 16 Item 13. Certain Relationships and Related Transactions........... 16 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................................. 16 Signatures ......................................................... 21
PART I Item 1. Business SEGMENTS OF BUSINESS Harnischfeger Industries, Inc. ("Harnischfeger Industries" or the "Company") is a holding company for subsidiaries involved in the worldwide manufacture and distribution of: papermaking machinery (Beloit Corporation); surface mining equipment (P&H(R) Mining Equipment); material handling equipment (P&H Material Handling); and underground mining equipment (Joy Mining Machinery). In early fiscal 1996, the Company completed the acquisition of Dobson Park Industries plc ("Dobson"), an industrial engineering group with interests in underground mining equipment, industrial electronic control systems, toys and plastics. Dobson's principal subsidiary, Longwall International, is engaged in the manufacture, sale and service of mining equipment for the international underground coal mining industry and has been added to the Company's Mining Equipment Segment. Harnischfeger Industries is the direct successor to a business begun over 100 years ago which, at October 31, 1995, through its subsidiaries, manufactures and markets products classified into three industry segments: Papermaking Machinery and Systems, Mining Equipment, and Material Handling. PAPERMAKING MACHINERY AND SYSTEMS The Papermaking Machinery and Systems Group is comprised of the Company's 80% interest in Beloit Corporation ("Beloit"). Mitsubishi Heavy Industries, Ltd. ("Mitsubishi") is the owner of the other 20% interest in Beloit. The Company and Mitsubishi have entered into certain agreements that provide Mitsubishi with the right to designate one of Beloit's five directors. These agreements also place certain restrictions on the transfer of Beloit stock. In the event of a change in control of the Company, Mitsubishi has the right to sell its 20% interest back to the Company for the greater of $60 million or the book value of its equity interest. Beloit is a leader in the design and manufacture of papermaking machinery and related products used in the pulp and paper industries. Beloit operates on a global basis with major manufacturing facilities in seven countries and sales and service offices located throughout the world. In addition, licensing arrangements exist with several major foreign companies. Beloit's activities are divided into the following categories: complete installations involving the design, manufacture and installation of integrated papermaking equipment and systems; major rebuilds and servicing of existing systems; and the sale of ancillary equipment and replacement parts. This machinery is custom designed to meet the specific needs of each customer. In 1995, Beloit expanded its service business through the acquisition of the roll-covering business of Rollin, S.A., a roll service and repair company located in France. Beloit is known for the quality and dependability of its products and is a leader in product innovation and development. Beloit has made a continuous commitment to research and development activities, and has been granted numerous patents on its designs. Beloit systems and equipment are used by a substantial number of paper producers, both domestic and foreign, and Beloit's installed base of equipment exceeds that of any of its competitors. A major factor in Beloit's success in the paper machinery industry has been its international manufacturing operations. Beloit's overseas facilities have been used to support both domestic and foreign sales and have provided Beloit with the flexibility to shift its manufacturing to more favorable locations as appropriate. In addition, Beloit has been able to take advantage of favorable export financing provided by certain foreign governments. Beloit's manufacturing facilities are supported by a domestic and international marketing network staffed by experienced sales engineers. Formerly, the Papermaking and Systems Group also included the Company's 20% interest in Measurex Corporation ("Measurex"). On December 29, 1994, Measurex repurchased 2,026,900 shares of its stock which had been held by the Company. On June 23, 1995, Measurex Corporation repurchased the remaining 1,613,100 shares of its stock. These transactions resulted in a gain of $29.7 million. Measurex continues to have cooperative agreements with Beloit. MINING EQUIPMENT P&H Mining Equipment is the world's largest producer of electric mining shovels and is a significant producer of electric and diesel-electric crawler and walking draglines, hydraulic mining excavators, blasthole drills, and electric shovel, dredge and dragline bucket products. Electric mining shovels range in capacity from 18 to 80 cubic yards, crawler draglines from 10 to 20 cubic yards, and hydraulic mining excavators from 12 to 27 cubic yards. Capacities for the walking draglines range from 20 to 150 cubic yards. In 1991, P&H Mining Equipment expanded its product lines by acquiring the large rotary blasthole drill product line from the Gardner-Denver Mining and Construction Division of Cooper Industries, Inc. There are three drill models currently in the active product line, with drilling diameters ranging from 9 to 22 inches and bit load capacities from 70,000 to 150,000 pounds. The products of P&H Mining Equipment are used in mines, quarries and earth-moving operations in the digging and loading of such minerals and other ores as coal, copper, gold, iron ore, lead, zinc, bauxite, uranium, phosphate, stone and clay. P&H Mining Equipment has a relationship in the mining shovel business with Kobe Steel, Ltd. ("Kobe") pursuant to which P&H Mining Equipment licenses Kobe to manufacture certain electric mining shovels and related replacement parts in Japan. Harnischfeger Corporation has the exclusive right to market Kobe-manufactured mining shovels and parts outside Japan (except in the case of certain government sales). In addition, Harnischfeger Corporation is party to an agreement, through 1996, with a corporate unit of the People's Republic of China, licensing the manufacture and sale of two models of electric mining shovels and related components. This relationship provides P&H Mining Equipment with an opportunity to sell component parts for shovels built in China. On November 29, 1994, pursuant to an exchange of common stock, the Company completed its acquisition of Joy Technologies Inc. ("JOY" or "Joy Mining Machinery"), a world leader in underground mining equipment. JOY manufactures and services mining equipment for the underground extraction of coal and other bedded deposits and has facilities in Australia, South Africa, the United Kingdom and the United States, as well as sales offices in Poland and the People's Republic of China. Joy Mining Machinery designs, manufactures and distributes continuous miners, entry drivers and sump shearers; long-wall shearers; shuttle cars; and continuous haulage systems for use in underground mining. JOY products are not sold into the general construction industry, and demand for them is not tied to cycles in that industry. JOY also maintains an extensive network of service and spare parts distribution centers to rebuild and service equipment and sell spare parts in support of its installed base. This network includes six service centers in the United States and four outside of the United States, all of which are strategically located in major underground mining regions. The financial position and results of operations of Harnischfeger Industries and JOY were combined retroactively in fiscal 1995. In early fiscal 1996, the Company completed the acquisition of Dobson Park Industries plc for a purchase price of approximately $330 million including acquisition costs. Dobson, headquartered in the United Kingdom, is an industrial engineering group with interests in underground mining equipment, industrial electronic control systems, toys and plastics. Longwall International ("Longwall"), one of the main subsidiaries of Dobson, is engaged in the manufacture, sale and service of underground mining equipment for the international coal mining industry. Its products include electronically controlled roof support systems, armored face conveyors, pumps and belt conveyor components and systems. Longwall will be fully integrated into Joy Mining Machinery and will enable JOY to offer integrated underground longwall mining systems to the worldwide mining industry. The industrial electronic and toys/plastics businesses are being evaluated in the context of the five characteristics required for consideration as a core business of this Company. As a result of this evaluation, it is likely that these businesses will be sold. Financial information with respect to the acquisition of Dobson is presented in Note 17 to the Financial Statements of the 1995 Annual Report to Shareholders incorporated by reference from the Company's Current Report on Form 8-K dated December 8, 1995. P&H MATERIAL HANDLING P&H Material Handling produces lines of through-the-air material handling equipment designed for a variety of users as well as container handling cranes for use in ports. The Division is comprised of five business groups: P&H Equipment, P&H Aftermarket, P&H Distribution and Service, Morris - Engineered Products Division and Morris - Standard Products Division. P&H Equipment The P&H Equipment group is comprised of the overhead crane and hoist product lines in the United States. It was formed from the core of what made up the Material Handling Equipment Division in prior years. The new crane portion of the group is comprised of several product lines: engineered cranes, standard cranes, portal cranes and crane components. Cranes are designed for installation in a wide range of industrial settings. Each crane is engineered to the customer's specifications, using standard components wherever possible. Engineered cranes are marketed for moderate to severe duty cycle applications in capacities from 3 to 800 tons. Standard overhead cranes are available in capacities from 5 to 100 tons. Stacker cranes, ranging in capacities from 2 to 50 tons, are particularly suitable for factory automation projects. Portal cranes range in lifting capacities from 5 to 100 tons and are used outdoors for woodyard, scrap, and container handling. The large installed base of cranes and increasing sensitivity of customers to opportunities for improved manufacturing efficiency from upgrading their material handling equipment provides this product line an opportunity for growth. The component products portion of this group consists of electric wire rope and chain hoists, manual chain hoists, ratchet lever hoists, and electrical products. Hoists range in capacities from 1/8 ton to 60 tons. These hoists use state-of-the-art materials and manufacturing techniques and feature a wide variety of controls. P&H Aftermarket The P&H Aftermarket Group consists of: Product Support, which markets repair parts, and PHoenix(TM) which handles pre-owned and remanufactured cranes and parts. The Product Support portion of the aftermarket group markets replacement products and parts through Material Handling Centers, both independent and company owned, in domestic markets and through licensees or agents in international markets. This group differentiates itself from the competition through reliable and responsive delivery performance. The PHoenix portion of the aftermarket group markets pre-owned cranes under the PHoenix trademark which have been remanufactured and modernized to meet customer requirements. It also markets pre-owned parts to its customers. The PHoenix group also provides engineering services for the revitalization of crane and runway systems. The group's products are marketed direct and through both independent and company owned Material Handling Centers. P&H Distribution and Service This group provides installation, erection and repair and maintenance services under the ProCare(R) trademark through the growing network of company owned Material Handling Centers. The group responds to customers' increased desire to outsource the repair and maintenance of overhead cranes and hoists. Morris - Engineered Products Division The Morris - Engineered Products Division is the larger portion of the Morris Mechanical Handling business based in the United Kingdom. It manufactures high integrity special purpose heavy lifting equipment, principally container handling cranes. In addition, its operations in South Africa are involved in the manufacture and service of cranes and other lifting equipment. It also has a United Kingdom Crane Service Division that distributes and services overhead lifting equipment throughout the United Kingdom. Morris - Standard Products Division The Morris - Standard Products Division manufactures hoists, cranes, linear motors, and controls. The hoist division manufactures a range of electric wire rope hoists and both electric and hand chain hoists. The industrial cranes division manufactures electric overhead cranes all to standardized designs. Linear Motors manufactures crane and general industrial controls and linear motors for special and general application. A recently acquired operation in Singapore will provide a base for distribution of standard products in that region. DISCONTINUED SEGMENTS Environmental The Company completed the sale of Joy Environmental Technologies ("JET") in the first quarter of 1996. JET has been presented as a discontinued operation in the Company's Consolidated Financial Statements. JET supplies flue gas desulfurization systems for reducing levels of sulfur dioxide in smokestack emissions which otherwise might react with other chemicals in the atmosphere to form acid rain. JET also designs, fabricates, and installs systems for the collection and removal of ash accumulated at the bottom of coalburning boilers and ash carried up the exhaust flues of these boilers. These products and services are used worldwide by various electric utilities and industrial companies. Systems Syscon Corporation ("Syscon"), the remaining unit in the Company's Systems Group, was sold in February, 1995 to Logicon, Inc. Syscon is engaged principally in providing systems development, systems integration and systems services to the United States Government, government agencies and commercial enterprises. INTERNATIONAL OPERATIONS In 1995, 1994 and 1993, Beloit's foreign sales (principally the United Kingdom, Italy, Canada, Brazil and Poland) amounted to 41%, 30% and 28%, respectively, of Beloit's consolidated net sales. Foreign sales of the Mining Equipment segment (principally in Australia, South Africa, Brazil, Canada, United Kingdom and Germany) generated approximately 44% of the segment's consolidated net sales in 1995, 48% in 1994 and 49% in 1993. More than 60% of Longwall's net sales in 1995 were derived from markets outside the United States (principally the United Kingdom, Continental Europe, Asia, Australia, South Africa and Canada). P&H Material Handling has been actively increasing its global operations and now has operations in the United Kingdom, South Africa, Canada, Mexico, and Singapore which offer a combination of manufacturing, distribution and service facilities. In addition, agents and distributors represent their products in other parts of the world. Foreign sales in 1995 amounted to 48% of the segment's consolidated net sales. Beloit has granted licensing agreements to serve certain foreign markets to companies located in Australia, Japan and Spain. The licensing agreement with Mitsubishi in Japan represents the majority of Beloit's license income. Beloit maintains sales and service offices throughout the world to remain competitive in foreign markets. In general, sales of licensed mining products are managed within the country of manufacture by the foreign licensee. Licensee exports, together with exports from the United States, are sold through P&H Mining Equipment's and P&H Material Handling's subsidiaries, which directly or through subsidiaries or affiliates maintain regional sales offices in: Brisbane, Melbourne, Singleton, Mackay and Perth, Australia; North York and Vancouver, Canada; Hermosillo, Mexico; Belo Horizonte and Sao Paulo, Brazil; Santiago, Chile; Lima, Peru; Weiterstadt, Germany; Aylesbury, United Kingdom; Johannesburg, South Africa; and Puerto Ordaz, Venezuela. Harnischfeger Industries' international operations are subject to certain risks not generally applicable to its domestic businesses, including currency fluctuations, changes in tariff restrictions, restrictive regulations of foreign governments (including price and exchange controls), and other governmental actions. Harnischfeger Industries has entered into various foreign currency exchange contracts with major international financial institutions designed to minimize its exposure to exchange rate fluctuations on foreign currency transactions. GENERAL Seasonality No significant portion of Harnischfeger Industries' business is subject to or influenced by seasonal factors; however, Harnischfeger Industries' business is influenced by the cyclical nature of the paper machinery, mining, and capital goods industries. Distribution Sales of Beloit products are principally made directly to the end user. On a worldwide basis, each manufacturing facility is responsible for a designated market area. Beloit also maintains a worldwide marketing group to coordinate and support worldwide facilities in marketing strategies, technical sales support and participation in major projects including interface with engineering firms and financial institutions. Beloit offers systems and turnkey alternatives to assist in related business development throughout the world. Agents are used in certain foreign countries to augment Beloit's sales force stationed in the segment's manufacturing facilities and in sales offices worldwide. In the United States, surface mining equipment, overhead cranes and certain electrical products are marketed principally directly from the segments' headquarters and regional sales offices. Electric wire rope and chain hoists and crane modernizations are sold through dealers and distributors, assisted and coordinated by corporate and regional office personnel. P&H Material Handling has a dealer network of regional distributorships (referred to as Material Handling Centers). Joy Mining Machinery and Longwall sales are made mostly through sales offices located in major coal-producing areas. JOY's and Longwall's worldwide sales forces have marketing responsibility for new machine sales, as well as for parts, components and rebuild services provided to customers. A segment of the sales forces in the United States is dedicated to manning a truck fleet which visits customer sites on a regular basis in order to deliver components and parts. The manufacture and sale of repair and replacement parts and the servicing of equipment are important aspects of P&H Mining Equipment operations. P&H Mining Equipment maintains mining parts warehouses in Arizona, Minnesota, Nevada, Wisconsin, West Virginia and Wyoming and in Australia, Brazil, Canada, Chile, Germany, South Africa and Venezuela. These warehouses facilitate shipment of customers' orders for parts, and some also function as regional service centers. Competition Harnischfeger Industries conducts its domestic and foreign operations under highly competitive market conditions, requiring that its products and services be competitive in price, quality, service and delivery. The pulp and paper capital machinery market is globally competitive; Beloit's two major competitors are foreign-owned companies. The principal competitors are Valmet Paper Machinery, Inc., with controlling interest held by Valmet Corporation, Finland, and Voith Sulzer Papertech, with headquarters in Germany. P&H Mining Equipment's principal competitors in electric mining shovels are Bucyrus Erie Company and Marion, a division of Global Industrial Technologies. Harnischfeger Industries believes P&H Mining Equipment is the leading participant in this market. Its principal competitors in the hydraulic mining excavator market are Demag, Hitachi, Caterpillar and Orenstein & Koppel. In draglines, the main competitors are Bucyrus Erie Company and Marion. The Division's main competitors in drills are Ingersoll-Rand, Driltech and Bucyrus Erie Company. In the underground coal mining industry, JOY competes primarily on the basis of the quality and reliability of its products and its ability to provide rapid, extensive and cost-effective repair and rebuild services and delivery of spare parts. JOY's primary competitors in the continuous mining machinery industry are EIMCO(a Tampella Tamrock Company), the Jeffrey division of Indresco Inc., Simmons- Rand Company(a subsidiary of Long Airdox Company), and Voest Alpine. In the longwall shearer new equipment market, JOY competes primarily with Anderson Longwall PLC, Eickhoff Corporation, and Mitsui Miike Machinery Company, Ltd. In the continuous haulage market, JOY competes with Long Airdox, Fairchild International, and Jeffrey. In the sale of spare parts for JOY's equipment, JOY competes with EIMCO and various small suppliers. Longwall competes globally. The primary competitors of Longwall are DBT and the Marmon Group. The principal worldwide competitors for the P&H Material Handling Division are Demag and Konecranes International KCI. Harnischfeger Industries believes that P&H Material Handling is one of the largest worldwide participants in this market. When considering any specific geographic market, the competitors would normally be split into overhead cranes, dockside cranes, hoists, and service. There are significant numbers of competitors in each of the geographic markets and segments of those markets. Customers During 1995, there were no sales or services made to an individual customer amounting to 10% or more of consolidated sales. Backlog Backlog by business segment for the Company's continuing operations (in thousands of dollars) as of the end of fiscal years 1995 and 1994 was as follows:
October 31, --------------------- 1995 1994 ---------- -------- Papermaking Machinery and Systems.................... $ 679,625 $633,770 Mining Equipment..................................... 221,540 190,900 Material Handling Equipment.......................... 130,879 107,112 --------- -------- $1,032,044 $931,782 ========== =========
Supply of Materials and Purchased Components The Papermaking Machinery and Systems Group purchases raw materials used in its products which include: plates, sheets, shapes, carbon and alloy steel, stainless steel, brass and bronze, nickel alloy, and aluminum. Purchases of semi-processed and component parts include: castings, valves, filters, pumps, dryers, electrical equipment, and various vacuum, drying, hydraulic, combustion, material-handling and temperature control systems. Beloit has approximately 4,700 suppliers of which approximately 1,000 are most commonly used. No single source is dominant. P&H Mining Equipment Division and P&H Material Handling manufacture machines and heat-treated gears, pinions, shafts, structural fabrications, electrical motors, generators, and other electrical parts. They purchase raw and semi-processed steel, castings, forgings, copper and other materials for these parts and components from approximately 400 suppliers. In addition, component parts, such as engines, bearings, controls, hydraulic components, and a wide variety of mechanical and electrical items are purchased from approximately 1,500 suppliers. Purchases of materials and components are made on a competitive basis with no single source being dominant. JOY purchases electric motors, gears, hydraulic parts, electronic components, forgings, steel, clutches and other components and raw materials from outside suppliers. Although JOY purchases certain components and raw materials from a single supplier, alternative sources of supply are available for all such quantities. JOY believes that it has adequate sources of supplies of component parts and raw materials for its manufacturing requirements. Longwall purchases electric motors, gears, hydraulic parts, electronic components, steel and other components and raw materials from outside suppliers. Certain components and raw materials are purchased from a single supplier; however, alternative sources of supply are available for all such quantities. Longwall believes that it has adequate sources of supplies of component parts and raw materials for all its manufacturing requirements. Patents and Licenses Patents are quite important in the papermaking industry. All major machinery manufacturers use patents extensively to protect the technology base that results from research and development. Beloit has been granted numerous patents on its designs and more are pending. Most are registered in all of the major countries into which Beloit and its licensees sell. In May, 1993, a Federal court jury in Madison, Wisconsin returned a verdict finding that J.M. Voith GmbH of Germany and its subsidiary, Voith, Inc. of Appleton, Wisconsin infringed upon Beloit's patent on its Bel- Champ(R) technology for the drying technology of large paper manufacturing machines. The verdict was appealed by Voith. In September, 1995, J.M. Voith GmbH, Voith, Inc., and Beloit reached an understanding concerning settlement of their outstanding patent litigation. In addition, on November 23, 1994, a Federal court jury, in Madison, Wisconsin, returned a verdict finding Valmet Corporation of Finland guilty of infringing a key patent held by Beloit Corporation on the Bel-Champ paper machine drying technology. In connection with this suit, the jury awarded Beloit $7.9 million in damages. The verdict in this case has been appealed by Valmet and the award has not been recorded in the Company's financial statements. P&H Mining Equipment and P&H Material Handling have numerous domestic and foreign patents, patent applications and patent licensing agreements. Harnischfeger Corporation does not consider these businesses materially dependent upon any patent or patent license agreement. JOY, Longwall and their respective subsidiaries own numerous patents and trademarks and have patent licenses from others relating to their respective products and manufacturing methods. Also, patent and trademark licenses are granted to others throughout the world and royalties are received under most of these licenses. While JOY and Longwall do not consider any particular patent or license or group of patents or licenses to be essential to their respective business as a whole, both JOY and Longwall consider its patents and licenses significant to the conduct of its business in certain product areas. Research and Development Harnischfeger Industries maintains a strong commitment to research and development with engineering staffs that are engaged in full-time research and development of new, and improvement of existing, products. Beloit maintains research and development facilities in Rockton, Illinois, Pittsfield, Massachusetts, Bolton, United Kingdom, Clarks Summit, Pennsylvania, Portland, Oregon and Waukesha, Wisconsin. Harnischfeger Corporation maintains research and development facilities in Milwaukee, Wisconsin. JOY and Longwall pursue technological development through the engineering of new products, systems and applications; the improvement and enhancement of licensed technology; and synergistic acquisitions of technology. Research and development expenses were $30.3 million in 1995, $28.9 million in 1994, and $26.7 million in 1993. Environmental and Health and Safety Matters The activities of the Company are regulated by federal, state and local statutes, regulations and ordinances relating to both environmental protection and worker health and safety. These laws govern current operations, require remediation of environmental impacts associated with past or current operations, and under certain circumstances provide for civil and criminal penalties and fines, as well as injunctive and remedial relief. The Company's foreign operations are subject to similar requirements as established by their respective countries. The Company has expended substantial managerial and financial resources in developing and implementing actions for continued compliance with these requirements. The Company believes that it has substantially satisfied these diverse requirements. However, because these requirements are complex and, in many areas, rapidly evolving, there can be no guarantee against the possibility of sizeable additional costs for compliance in the future. These same requirements must also be met by the Company's competitors and, therefore, the costs for present and future compliance with these laws should not create a competitive disadvantage. Further, these laws have not had, and are not presently expected to have, a material adverse effect on the Company. The Company's operations or facilities have been and may become the subject of formal or informal enforcement actions or proceedings for alleged noncompliance with either environmental or worker health and safety laws or regulations. Such matters have typically been resolved through direct negotiations with the regulatory agency and have typically resulted in corrective actions or abatement programs. However, in some cases, fines or other penalties have been paid. Historically, neither such commitments nor such penalties have been material. Employees As of October 31, 1995, Harnischfeger Industries employed approximately 14,000 persons, of which approximately 8,800 were employed in the United States. Approximately 6,950 of the United States employees are represented by local unions under collective bargaining agreements with expiration dates from December 31, 1995 to August 4, 2000. Harnischfeger Industries believes that it maintains generally good relationships with its employees. Financial Information about Industry Segments The financial information on industry segments is presented in Note 15 to the Financial Statements incorporated by reference from the Company's Current Report on Form 8-K dated December 8, 1995. Item 2. Properties As of October 31, 1995, the following principal properties were owned, except as indicated. All of these plants are generally suitable for operations. Harnischfeger Industries owns a 120,000 square foot office building in Brookfield, Wisconsin, which is used as its worldwide corporate headquarters and is currently constructing a new corporate headquarters in St. Francis, Wisconsin. MINING EQUIPMENT LOCATIONS
Floor Space Land Area Plant and Location (Sq. Ft.) (Acres) Principal Operations - ------------------------- ----------- --------- -------------------------- Milwaukee, Wisconsin..... 1,067,000 46 Electric mining shovels, hydraulic mining excavators, electric and diesel-electric draglines and large rotary blasthole drills. Crane welding. Milwaukee, Wisconsin..... 180,000 13 Electrical products, heavy duty overhead and portal crane components and service parts warehouse. Crane assembly. Franklin, Pennsylvania... 714,640 63 Underground coal mining machinery, components and parts. Reno, Pennsylvania....... 121,400 22 Components and parts for mining machinery. Brookpark, Ohio.......... 85,000 4 Components and parts for mining machinery. Solon, Ohio.............. 96,800 14 Components and parts for mining machinery. Bluefield, Virginia...... 102,160 15 Duffield, Virginia....... 72,000 11 Homer City, Pennsylvania. 79,500 10 Mining machinery rebuild, service and parts sales. Meadowlands, Pennsylvania 118,316 13 Mt. Vernon, Illinois..... 107,130 12 Price, Utah.............. 44,200 6 New Philadelphia, Ohio... 277,600 17 Axial vane, and centrifugal fans, components and parts. Bassendean, Australia.... 75,500 5 Components and parts for mining shovels. Mt. Thorley, Australia... 20,000 6 Components and parts for mining shovels. Kurri Kurri, Australia.............. 264,000 1 Mining machinery rebuild, service and parts sales. Litigow, Australia....... 8,500 1 Parts sales for mining machinery parts sales. Moss Vale, Australia..... 764,150 18 Underground coal mining machinery, components and parts. Johannesburg, So. Africa................. 103,000 6 Components and parts for mining shovels. Johannesburg, So. Africa................. 44,000(1) 1 Electrical products and components for mining shovels. Steeledale, South Africa. 557,400 15 Underground coal mining machinery, components and parts. Belo Horizonte, Brazil... 37,700 1 Components and parts for mining shovels. East Kilbride, Scotland, U.K.................... 109,550 13 Underground coal mining machinery, Pinxton, U.K............. 42,000 2 components and parts - ------------------------- (1) Under a lease expiring in 2005.
This segment operates warehouses in Casper and Green River, Wyoming; Hibbing, Minnesota; Charleston and Pineville, West Virginia; Milwaukee, Wisconsin; Phoenix, Arizona; Elco, Nevada; Birmingham, Alabama; Carlsbad, New Mexico; Norton, Virginia; Lovely and Henderson, Kentucky; Hinton, Sparwood, Cornwall and Vancouver, Canada; Bayswater, Mt. Thorley, Gracemere and Mackay, Australia; Belo Horizonte, Brazil; Weiterstadt, Germany; Johannesburg, Wadeville and Hendrina, South Africa; Stobswood, United Kingdom and Puerto Ordaz, Venezuela. The warehouses in Casper, Hibbing, Milwaukee, Mt. Thorley, Belo Horizonte and Johannesburg are owned; the others are leased. In addition, the segment leases sales offices throughout the United States and in principal locations in foreign countries. P&H MATERIAL HANDLING LOCATIONS
Floor Space Land Area Plant and Location (Sq. Ft.) (Acres) Principal Operations - ----------------------- ----------- --------- ---------------------------- Milwaukee, Wisconsin..... 130,000 (1) 8 Remanufacture of overhead cranes, hoists and material handling equipment. Oak Creek, Wisconsin..... 277,000 36 Engineered and standard overhead cranes, hoists and material handling equipment. Loughborough, UK......... 420,000 36 Engineered and standard overhead cranes, hoists, controls and material handling equipment. Johannesburg, S. Africa.. 124,000 7 Engineered and standard overhead cranes, hoists and material handling equipment. Mexico City, Mexico...... 65,000 3 Engineered and standard overhead cranes, hoists and material handling equipment. Birmingham, Alabama...... 36,500 3 Standard overhead cranes and service. Missisauga, Canada....... 17,600 (2) 1 Manufacture of brakes. Singapore, Singapore..... 21,200 (3) 1 Standard overhead cranes and hoist distribution. (1) Under a lease expiring in 1996. (2) Under a lease expiring in 2000. (3) The land is under a lease expiring in 2024.
This division has leased facilities for its company owned Material Handling Centers in San Leandro, California; Pittsburg, California; Portland, Oregon; Reno, Nevada; Dallas, Texas; Houston, Texas; New Orleans, Louisiana; Chicago, Illinois; Detroit, Michigan; Pittsburgh, Pennsylvania; and Cleveland, Ohio. In addition, the division leases sales offices throughout the United States and in principal locations in foreign countries. It also has approximately 18 leased locations for service operations in the United Kingdom, Mexico and South Africa. PAPERMAKING MACHINERY AND SYSTEMS LOCATIONS
Floor Space Land Area Plant and Location (Sq. Ft.) (Acres) Principal Operations - ----------------------- ----------- --------- ------------------------------ Beloit, Wisconsin......... 928,000 40 Papermaking machinery and finished product processing equipment. Beloit, Wisconsin......... 230,000 15 Castings, pattern shop. Waukesha, Wisconsin....... 57,000 10 Castings, pattern shop and finished product processing. Waukesha, Wisconsin....... 76,000(1) 13 Refiner plate machining, finished product processing and warehousing. Rockton, Illinois......... 469,000 203 Papermaking machinery, finished product processing equipment and R&D center. South Beloit, Illinois.... 163,000 11 Castings. Dalton, Massachusetts..... 277,000 55 Stock and pulp preparation equipment and specialized processing systems. Lenox, Massachusetts...... 127,000 19 Winders. Pittsfield, Massachusetts........... 36,000 30 Research and development facility and pilot plant for process simulation. Aiken, South Carolina..... 92,000 17 Columbus, Mississippi..... 133,000 22 Rubber and polymeric covers for rolls; Federal Way, Washington... 55,000 3 rolls; rubber blankets; rubber linings Neenah, Wisconsin......... 77,000 10 and metal roll repairs. Clarks Summit, PA......... 88,000 10 Renfrew, Canada........... 145,000 22 Kalamazoo, Michigan....... 23,500 1 Filled rolls for supercalenders and specialty rolls. Portland, Oregon.......... 41,000 5 Bulk materials handling and drying systems. Rochester, New Hampshire.. 15,650 5 Specialty services provided principally to the paper industry. Pensacola, Florida........ 7,250 2 Specialty services provide principally to the paper industry. Sandusky, Ohio............ 254,000 13 Centrifugal castings. Glenrothes, United Kingdom 56,000 8 Centrifugal castings. Campinas, Brazil.......... 202,000 33 Papermaking machinery and finished product processing equipment; stock and pulp preparation equipment; woodyard and pulp plant equipment. Bolton, United Kingdom.... 465,400 73 Papermaking machinery and finished product processing equipment; stock and pulp preparation equipment. Pinerolo, Italy........... 517,400 18 Papermaking machinery and finished product processing equipment; stock and pulp preparation equipment. Jelenia Gora, Poland...... 522,000 40 Papermaking machinery and finished product processing equipment; stock and pulp preparation equipment. Swiecie, Poland........... 37,000 (2) 4 Components and parts for papermaking machinery equipment. Cernay, France............ 35,200 15 Roll-covering service.
- ------------------------- (1) Under a lease expiring in 2007. (2) Under a lease expiring in 2019. The Papermaking Machinery and Systems business has warehouse space at the above facilities and in addition maintains leased facilities in Memphis, Tennessee; Swiecie, Poland; and Montreal, Canada. Sales offices are also maintained at various locations throughout the world. Information relating to lease commitments is presented in Note 11 to the Financial Statements incorporated by reference from the Company's Current Report on Form 8-K dated December 8, 1995. Item 3. Legal Proceedings The Company is party to litigation matters and claims which are normal in the course of its operations and, while the results of litigation and claims cannot be predicted with certainty, management believes that the final outcome of such matters will not have a materially adverse effect on the Company's consolidated financial position or results of operations. The Company is also involved in a number of proceedings and potential proceedings relating to environmental matters. Although it is difficult to estimate the potential exposure to the Company related to these environmental matters, the Company believes that these matters will not have a materially adverse effect on its consolidated financial position or results of operations. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1995. Executive Officers of the Registrant The following table sets forth, through the date of filing this 10-K report, the executive officers of Harnischfeger Industries and its major subsidiaries, their ages, their offices with Harnischfeger Industries and the period during which they have held such offices.
Name Age Current Office and Principle Occupation - ---------------------------- --- ---------------------------------------- Jeffery T. Grade............ 52 Chairman of the Board and Chief Executive Officer since 1993; Chief Executive Officer since 1992; President and Chief Operating Officer since 1986; Director since 1983; Senior Vice President, Finance and Administration and Chief Financial Officer from 1983 to 1986. Francis M. Corby, Jr........ 51 Executive Vice President for Finance and Administration since December 1994; Senior Vice President, Finance and Chief Financial Officer from 1986 to December 1994. John Nils Hanson............ 53 Executive Vice President and Chief Operating Officer since July 1, 1995; President and Chief Executive Officer of Joy Mining Machinery 1990 to July 1995. K. Thor Lundgren............ 48 Executive Vice President for Law and Government Affairs since December 1994; Senior Vice President and General Counsel from 1991 to December 1994. Richard W. Schulze.......... 58 Senior Vice President and Special Assistant to the Chairman and CEO since December 1994; Senior Vice President, Human Resources and Public Relations from 1982 to December 1994. James C. Benjamin........... 43 Vice President and Controller since 1986. Ian Lambert................. 49 Vice President and Treasurer since 1989. Joseph A. Podawiltz......... 50 Vice President of Human Resources since February 1995.
Number of Years Name as Officer - ---------------------------- ---------- Jeffery T. Grade............ 13 Francis M. Corby, Jr........ 10 John Nils Hanson............ - K. Thor Lundgren............ 4 Richard W. Schulze.......... 14 James C. Benjamin........... 10 Ian Lambert................. 6 Joseph A. Podawiltz......... -
Mr. Lundgren joined the Company in September, 1991. Prior to joining the Company, Mr. Lundgren was a partner with the law firm of Michael, Best & Friedrich. Mr. Podawiltz joined the Company in February, 1995. Prior to joining the Company, Mr. Podawiltz was Vice President of Human Resources with the A.O. Smith Automotive Products Company. The business address of each such person is 13400 Bishops Lane, Brookfield, Wisconsin 53005. All officers listed above are citizens of the United States of America except for Mr. Lambert who is a citizen of the United Kingdom. Officers are elected annually but may be removed at any time at the discretion of the Board of Directors. There are no family relationships between the foregoing officers. PART II The information required by Items 6 through 8 is incorporated by reference from the Company's Current Report on Form 8-K dated December 8, 1995.
Form 10-K Item Number - ----------- Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters (filed in this report on Form 10-K) Item 6. Selected Financial Data for the Registrant for Each of the Last Five Fiscal Years Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 8. Financial Statements and Supplementary Data Item 9. Disagreements on Accounting and Financial Disclosure: None
PART III All information required by Items 10 through 13 of Part III, with the exception of information on the Executive Officers which appears in Part I of this report, is incorporated by reference from the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year. PART IV The information required by Item 14 is incorporated by reference from the 1995 Annual Report to Shareholders reported on the Company's Current Report on Form 8-K dated December 8, 1995.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following documents are filed as part of this report: (1) Financial Statements Statement of Income for the years ended October 31, 1995, 1994 and 1993 Balance Sheet at October 31, 1995 and 1994 Statement of Cash Flows for the years ended October 31, 1995, 1994 and 1993 Statement of Shareholders' Equity for the years ended October 31, 1995, 1994 and 1993 Notes to Financial Statements Report of Independent Accountants (2) Financial Statement Schedule For the Years Ended October 31, 1995, 1994 and 1993: II. Valuation and Qualifying Accounts
All other schedules are omitted because they are either not applicable or the required information is shown in the financial statements or notes thereto. Financial statements of 50% or less-owned companies have been omitted because the proportionate share of their profit before income taxes and total assets are less than 20% of the respective consolidated amounts and investments in such companies are less than 20% of consolidated total assets. (3) Exhibits
Exhibit Number Exhibit ------- ------------------------------------------------------------- 3(a) Certificate of Incorporation of Harnischfeger Industries, Inc. (incorporated by reference to Exhibit 3(a) of the Registration Statement on Form S-4, File No. 33-8821). (b) Bylaws of Harnischfeger Industries, Inc., as amended on December 11, 1995. (c) Certificate of Designations of Preferred Stock, Series D (incorporated by reference to Exhibit 28.1(b) to Registrant's Current Report on Form 8-K dated March 25, 1992). (d) Amendment to Certificate of Incorporation of Harnischfeger Industries, Inc. dated November 29, 1994(incorporated by reference to Exhibit 4.1(c) to Registration Statement on Form S-8, File No. 33-57209). 4(a) 9.1% Series A Senior Note Agreement dated as of September 15, 1989 (incorporated by reference to Exhibit 4(b) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1991, File No. 1-9299). (b) 9.1% Series B Senior Note Agreement dated as of October 15, 1989 (incorporated by reference to Exhibit 4(c) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1991, File No. 1-9299). (c) 8.95% Series C Senior Note Agreement dated as of February 15, 1991 (incorporated by reference to Exhibit 4(d) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1991, File No. 1-9299). (d) 8.9% Series D Senior Note Agreement dated as of October 1, 1991 (incorporated by reference to Exhibit 4(e) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1991, File No. 1-9299). (e) Indenture for Debentures issued March 3, 1992 between Harnischfeger Industries, Inc. and Continental Bank, National Association, Trustee, dated March 1, 1992 (incorporated by reference to Exhibit 4(f) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1992, File No. 1-9299). (f) First Supplemental Indenture for Debentures issued June 22, 1992 between Harnischfeger Industries, Inc. and Continental Bank, National Association, Trustee, dated June 12, 1992 (incorporated by reference to Exhibit 4(g) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1992, File No. 1-9299). (g) Registration Statement filed on Form S-3, for issuance of Debt Securities of up to $150,000,000 dated August 22, 1992, File No. 33-51436 (incorporated by reference to Exhibit 4(h) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1992, File No. 1-9299). (h) Rights Agreement dated as of February 8, 1989 between the Registrant and the First National Bank of Boston, as Rights Agent, which includes as Exhibit A the Certificate of Designations of Preferred Stock, Series D, setting forth the terms of the Preferred Stock, Series D; as Exhibit B the Form of Rights Certificate; and as Exhibit C the Summary of Rights to Purchase Preferred Stock, Series D (Incorporated by reference to Exhibit 1 to Registrant's Registration Statement on Form 8-A filed on February 9, 1989). (i) Harnischfeger Industries, Inc. Stock Employee Compensation Trust Agreement effective as of March 23, 1993 (incorporated by reference to Exhibit 4(k) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1993, File No.1-9299).* (j) Amendment One to Harnischfeger Industries, Inc. Stock Employee Compensation Trust Agreement dated January 1, 1994.* (k) Amendment Two to Harnischfeger Industries, Inc. Stock Employee Compensation Trust Agreement dated May 6, 1995.* (l) $240,000,000 Amended and Restated Credit Agreement dated as of November 25, 1994 among Harnischfeger Industries Inc. as borrower and financial institutions from time to time thereto as lenders, the First National Bank of Chicago and Royal Bank of Canada, as co-agents and Chemical Bank as Agent (incorporated by reference to Exhibit 4(k) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1994, File No. 1-9299). (m) Form of Indenture, dated as of September 1, 1993, between Joy Technologies Inc. and The Bank of Montreal Trust Company, as Trustee for Joy Technologies Inc.'s 10 1/4% Senior Notes due 2002(incorporated by reference to Exhibit 4.1 to Joy Technologies Inc.'s Report on Form 10-Q for the quarter ended August 27, 1993, filed October 7, 1993). 10(a) Harnischfeger Industries, Inc. 1988 Incentive Stock Plan, as amended on March 6, 1995.* (b) Deferred Compensation Plan (incorporated by reference to Exhibit 10.4 to Form S-1 Registration Statement of Harnischfeger Corporation, File No. 12-89771).* (c) Harnischfeger Industries Deferred Compensation Trust dated November 1, 1988 (incorporated by reference to Exhibit 10(d) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1988, File No. 01-9299).* (d) First Amendment of the Deferred Compensation Trust dated December 19, 1990.* (e) Harnischfeger Industries, Inc. Executive Incentive Plan, as amended as of October 9, 1995.* (f) Harnischfeger Industries, Inc. Supplemental Retirement and Stock Funding Plan, as amended as of October 9, 1995.* (g) Directors Stock Compensation Plan, as amended, as of October 9, 1995.* (h) Service Compensation Agreement for Directors effective as of June 1, 1992 (incorporated by reference to Exhibit 10(g) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1992, File No. 1-9299).* (i) Key Executive Employment and Severance Agreement, entered into as of October 8, 1995, between Harnischfeger Industries, Inc. and Jeffery T. Grade.* (j) Key Executive Employment and Severance Agreement, entered into as of October 8, 1995, between Harnischfeger Industries, Inc. and Francis M. Corby, Jr.* (k) Key Executive Employment and Severance Agreement, entered into as of October 8, 1995, between Harnischfeger Industries, Inc. and K. Thor Lundgren.* (l) Independent Consultant Agreement, entered into on June 16, 1995, between Harnischfeger Industries, Inc. and John A. McKay.* (m) Purchase and Sale Agreement by and among HEI Systems, Inc. and HEI Acquisition, Inc. and Harnischfeger Industries, Inc., dated as of October 28, 1993 (incorporated by reference to Exhibit 10(p) to Report of Harnischfeger Industries, Inc. on Form 10-K for the year ended October 31, 1993, File No. 1-9299). (n) Agreement and Plan of Merger, dated as of August 17, 1994 among Harnischfeger Industries, Inc., Harnischfeger Acquisition Corporation and Joy Technologies Inc. (incorporated by reference to Exhibit 2.1 to Registration Statement on Form S-4, File No.1-9299). (o) Joy Technologies Inc. 1991 Stock Option and Equity Incentive Plan dated November 12, 1991 (incorporated by reference to Exhibit 99-1999.1 to Registration Statement on For S-8, File No. 33-57209).* (p) Amendment to Joy Technologies Inc. 1991 Stock Option and Equity Incentive Plan dated November 29, 1994 (incorporated by reference to Exhibit 99-1999.2 to Registration Statement on Form S-8, File No. 33-57209).* 11 Statement Re Computation of Earnings Per Share. 13 1995 Annual Report to Shareholders (incorporated by reference on the Company's Current Report on Form 8-K dated December 8, 1995). 21 Subsidiaries of the Registrant. 23(a) Consent of Price Waterhouse LLP 23(b) Consent of Arthur Andersen LLP 24 Powers of Attorney. 27 Financial Data Schedule incorporated by reference from the Company's Current Report on Form 8-K dated December 8, 1995.
* Represents a management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. (b) Reports on Form 8-K (1) Current Report on Form 8-K dated September 1, 1995 relating to the Company's discussions with Dobson Park Industries plc concerning the possible acquisition of Dobson's outstanding shares. (2) Current Report on Form 8-K dated October 11, 1995 relating to Harnischfeger and The First National Bank of Boston, as Rights Agent, amending the Rights Agreement dated as of February 8, 1989. (3) Current Report on Form 8-K dated October 26, 1995 relating to Harnischfeger Industries news release announcing that the Dobson board unanimously recommended that its shareholders approve an offer by Harnischfeger Industries to purchase all of Dobson's outstanding shares. (4) Current Report on Form 8-K dated December 4, 1995 relating to the pro forma financial information relative to the acquisition of Dobson required pursuant to Article 11 of Regulation S-X and the Company's five-year historical computation of Ratio of Earnings to Fixed Charges. (5) Current Report on Form 8-K dated December 4, 1995 relating to the 1995 financial statements of Dobson. (6) Current Report on Form 8-K dated December 8, 1995 relating to the Company's filing of its fiscal 1995 financial statements and notes thereto, Management's Discussion and Analysis, and related schedules and exhibits. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brookfield, Wisconsin, on the 29th day of January, 1996. HARNISCHFEGER INDUSTRIES, INC. (Registrant) /s/FRANCIS M. CORBY, JR. Francis M. Corby, Jr. Executive Vice President for Finance and Administration Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on January 29, 1996.
Signature Title - ------------------------------------------ ------------------------------------ /s/JEFFERY T. GRADE Chairman and Chief Executive ------------------------- Officer Jeffery T. Grade /s/FRANCIS M. CORBY, JR. Executive Vice President for -------------------------- Finance and Administration Francis M. Corby, Jr. /s/JAMES C. BENJAMIN Vice President and Controller -------------------------- James C. Benjamin (1) Director -------------------------- Donna M. Alvarado (1) Director -------------------------- Larry D. Brady (1) Director -------------------------- John D. Correnti (1) Director -------------------------- Harry L. Davis (1) Director -------------------------- Robert M. Gerrity (1) Director -------------------------- Robert B. Hoffman (1) Director -------------------------- Ralph C. Joynes (1) Director -------------------------- Herbert V. Kohler, Jr. (1) Director -------------------------- Jean-Pierre Labruyere (1) Director -------------------------- Robert F. Schnoes (1) Director -------------------------- Donald Taylor
- ------------------------- (1) Jeffery T. Grade, by signing his name hereto, does hereby sign and execute this report on behalf of each of the above-named Directors of Harnischfeger Industries, Inc. pursuant to powers of attorney executed by each of such Directors and filed with the Securities and Exchange Commission as an exhibit to this report. January 29, 1996 By: /s/JEFFERY T. GRADE Jeffery T. Grade, Attorney-in-fact Item 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS THE ANNUAL MEETING The annual meeting of the shareholders of Harnischfeger Industries, Inc. will be held at Milwaukee's Wyndham Hotel, 139 E. Kilbourn Ave., on Tuesday, April 9, 1996 at 10:00 a.m. ANNUAL REPORT ON FORM 10-K Copies of the annual report on Form 10-K, filed with the Securities and Exchange Commission, will be available to shareholders after February 15, 1996 without charge on request to: Secretary Harnischfeger Industries, Inc. P.O. Box 554 Milwaukee, WI 53201-0554 Telephone: (414)797-6480 TRANSFER AGENT AND REGISTRAR Bank of Boston c/o Boston EquiServe Mail Stop 45-02-09 P.O. Box 644 Boston, MA 02102-0644 Telephone:(617)575-3400 MARKET AND OWNERSHIP OF COMMON STOCK The principal market for the Company's Common Stock is the New York Stock Exchange, where its trading symbol is HPH. As of October 31, 1995, the approximate number of holders of record of the Company's Common Stock was 2,100. In addition, there were an estimated 10,000 beneficial owners of shares held of record by brokers and fiduciaries. CORPORATE HEADQUARTERS 13400 Bishops Lane Brookfield, WI 53005 MAILING ADDRESS P.O. Box 554 Milwaukee, WI 53201-0554 SHAREHOLDER SERVICES Annual Report Requests and General Information Corporate Communication: (414)797-6626 FINANCIAL INFORMATION To obtain fax copies of recent financial press releases and quarterly statements on request, please call 1-800-758-5804 and use access code 396450 at the prompt. Our press releases are available on the World Wide Web at http.//www.prnewswire.com. Click on Company News On Call to find Harnischfeger. EX-10 2 Exhibit 10(a) HARNISCHFEGER INDUSTRIES, INC. 1988 INCENTIVE STOCK PLAN - --------------------------------------------------- (as amended March 6, 1995) ------------------------- HARNISCHFEGER INDUSTRIES, INC. 1988 INCENTIVE STOCK PLAN - --------------------------------------------------- Table of Contents ----------------- Article Page - -------- ---- 1 Introduction 1 1.1 Plan Name, Effective Date 1 1.2 Purpose 1 1.3 Plan Administrator 2 1.4 Company Shares Reserved for the Plan 2 2 Administration of the Plan 3 2.1 Plan Administrator 3 2.2 Plan Administrator's Powers 4 2.3 Actions by Plan Administrator 5 3 Plan Participants 6 3.1 Eligibility 6 3.2 Participation 7 3.3 Grant Date 8 4 Terms and Conditions of Options and Stock Appreciation Rights 8 4.1 Terms and Conditions of Options 8 4.2 Terms and Conditions of Stock Appreciation Rights 11 4.3 Method of Exercising Options and Stock Appreciation Rights 14 5 Terms and Conditions of Restricted Company Shares 15 5.1 Terms and Conditions of Restricted Company Shares 15 5.2 Vesting 15 5.3 Forfeitures 16 5.4 Issuance of Share Certificates 16 6 General Provisions 16 6.1 Stockholder Rights 16 6.2 Listing, Registration and Compliance with Laws and Regulations 17 6.3 Non-Transferability of Options, Stock Appreciation Rights, and Restricted Company Shares 18 6.4 Adjustments for Changes in Company Shares 18 6.5 Loan Agreement Restrictions 19 6.6 Indemnification 19 6.7 Withholding of Taxes 20 6.8 No Employment Rights Conferred 21 6.9 Notice of Early Disposition of Company Shares 21 6.10 Cancellation of Options 21 Article Page - ------- ---- 6.11 Continued Availability of Company Shares Under Unexercised Options and Forfeited Restricted Stock Grants 21 6.12 No Strict Construction 22 6.13 Choice of Law 22 6.14 Successors 23 6.15 Severability 23 7 Amendment and Termination 23 7.1 Amendment 23 7.2 Termination 24 HARNISCHFEGER INDUSTRIES, INC. 1988 INCENTIVE STOCK PLAN - --------------------------------------------------- ARTICLE 1 --------- Introduction ------------ 1.1 Plan Name, Effective Date. Harnischfeger Industries, Inc. 1988 Incentive Stock Plan (the "Plan") is established effective February 8, 1988 by Harnischfeger Industries, Inc. (the "Company"). 1.2 Purpose. The purpose of the Plan is to provide key employees of the Company and its subsidiaries with additional incentive to increase their efforts on the Company's behalf and to remain in or enter into the employ of the Company and its subsidiaries by granting to such employees from time to time, at the discretion of the plan administrator: (a) incentive stock options (within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code")) to purchase shares of common stock of the Company ("Company Shares"), (b) nonqualified stock options (meaning all options granted under the Plan which are not designated by the plan administrator at the time of grant as incentive stock options) to purchase Company Shares, (c) stock appreciation rights, but only in connection with incentive stock options and nonqualified stock options granted under the Plan, and (d) restricted Company Shares, according to the terms of Article 5. By virtue of the benefits available under the Plan, employees who are responsible for the future growth and continued success of the Company have an opportunity to participate in the appreciation in the value of Company Shares, which furnishes such employees with an additional incentive to work for and contribute to such appreciation through the growth and success of the Company. 1.3 Plan Administrator. As provided in Article 2, the Plan is administered by a committee of two or more members of the Board of Directors of the Company (the "plan administrator"). 1.4 Company Shares Reserved for the Plan. 3,480,000 Company Shares (which may be authorized and unissued shares or treasury shares and which number is subject to adjustment as provided in Section 6.4) shall be reserved for issuance under the Plan, reduced by the sum of the following: (i) all Company Shares which are purchased after 1987 upon the exercise of purchase options at any time granted under the Harnischfeger Industries, Inc. 1978 Incentive Stock Plan (the "1978 Plan") or this Plan, (ii) all Company Shares for which payment of incremental value is made after 1987 by reason of the exercise of stock appreciation rights at any time granted under the 1978 Plan or this Plan to the extent of a) the Company Shares received upon such exercise of stock appreciation rights and b) the number of Company Shares subject to incentive stock options granted in tandem with any such stock appreciation rights, (iii) the number of Company Shares determined by dividing the value of the cash or other consideration issued by the Company by reason of a surrender after 1987 of any option by the per share market value on the surrender date (provided that if a new option is substituted for a surrendered option, the new option will (regardless of the exercise price prescribed therein) be deemed to have a value of zero for purposes of this clause (iii)) and (iv) the number of restricted Company Shares granted and not forfeited. ARTICLE 2 --------- Administration of the Plan --------------------------- 2.1 Plan Administrator. The Plan is administered by a committee consisting of two or more directors of the Company appointed by the Board of Directors of the Company, each of whom has not, during the one year prior to or during service as an administrator of the Plan, been granted or awarded equity securities of the Company pursuant to the Plan or any other plan of the Company other than a plan meeting the requirements of paragraphs (c)(2)(i)(A)-(D) of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934 as amended. Subject to the foregoing, the Board of Directors of the Company shall have the power to determine the number of plan administrative committee members and to change such number from time to time. The Board of Directors may from time to time appoint members who qualify under the above criteria to the plan administrative committee in substitution for, or (where the number of members has been increased) in addition to, members previously appointed and may fill vacancies, however caused. Any plan administrative committee member may be removed by the Board of Directors at any time without cause. No individual may be appointed as a committee member who shall not be a director of the Company at the time of such appointment. An individual shall automatically cease to be a plan administrative committee member at the time such individual ceases to be a director of the Company. 2.2 Plan Administrator's Powers. Except as otherwise specifically provided and in addition to the powers, rights and duties specifically given to the plan administrator elsewhere in the Plan, the plan administrator shall have the following powers, rights an duties: (a) To determine (i) the key employees of the Company and its subsidiaries to whom restricted Company Shares, incentive stock options, nonqualified stock options and stock appreciation rights shall be granted (provided that no restricted Company Shares, option or stock appreciation rights may be granted to an individual at a time when the individual owns, or would own after the grant of such Company Shares or the exercise of such option, stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company), (ii) the time or times at which such restricted Company Shares, options and stock appreciation rights shall be granted (provided that no restricted Company Shares, options and no stock appreciation rights may be granted after January 31, 1998), and (iii) the number of Company Shares to be granted as restricted Company Shares or to be covered under each incentive stock option or nonqualified stock option and any related stock appreciation right granted under the Plan, provided that the aggregate number of Company Shares that may be granted from time to time to any participant under the Plan, whether as restricted Company Shares or to be covered under incentive stock options or nonqualified stock options, may not exceed 350,000 shares. The share equivalent (determined by dividing the applicable cash amount by the fair market value of a Company Share on the date of the applicable payment) of any cash received by a participant upon the exercise of stock appreciation rights granted under the Plan shall reduce the foregoing 350,000 limitation on a share for share basis. (b) To establish all of the terms and conditions governing the rights and obligations of a key employee with respect to any such restricted Company Shares, incentive stock option, nonqualified stock option or stock appreciation right granted to such employee, including but not limited to (i) the option price of Company Shares covered under each such option or stock appreciation right (which option price shall not be less than 100 percent of the fair market value of a Company Share on the date the applicable option is granted) and whether upon the exercise of an option such price may be paid in cash or Company Shares, or partially in each, (ii) the length of the period during which an option or stock appreciation right may be exercised, (iii) the time or times during each such applicable period when each option or stock appreciation right may be partially or fully exercised, including the power to accelerate the exercisability of any previously granted option or stock appreciation right, (iv) whether a stock appreciation right which has been exercised shall be partially or fully paid by the issuance of Company Shares, (v) any conditions precedent to be satisfied before an option or a stock appreciation right may be exercised, (vi) any restrictions on resale of any Company Shares received as restricted Company Shares or on exercise of an option or stock appreciation right and whether the Company shall have any repurchase rights with respect to such Company Shares, (vii) the form of the instruments evidencing any option or stock appreciation right granted under the Plan or effecting an exercise by a holder thereof of any option or stock appreciation right, and the form of the instruments evidencing the granting of restricted Company Shares, and (viii) the vesting schedule applicable to each grant of restricted Company Shares and whether the vesting schedule for a restricted Company Share shall be accelerated at any time. (c) To construe and interpret the Plan and the terms of restricted Company Shares, options and stock appreciation rights granted under the Plan, to adopt, amend and rescind such rules and regulations as may be necessary for the efficient administration of the Plan and as are consistent with its terms, and to remedy ambiguities, inconsistencies or omissions. Each action taken and decision made by the plan administrator within the scope of the authority delegated to it by this Plan or by the Board of Directors shall be binding and conclusive on all persons interested in the Plan. 2.3 Actions by Plan Administrator. The plan administrator shall hold its meetings at such times and places as it may determine and may make such rules and regulations for the conduct of its business as it considers advisable. A majority of the members of the plan administrative committee shall constitute a quorum and any action taken by a majority of the members present at a meeting at which a quorum of members is present shall be considered an act of the plan administrator. The plan administrator also may take fully effective actions by a written instrument signed by a majority of the members of the plan administrative committee. The plan administrative committee may select one of its members as its chairman and may appoint a secretary of the committee (who need not be a member of the committee). ARTICLE 3 --------- Plan Participants ----------------- 3.1 Eligibility. Each key employee of the Company and its subsidiaries shall be eligible to be designated by the plan administrator as the recipient of restricted Company Shares, an incentive stock option or nonqualified stock option and stock appreciation rights under the Plan. In making determinations as to the employees to be granted restricted Company Shares, options and stock appreciation rights, the plan administrator may take into account the nature of the services rendered or expected to be rendered by the respective employees, their present and potential contributions to the Company's success, the anticipated number of years of service remaining and such other factors as the plan administrator in its discretion considers relevant. The term "key employee" shall include officers as well as other employees of the Company and its subsidiaries (including employees who also are directors of the Company or one of its subsidiaries) who have managerial, supervisory, professional, engineering or similar responsibilities. Neither any member of the plan administrative committee nor any member of the Board of Directors who is not an employee of the Company or its subsidiaries shall be eligible to be granted an option, any stock appreciation rights or restricted Company Shares under the Plan. 3.2 Participation. The plan administrator may from time to time grant to key employees restricted Company Shares, incentive stock options to purchase Company Shares, nonqualified stock options to purchase Company Shares and, in addition at its sole discretion, stock appreciation rights in connection with such incentive stock options or nonqualified stock options. The plan administrator may grant more than one restricted Company Share, option or stock appreciation right to the same key employee. Each stock appreciation right granted under the Plan must be granted in connection with all or a portion of an incentive stock option or nonqualified stock option granted under the Plan. However, a stock appreciation right may be granted concurrently with the granting of an option or at any time thereafter during the term of the option; provided that at the time of such grant the individual to whom the stock appreciation right is granted is a key employee of the Company or of one of its subsidiaries. No restricted Company Share, option or stock appreciation right may be granted to any key employee who on the effective date of the grant is not in the employ of the Company or one of its subsidiaries. (Key employees who have received grants of restricted Company Shares or options under the Plan are sometimes referred to herein as "participants"). The Company will from time to time grant to such key employees as may be selected by the plan administrator the restricted Company Shares, options and stock appreciation rights designated to be granted by the plan administrator, subject to the terms and conditions established by the plan administrator and the terms and conditions herein provided. 3.3 Grant Date. The effective date of the grant of a restricted Company Share, option or stock appreciation right (the "grant date") shall be the date specified by he plan administrator in its determination or designation relating to the granting of such restricted Company Shares, option or stock appreciation right: provided that the plan administrator may not designate a grant date with respect to any restricted Company Shares, option or stock appreciation right which is earlier than the date on which the granting of such share, option or stock appreciation right is approved by the plan administrator. ARTICLE 4 --------- Terms and Conditions of Options and Stock Appreciation Rights - -------------------------------------------------- 4.1 Terms and Conditions of Options. As provided in Section 2.2, options granted under the Plan shall be in such quantity, at such price, subject to such terms and conditions and evidenced in such form as shall be determined from time to time by the plan administrator; provided that all options shall in any event be subject to the following terms and conditions: (a) Option Price. The option price per Company Share, which may be different in each case, shall be fixed by the plan administrator at or before the time the plan administrator approves the granting of the option. However, no option shall have an option price per Company Share of less than 100 percent of the fair market value of a Company Share on the grant date of the option. For this purpose "fair market value" of a Company Share as of any date shall be determined in such manner as shall be prescribed in good faith by the plan administrator; provided that in the absence of specific instructions by the plan administrator to the contrary, the fair market value of a Company Share as of any date shall be equal to the last per share sales price reported for a Company Share for such date in The Wall Street Journal or, if no sales of Company Shares are reported for such date in The Wall Street Journal, for the next succeeding date for which sales of Company Shares are so reported in The Wall Street Journal. (b) Term and Exercisability of Options. The term of each option granted under the Plan shall be for a period not exceeding ten years from the grant date, as established by the plan administrator at or before the time the plan administrator grants the option. No option shall be exercisable (i) during the first six full calendar months commencing on or after the grant date, (ii) following the exercise of a stock appreciation right related to such option (but only to the extent the stock appreciation right or portion thereof that has been exercised covered the same Company Shares that were covered by the option), or (iii) on or following the tenth anniversary of the grant date (or any earlier date which is the day following the last day of the term of the option). Unless the plan administrator determines otherwise in the original terms of an option, and subject to subsection (d) next below and other applicable provisions of the Plan, each option shall become exercisable in accordance with the following table based upon the number of full calendar months elapsed from the grant date of the option:
If the Number of Full The Percentage of Company Calendar Months Elapsed Shares Covered by the Option From the Grant Date Equals Which are Exercisable Shall Be - ------------------------- ----------------------------- Less than 6 months 0 At least 6 months but less than 18 months 25% At least 18 months but less than 30 months 50% At least 30 months but less than 42 months 75% 42 months or more 100%
Further, unless the plan administrator determines otherwise, in the case of a participant who will reach his "normal retirement date" (as defined in Harnischfeger Corporation Salaried Employees Retirement Plan) less than 42 months from the grant date of an option, the number of Company Shares which shall become exercisable at the beginning of each twelve calendar month period subsequent to the initial six calendar month period commencing on or following the grant date shall be the total number of Company Shares specified in the option multiplied by a fraction, the numerator of which is 100% and the denominator of which is the whole number (but not less than one) of complete twelve month periods between the date following such initial six calendar month period and the participant's normal retirement date. (c) Special Incentive Stock Option Terms. The terms of each incentive stock option granted under the Plan shall include those terms which are required by Section 422 of the Code and such other terms not inconsistent therewith as the plan administrator may determine. Each option which is designated by the plan administrator as an incentive stock option shall be considered to have contained from the outset such terms and provisions as shall be necessary to entitle such intended incentive stock option to the tax treatment afforded by the Code to incentive stock options under Section 422 of the Code. If any agreement covering such an intended incentive stock option granted under the Plan does not explicitly include any terms required to entitle such intended incentive stock option to the tax treatment afforded by the Code to incentive stock options, then all of such required terms and provisions shall be considered implicit in such agreement and such intended incentive stock option shall be considered to have been granted subject to such required terms and conditions. (d) Early Terminations of Options. If a participant ceases to be employed by the Company and all of its subsidiaries prior to the end of the six full months commencing on the grant date of an option, the option shall terminate effective as of the date of the participant's termination of employment and no portion of the terminated option shall be exercisable after that date. If a participant's termination of employment occurs following the six full months commencing on or after the grant date of an option the following shall apply with respect to such option: (i) Except as provided in (iii) and (iv) below, the participant shall, during the three months commencing on his date of termination of employment, have the right at his discretion to partially or fully exercise the unexercised portion of the option which was exercisable at the time of his termination of employment. (ii) If a participant shall die prior to his termination of employment or following his termination of employment but within the three month period described in subparagraph (i) next above, the unexercised portion of the option which was exercisable at the time of the participant's death may be partially or fully exercised within the twelve month period commencing on the date of the participant's death by the participant's estate or by any person who has acquired the right to exercise such option by bequest or inheritance or by reason of the laws of descent and distribution. (iii) If a participant's employment is terminated by the Company or any of its subsidiaries for cause, any unexercised portion of an option granted to the participant shall terminate effective as of the participant's date of termination of employment and no portion thereof shall be exercisable thereafter. For this purpose, termination "for cause" means termination as a result of the failure of the participant to carry out the duties assigned to him as a result of his incompetence, willful neglect or willful serious misconduct, as determined by the Company. (iv) Notwithstanding the foregoing, the unexercised portion of any option shall, to the extent permitted by applicable law, terminate immediately upon the employment of a participant by a competitor of the Company or of one of its subsidiaries. 4.2 Terms and Conditions of Stock Appreciation Rights. As provided in Section 2.2, stock appreciation rights granted under the Plan shall be subject to such terms and conditions and shall be evidenced by agreements in such form as shall be determined from time to time by the plan administrator. In general (i) stock appreciation rights shall be exercisable at such time or times and to the extent that the incentive stock option or nonqualified stock option, or portion thereof, to which the stock appreciation right is related is exercisable, and (ii) upon the termination, exercise or expiration of an option or portion thereof to which a stock appreciation right is related, such stock appreciation right shall terminate and shall not thereafter be exercisable. However, notwithstanding that the option or portion thereof related to a stock appreciation right may be exercisable, each stock appreciation right may be exercised only during a window period (as described below), a stock appreciation right may not be exercised until after the end of the six full calendar months commencing on or after the date such stock appreciation right is granted (except that this limitation shall not apply in the case of the death or disability of a participant if the option or portion thereof to which the stock appreciation right is related is exercisable) and a stock appreciation right related to an incentive stock option shall not be exercisable on any date on which the fair market value of a Company Share is less than the option price provided for in the related incentive stock option. A stock appreciation right granted to a participant shall entitle the participant upon his exercise of such right to surrender the related option or portion thereof and receive an amount (herein called the "incremental value") equal to the excess of the fair market value on the date of such exercise of the Company Shares subject to such surrendered option or portion thereof over the option price of such Company Shares as provided in such option. The incremental value shall be paid by the Company all in cash, all in Company Shares or in any combination of cash and Company Shares, as the plan administrator shall determine in its sole discretion, which determination shall be made after considering any preference expressed by the participant exercising the stock appreciation right. Any participant who wishes to express such a preference shall notify the plan administrator in writing of his preference and, if such participant expresses a preference to receive cash in whole or in part, such writing shall be delivered to the Company, in care of the plan administrator, during the period (hereinafter the "window period") beginning on the third business day following the date of release for publication of an annual or quarterly summary statement of the sales and earnings of the Company and its consolidated subsidiaries and ending on the twelfth business day following such date. In the event a participant does not duly notify the plan administrator of any preference, and in the absence of any express determination by the plan administrator to the contrary, each payment of incremental value which shall become due by reason of any exercise of a stock appreciation right shall be made in cash. In the event any Company Shares shall be delivered to satisfy all or any part of any incremental value obligation arising by reason of any exercise of a stock appreciation right, the dollar amount of such obligation satisfied by such delivery of Company Shares shall be considered to be equal to the fair market value of a Company Share as of the date of exercise multiplied by the number of Company Shares delivered. No fractional Company Shares shall be issued to make any payment of incremental value, and the cash and Company Shares payable in each case shall be adjusted in such manner as shall be prescribed by the plan administrator to avoid the issuance of any fractional Company Shares. Upon exercise of a stock appreciation right and surrender of the related option or portion thereof, such option, to the extent surrendered, shall be considered to have been exercised and shall not thereafter be exercisable, and to the extent Company Shares covered under the option have not been used to pay the incremental value, such Company Shares shall no longer be reserved under the Plan. 4.3 Method of Exercising Options and Stock Appreciation Rights. An option shall be exercised by a written notice to the plan administrator and payment of the option price to the Company, in care of the plan administrator. Payment of the option price may be made, at the discretion of the optionee, (i) in cash (including check, bank draft, or money order), (ii) by delivery of Company Shares (valued at the fair market value thereof on the date of exercise) or (iii) by delivery of a combination of cash and common stock provided, however, that the plan administration may, in any instance, in order to prevent any possible violation of law, require the option price to be paid in cash and further provided that the right to deliver Company Shares in payment of the option price may be limited or denied in any option agreement. A stock appreciation right shall be exercised by written notice to the plan administrator at such time as is permitted in accordance with the provisions of Section 4.2 and by surrender of the option or portion thereof to which the stock appreciation right relates. At the time or exercise of an option or stock appreciation right a participant may request that Company Shares to be issued with respect to the exercise of the option or which may be issued with respect to the exercise of the stock appreciation right be issued in the name of the participant and another person jointly with right of survivorship. ARTICLE 5 --------- Terms and Conditions of Restricted Company Shares - ------------------------------------------------- 5.1 Terms and Conditions of Restricted Company Shares. As provided in Section 2.2, Company Shares granted under the Plan shall be subject to such terms, conditions and restrictions, and shall be evidenced by such agreements as shall be determined from time to time by the plan administrator. All grants of Company Shares shall in any event be subject to the following terms, conditions and restrictions: (a) The purchase price, if any, will be determined by the plan administrator. (b) Restricted Company Shares may be subject to restrictions on the sale or other disposition thereof, rights of the Company to reacquire such restricted Company Shares at the purchase price, if any, originally paid therefor upon termination of the employee's employment within specified periods, representation by the employee that he or she intends to acquire restricted Company Shares for investment and not for resale, and such other restrictions, conditions and terms as the plan administrator deems appropriate. (c) The participant shall be entitled to all dividends paid with respect to restricted Company Shares during the period of restriction and shall not be required to return any such dividends to the Company in the event of the forfeiture of the restricted Company Shares. (d) The participant shall be entitled to vote the restricted Company Shares during the period of restriction. (e) The plan administrator shall determine whether restricted Company Shares are to be delivered to the participant with an appropriate legend imprinted on the certificate or if the shares are to be deposited in escrow pending removal of the restrictions. 5.2 Vesting. Each participant shall be vested in the Company Shares granted under this Article 5 according to such schedule and such performance factors affecting vesting as the plan administrator determines at the time of grant. As provided in Section 2.2, the plan administrator shall have the power to accelerate the vesting schedule. Whenever the term "vested" or "fully vested" are used in this Plan with reference to restricted Company Shares, the meaning of those terms shall be determined by reference to the vesting schedule. 5.3 Forfeitures. If a participant terminates employment before his Company Shares are vested or before fulfillment of the applicable performance factors, the participant shall forfeit such Company Shares under terms established by the plan administrator and they shall again be available for issuance under Section 1.4. 5.4 Issuance of Share Certificates. Share certificates for the number of restricted Company Shares granted will be issued in the name of each participant at the time of grant and shall be delivered pursuant to subsection 5.1(e). A participant may request that Company Shares be issued in the name of the participant and another person jointly with right of survivorship. ARTICLE 6 --------- General Provisions ------------------ 6.1 Stockholder Rights. A participant shall not have any dividend, voting or other stockholder rights by reason of a grant of an option or a grant of a stock appreciation right prior to the issuance of any Company Shares pursuant to the proper exercise of all or any portion of such option or stock appreciation right. A participant shall have dividend, voting and other stockholder rights with respect to restricted Company Shares except as provided in Section 6.3 or otherwise provided at the time of grant. 6.2 Listing, Registration and Compliance with Laws and Regulations. Each restricted Company Share, option and stock appreciation right granted to a participant shall be subject to the condition that the Company shall not be obligated to issue any Company Shares to the participant regardless of whether such participant attempts to exercise or has exercised the option or stock appreciation right, in whole or in part, if at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of Company Shares subject to such grant, option or stock appreciation right upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition or, or in connection with, the granting of such restricted Company Share, option or stock appreciation right or the issue or purchase of Company Shares thereunder unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. The Company shall not by reason of the granting of any restricted Company Share, option or stock appreciation right under this Plan have any obligation to register the Company Shares subject to such option under the Securities Act of 1933, as amended, or to maintain in effect any registration of such Company Shares which may be made at any time under such Act. In this connection, the form of restricted Company Share, stock option and stock appreciation right agreements to be used under the Plan may provide, among other things, that a participant shall represent that all Company Shares are being purchased for investment and not with a view to resale in connection with a distribution of such Company Shares. 6.3 Non-transferability of Options, Stock Appreciation Rights and Restricted Company Shares. During a participant's lifetime any option or stock appreciation right granted under the Plan shall be exercisable only by the participant and shall not be transferred (except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder), pledged or hypothecated in any way and shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of an option or stock appreciation right, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the rights and privileges conferred hereby, such option or stock appreciation right shall immediately become null and void. Company Shares granted under the provisions of Article 5 shall not be transferred until such Shares have become fully vested and nonforfeitable, and any attempt to sell, assign, pledge, hypothecate or otherwise encumber such Shares shall result in their forfeiture according to the terms of Section 5.3. 6.4 Adjustments for Changes in Company Shares. In order to prevent dilution or enlargement of restricted Company Shares, options or stock appreciation rights, in the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or other change in Company Shares, the Board of Directors shall make appropriate changes in the aggregate number and type of Company Shares reserved for grant as restricted Company Shares, options and stock appreciation rights under this Plan, in the number and type of Company Shares subject to grant as restricted Company Shares and subject to unexercised options and stock appreciation rights, in the option price per Company Share specified in unexercised options and in stock appreciation rights relating to unexercised options. 6.5 Loan Agreement Restrictions. Each option and stock appreciation right shall be subject to the condition that the Company shall not be obliged to (i) issue any Company Shares to a participant, regardless of whether such participant attempts to exercise or has exercised an option or stock appreciation right, in whole or in part, or (ii) make any payment to a participant upon the surrender of a stock appreciation right, if at any time the Board of Directors shall determine, in its discretion, that the issuance of such Company Shares or the payment of cash would be in violation of any covenant contained in any of the Company's loan agreements or other contracts, as now or from time to time hereafter in effect. 6.6 Indemnification. No member of the plan administrative committee shall be liable, in the absence of bad faith, for any act or omission with respect to his service on the committee relating to the Plan. Service on the plan administrative committee shall constitute service as a director of the Company so that members of the plan administrative committee shall be entitled to indemnification and reimbursement as directors of the Company to the full extent provided for at any time by law, the Company's Certificate of Incorporation, the Company's By-Laws and in any insurance policy or other agreement intended for the benefit of the Company's directors. 6.7 Withholding of Taxes. The Company shall be entitled, if the plan administrator considers it necessary or desirable, to withhold (in cash or Company Shares), or secure payment from the participant in lieu of withholding, the amount of any withholding or other payment required of the Company under the tax withholding provisions of the Code, any state's income tax act or any other applicable law with respect to any amount payable and Company Shares issuable under such participant's exercised options or stock appreciation rights or as restricted Company Shares, provided, however, that with respect to any Section 16 Officer (as defined below) any decision by the Company to withhold Company Shares and any withholding of Company Shares by the Company from a Section 16 Officer shall only be made during a window period and provided further that no Company Shares shall be withheld under the provisions of this Section 6.7 that are issuable under options, stock appreciation rights or restricted stock granted to the Section 16 Officer less than six months before the date either the decision to withhold or the withholding is to take place. A Section 16 Officer is a participant who is or at any time during the prior six months has been designated by the Company as a Section 16 Officer for purposes of Section 16 of the Securities Exchange Act of 1934. Subject to the discretion of the Company, no distribution will be made to the participant until all tax withholding obligations have been satisfied and, if Company Shares are withheld pursuant to this Section 6.7, until the window period during which the Company Shares are withheld. 6.8 No Employment Rights Conferred. Nothing in the Plan or in any option, stock appreciation right or restricted Company Share granted under the Plan shall confer any right on an employee to continue in the employ of the Company or any subsidiary or shall interfere in any way with the right of the Company or any subsidiary at any time to terminate his employment with or without cause or to adjust his compensation. 6.9 Notice of Early Disposition of Company Shares. As a condition of participation in the Plan each participant agrees that he will give prompt notice to the plan administrator of any disposition of Company Shares acquired upon the exercise of an incentive stock option if such disposition occurs within either two years after the grant date of an incentive stock option or one year after the receipt of such Company Shares by the participant following his exercise of the incentive stock option. 6.10 Cancellation of Options. By express written agreement a participant and the plan administrator may agree that any previously granted option is thereby canceled as of the date of the agreement and, at its discretion, the plan administrator may subsequently grant to such a participant who has voluntarily surrendered and canceled a prior option one or more new or substitute similar or different options under the plan. 6.11 Continued Availability of Company Shares Under Unexercised Options and Forfeited Restricted Stock Grants. If an option granted under the Plan terminates or expires without being wholly exercised, if Company Shares as to which an option has been exercised shall for any reason not be issued, or if restricted Company Shares are forfeited, restricted Company Shares or a new option (and at the discretion of the plan administrator a related stock appreciation right) may be granted under the Plan covering the number of Company Shares to which such termination, expiration, forfeiture, failure to issue or reacquisition relates; provided, however, that to the extent Company Shares are issued in connection with the exercise of a stock appreciation right or a stock appreciation right granted in connection with an incentive stock option is exercised, the related option shall, solely for purposes of determining the total number of Company Shares available for grant under the Plan, be deemed to have been exercised, and the Company Shares issued upon the exercise of such stock appreciation right or which otherwise would have been issued upon the exercise of an incentive stock option related to such stock appreciation right shall not thereafter be available for any further grants under the Plan. 6.12 No Strict Construction. No rule of strict construction shall be applied against the Company, the plan administrator or any other person in the interpretation of any of the terms of the plan, any option agreement or stock appreciation right agreement or restricted Company Share agreement, any option or stock appreciation right or restricted Company Share granted under the plan or any rule or procedure established by the plan administrator. 6.13 Choice of Law. Each option, stock appreciation right, and restricted Company Share granted under the Plan shall be considered to be a contract under the laws of the State of Wisconsin and, for all purposes, the Plan and each option, stock appreciation right, and restricted Company Share granted under the Plan shall be construed in accordance with and governed by the laws of the State of Wisconsin. 6.14 Successors. This Plan is binding on and will inure to the benefit of any successor to the Company, whether by way of merger, consolidation, purchase or otherwise. 6.15 Severability. If any provision of the Plan or an option or stock appreciation right or restricted Company Share agreement shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan or such agreement, and the Plan and such agreement shall each be construed and enforced as if the invalid provisions had never been set forth therein. ARTICLE 7 --------- Amendment and Termination ------------------------- 7.1 Amendment. The Board of Directors may amend the Plan from time to time, in its sole discretion, but no amendment shall: (a) without a participant's consent impair his rights to any option or stock appreciation right or restricted Company Share theretofore granted; or (b) without the authorization and approval of the Company's stockholders (i) increase the maximum number of Company Shares which may be issued in the aggregate under the Plan, except as provided in Section 6.4, (ii) extend the termination date of the Plan or of any option or stock appreciation right granted under the Plan, or (iii) enlarge the class of employees eligible to receive options or stock appreciation rights or restricted Company Shares under the Plan. 7.2 Termination. The Board of Directors may terminate the Plan at any time with respect to Company Shares which have not theretofore been granted or for which options have not theretofore been granted. Unless earlier terminated, the Pan will terminate at the close of business on January 31, 1998. Following the termination of the Plan, all options or stock appreciation rights which prior to the Plan termination have not expired, terminated or been exercised or surrendered may be exercised in accordance with their terms and the terms hereof, all restricted Company Shares which have been granted may vest or be forfeited in accordance with the terms of their grant and the terms hereof, and the plan administrator shall continue to have its full powers under the Plan, except with respect to the granting of restricted Company Shares, options or stock appreciation rights under the Plan. Exhibit 10(d) HARNISCHFEGER INDUSTRIES, INC. DIRECTORS STOCK COMPENSATION PLAN (as amended and restated October 9, 1995) 1. Purpose. The Harnischfeger Industries, Inc. Directors Stock Compensation Plan (the "Directors Plan") has been established effective as of March 2, 1992 by Harnischfeger Industries, Inc., a Delaware corporation (the "Company"), to provide benefits to certain members of the Board of Directors of the Company (the "Board"). The Directors Plan is intended to assist and enable the Company to attract and retain directors of the highest capabilities and to facilitate the director's ability to acquire an ownership interest in the common stock of the Company. 2. Administration. The Chairman of the Board of Directors shall have the full power and authority to construe, interpret and administer the Plan and shall promulgate such rules and procedures as he considers necessary and appropriate for the implementation and administration of the Plan. 3. Eligibility. Effective on and after March 2, 1992, each member of the Board who serves on the Board as a director at any time after March 2, 1992, and who is not an employee of the Company (herein "Director") is eligible to participate in the Plan. 4. Participation. As of March 2, 1992, each Director shall have the right to have up to 100% of such Director's annual retainer and meeting fees (including fees for committee meetings) (collectively, the "Compensation") payable during the period beginning March 2, 1992 and ending October 31, 1992 (the "Initial Period") and the 12 month period beginning each November 1st starting with November 1, 1992 ("Plan Year") converted into shares of the Company's common stock ("Stock") and delivered into the Harnischfeger Industries Deferred Compensation Trust ("Rabbi Trust") for the benefit of such Director subject to the following terms: (a) Written notice shall be given by a Director to the Company prior to March 3, 1992 for the Initial Period and annually prior to May 1 of each subsequent Plan Year stating that such Director elects to convert into Stock up to 100% of such Director's Compensation payable during the Initial Period or the next Plan Year respectively. Directors who become Directors on or after May 1 of any Plan Year may by written notice to the Company elect to covert their Compensation into Stock under the Directors Plan effective six months after the date such notice is delivered to the Company. (b) As soon as practicable after each date determined by the Company for payment of compensation to Directors, the number of shares of Stock (rounded to the nearest whole share) derived by dividing the closing price of the Stock on the New York Stock Exchange Composite Tape on such payment date into the amount of Compensation each Director has elected to convert into Stock shall be delivered into the Rabbi Trust for the benefit of such Director. (c) The annual retainer fee for Directors shall be $22,600.00, the fee for each Board meeting attended shall be $1,250.00 and the fee for each meeting of a committee or subcommittee of the Board attended shall be $1,000.000 for regular members and $1,250.00 for committee and subcommittee chairs, provided that, subject to Section 15 hereof, the amount of such fees may be changed at the discretion of the Company from time to time. 5. Source of Stock. The Stock allocated to each Director's account pursuant hereto may at the Company's option be acquired through open market purchase, or may be either treasury shares or newly issued shares; provided that any treasury or newly issued shares are duly registered pursuant to applicable federal and state securities laws and stock exchange regulations. The Company may, in lieu of delivering shares to the trustee of the Rabbi Trust (the "Trustee"), direct the Trustee to use for the purposes of this Directors Plan shares of Stock previously delivered by the Company to the Rabbi Trust if such shares have not been allocated to the account of any Directors Plan participant. Although the Company intends to exert its best efforts so that the shares allocated or distributed to Directors hereunder will be registered under, or exempt from the registration requirements of, the Securities Act of 1933 (the "Securities Act") and any applicable state securities laws, if the allocation or distribution would otherwise result in the violation by the Company of any provision of the Securities Act or of any state securities law, the Company may require that such allocation or distribution be deferred until the Company has taken appropriate action to avoid any such violation. 6. Participants' Accounts. An account shall be maintained in the name of each Director participating in the Plan which will reflect the shares of Stock into which his Compensation has been converted, and shall be credited to reflect all dividends, stock splits and other distributions with respect to such shares. All cash distributions with respect to Stock shall be invested by the Trustee in shares of Stock through open market or other appropriate purchases as soon as practicable after receipt of same. Each such Stock account shall be charged with any distribution made to a Director when made. 7. Distribution of Stock. The Stock in a Director's account shall be distributed to him (or to his beneficiary in the event of his death) promptly (but not sooner than sixty (60) days) following the termination of his status as a Director of the Company; provided, however, that a Director may upon written notice to the Company given one year prior to his termination, request that the Company approve an annual distribution of such Stock over a period of time not to exceed ten (10) years (e.g. if a ten year election, one tenth of the balance at the time of the first distribution, one ninth of the balance at the time of the second distribution, etc.) and provided further that a Director may upon written notice to the Company given at least one year prior to termination of his status as a Director elect to delay until the next calendar year following termination of his status as a Director either the distribution of or, if the Director has elected annual distributions over a period of time, the initial distribution from his account. During the first fifty (50) days following a Director's termination, the Director (or the Director's beneficiary in the event of the Director's death) shall have the right to elect to have the Director's account distributed in cash, stock or a combination of cash and stock. Upon receipt of a request that a part or all of the distribution be made in cash, the Company shall direct the Trustee to credit such Participant's account with an amount (the "Cash Portion") equal to the product of the number of shares of Stock then credited to Participant's account necessary to comply with the request (the "Diversified Shares") and the closing price of the Stock on the New York Stock Exchange Composite Tape as of the date the request is received by the Company. Thereafter, the Trustee shall keep such Participant's account as if the Cash Portion were invested in cash, cash equivalents, mutual funds or marketable securities as directed by the Commitee from time to time and as if the Diversified Shares had been sold. 8. Disposition After Distribution. Notwithstanding any other provision herein, upon any distribution to a Director pursuant to Section 7 which occurs within six months after an allocation pursuant to Section 4 or 6, the Director agrees, as a condition to participation, to refrain from disposing of any such distributed stock until six months have elapsed from the Section 4 or 6 allocation. 9. Change in Control. Notwithstanding the foregoing, in the event of a "Change in Control" of the Company (as defined in the Rabbi Trust), the Company shall purchase for cash all shares of Stock then in all Directors' accounts which have been held in such accounts for at least six months at a per-share price equal to the the Change in Control Price, and the Trustee is directed to sell such shares upon such terms. Thereafter, with regard to any shares which have not been held in such accounts for at least six months, the Company shall purchase such shares for cash as soon as they have been held in such accounts for at least six months. Immediately after the Company purchases any shares pursuant to this Section 9, the Committee shall cause the Trustee to effect a distribution of all cash proceeds to the Directors in accordance with their accounts. As used herein, "Change in Control Price" means the higher of (i) the highest reported sales price, regular way, of a share of Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national securities exchange on which such shares are listed or on NASDAQ, as applicable, during the 60-day period prior to and including the date of a Change in Control and (ii) if the Change in Control is the result of a tender or exchange offer or a Business Combination (as defined in the Rabbi Trust), the highest price per share of Stock paid in such tender or exchange offer or Business Combination. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined by the Incumbent Board (as defined in the Rabbi Trust). 10. Designation of Beneficiaries. Each Director from time to time may name any person or persons (who may be named concurrently, contingently or successively) to whom his benefits under the Plan are to be paid if he dies before he receives the proceeds of his Directors Plan account. Each such beneficiary designation will revoke all prior designations by the Director, shall not require the consent of any previously named beneficiary, shall be in a form prescribed by the Company, and will be effective only when filed with the Company during the Director's lifetime. If a Director fails to designate a beneficiary before his death, as provided above, or if the beneficiary designated by a Director dies before the date of the Director's death or before complete payment of the Director's Stock Compensation Plan account, the Company, in its discretion, may pay such benefits to either (i) one or more of the Director's relatives by blood, adoption or marriage and in such proportions as the Company determines, or (ii) the legal representative or representatives of the estate of the last to die of the Director and his designated beneficiary. 11. General. No Director or other person shall have any right, title or interest in any amount awarded under this Plan prior to the payment thereof to such person. No rights or interests of Directors under this Plan shall be assignable either voluntarily or involuntarily. Neither the Company nor any officer of the Company shall be personally liable for any act done or omitted to be done in good faith in the administration of the Plan. 12. Facility of Payment. When a person entitled to benefits under the Plan is under legal disability, or, in the Company's opinion, is in any way incapacitated so as to be unable to manage his affairs, the Company may direct the payment of benefits to such person's legal representative, or to a relative or friend of such person for such person's benefit, or the Company may direct the application of such benefits for the benefit of such person. Any payments made in accordance with the preceding sentence shall be a full and complete discharge of any liability for such payment under the Plan. 13. Withholding for Taxes. Notwithstanding any other provision of the Plan, the Company may on behalf of the Directors withhold or direct the Trustee to withhold from any payment to be made under the Directors Plan, whether in the form of cash or stock, such amount or amounts as may be required for purposes of complying with applicable federal, state or foreign tax withholding provisions, provided, however, that any decision by the Company to withhold stock and any withholding of stock by the Trustee from the account of a Director shall only be made during the window period (as defined below) and provided further that no stock that has been held in the account of a Director for less than six months shall be withheld under the provisions of this Section 13. A window period shall be the period beginning on the third business day following the date of release for publication of an annual or quarterly summary statement of the sales and earnings of the Company and its consolidated subsidiaries and ending on the twelfth business day following such date. Subject to the discretion of the Company, no distribution will be made to the Director until all tax withholding obligations have been satisfied and, if stock is withheld pursuant to this Section 13, until the window period during which the Stock is withheld. 14. Benefit Statements. The Company shall provide statements of account to participating Directors on a periodic basis but not less than annually in such form and at such time as it deems appropriate. 15. Amendment and Termination. The Board of Directors of the Company hereby reserves the right to amend this Plan from time to time and to terminate this Plan at any time, except that (i) no such amendment or any termination of this Plan shall change the terms and conditions of payment of any Compensation previously payable to a Director without the consent of the Director concerned, nor shall any termination of the Plan eliminate any obligations of the Company which theretofore shall have arisen under the Plan and (ii) neither the provisions dealing with the reinvestment of cash distributions nor the amount of fees payable to Directors may be changed more than once every six months other than to conform with changes in the Internal Revenue Code, the Employee Retirement Income Security Act or any rules promulgated thereunder. 16. Controlling Law. The laws of Wisconsin shall be controlling in all matters relating to the Plan. 17. Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the plural shall include the singular and the singular shall include the plural. - ------------------------------------------------- Exhibit 10(e) HARNISCHFEGER INDUSTRIES, INC. EXECUTIVE INCENTIVE PLAN (as amended and restated October 9, 1995) 1. Purpose. Harnischfeger Industries, Inc. Executive Incentive Plan (the "Plan") was established by Harnischfeger Industries, Inc. (the "Company") effective as of October 30, 1990 to provide as an incentive the possibility of payment of additional compensation to or on behalf of the key officers of the Company and its subsidiaries who contribute materially to the success and profitability of the Company and who become participants in the Plan. 2. Administration. The Plan will be administered by a committee of two or more directors, each of whom has not, during the one year prior to or during service as an administrator of the Plan, been granted or awarded equity securities of the Company pursuant to the Plan or any other plan of the Company other than a plan meeting the requirements of paragraphs (c)(2)(i)(A)-(D) of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934 as amended (the "Committee"), which Committee from time to time may delegate the performance of certain of its ministerial duties under the Plan, such as the keeping of records and participants' accounts, to such person or persons as it may select. The Plan shall be administered on the basis of a plan year (the "Plan Year") which coincides with the fiscal year of the Company, which currently is the 12-month period beginning on November 1 and ending on the next following October 31. The Company shall pay the cost of Plan administration. The Committee shall have the power, right and duty to interpret the provisions of the Plan and may from time to time adopt rules with respect to the administration of the Plan and the determination and distribution of benefits under the Plan, and may amend any and all rules previously established. Any decision made by the Committee in good faith in connection with its administration of or responsibilities under the Plan, including the interpretation of any provision of the Plan, the application of any rule established under the Plan, any determination as to the officers eligible to participate in the Plan for any Plan Year, the amount allocated to each for any Plan Year and the manner, conditions and terms of payment of such amount, shall be conclusive on all persons. 3. Participation: Prior to October 1 of each Plan Year, the Committee shall select those executives who will be participants in the Plan for the following Plan Year. The inclusion or selection of any executive as a participant in the Plan (a "Participant") for any Plan Year shall not require the inclusion or selection of such person as a Participant for any subsequent Plan Year, or, if such person is subsequently so included or selected, shall not require the same benefit provided the Participant under the Plan for an earlier Plan Year be provided such Participant for the subsequent Plan Year. 4. Performance Goals. On or after September 15 of each Plan Year, the Chief Executive Officer of the Company shall recommend to the Committee performance goals for the Company and each of its divisions and subsidiaries for the following Plan Year. Prior to October 15 of each Plan Year, the Committee shall either approve the Chief Executive Officer's recommended performance goals for the following Plan Year, or in the Committee's sole discretion, shall establish the performance goals for that Plan Year at such levels as it considers appropriate. The Committee shall also establish, by October 15 of each Plan Year, threshold performance levels for the year for the Company and each of its divisions and subsidiaries, over and under performance levels and percentages for the year for the Company and each of its divisions and subsidiaries, and other features of the incentive compensation program for the following Plan Year. If the business unit fails to meet the established threshold performance level for a Plan Year, no amount will be awarded to Participants in that business unit's Plan for that year. 5. Target Incentive Percentage. As of the date that the Committee determines the executives who shall be eligible to participate in the Plan for a Plan Year, the Committee also shall establish with respect to each Participant a "target incentive percentage", which percentage shall be based upon the appropriate performance goals referred to in Section 4 as well as the Participant's responsibility level as determined by the Committee. For each Plan Year that the threshold performance level has been achieved, the target incentive percentage for each Participant (adjusted for any under or over performance or other features of the incentive compensation program as provided in Section 4) shall be multiplied by his base salary earned in the fiscal year. The resulting amount with respect to each Participant for a Plan Year is his "Incentive Award" for that year. 6. Source, Time and Manner of Payment. Each Participant's Incentive Award for a Plan Year shall be paid from the general assets of the Company, in accordance with the following: (a) All of a Participant's Incentive Award for a Plan Year shall be payable, without interest, on or before the January 10 next following the end of that Plan Year except for such portion of said Incentive Award that such Participant shall have previously elected to have deferred in accordance with Section 6 (b). (b) Each Participant may elect to defer the payment of up to 100% of the Incentive Award payable to such Participant pursuant to Section 6 (a), in accordance with the provisions of Section 7 hereof. 7. Election of Stock in Lieu of Pay. Each Participant shall have the right to elect to have up to 100% of the Incentive Award payable to such Participant in accordance with Section 6 hereof converted into shares of the Company's common stock ("Stock") and delivered into the Harnischfeger Industries Deferred Compensation Trust ("Rabbi Trust") for the benefit of such Participant subject to the terms hereinafter set forth: (a) A Participant in the Plan for any Plan Year may by written notice filed with the Company before the beginning of such Plan Year elect to convert into Stock up to 100% of his Incentive Award for that Plan Year. Such election shall be irrevocable. (b) Shares of Stock equal to the number (rounded to the nearest integer) derived by dividing seventy five percent (75%) of the average closing price of the Stock on the New York Stock Exchange Composite Tape for the month of October of the Plan Year into the amount of Incentive Award that each Participant has elected to convert into Stock shall be registered by the Company in the name of the Rabbi Trust and delivered to the Rabbi Trust for allocation to such Participant's account, provided, however, that (i) the Company may direct the trustee of the Rabbi Trust (the "Trustee") to use for this purpose shares of Stock previously delivered by the Company to the Rabbi Trust if such shares have not been allocated to the account of any Participant and (ii) the total number of shares that may be delivered by the Company to the Rabbi Trust for the accounts of all Participants during any Plan Year shall not exceed two percent of the total number of shares outstanding at the beginning of such Plan Year adjusted for any stock split, stock dividend, combination of shares, or similar change in Stock, and provided further that if there are not sufficient available shares during any Plan Year to fully convert all Incentive Awards which the Participants have elected to convert, all available shares for that Plan Year shall be allocated to electing Participants on a pro rata basis and the balance of each Participant's Incentive Award shall be paid to the Participant in cash. The aforesaid calculation and funding of each Participant's account shall take place as soon as practical after the January 1 immediately following the end of each such Plan Year beginning with the Plan Year ending October 31, 1990. The Stock allocated to a Participant's account pursuant hereto may at the Company's option be acquired through open market purchases or may be either treasury shares or newly issued shares provided that any treasury or newly issued shares are duly registered pursuant to applicable federal and state securities laws and stock exchange regulations. Although the Company intends to exert its best efforts so that the shares allocated or distributed to Participants hereunder will be registered under, or exempt from the registration requirements of, the Securities Act of 1933 (the "Securities Act") and any applicable state securities laws, if the allocation or distribution would otherwise result in the violation by the Company of any provision of the Securities Act or of any state securities law, the Company may require that such allocation or distribution be deferred until the Company has taken appropriate action to avoid any such violation. (c) An account shall be maintained in the name of each Participant which will reflect the shares of Stock into which his Incentive Award has been converted, and shall be credited to reflect all dividends, stock splits and other distributions with respect to such shares. All cash distributions with respect to Stock shall be invested by the Trustee in shares of Stock through open market or other appropriate purchases as soon as practicable after receipt of same; provided, however, that the number of shares allocated to each Participant's account in respect of each cash distribution will be the same as if the cash distribution were used to purchase shares of Stock at 75% of the average price paid by the Trustee for Stock purchased when it reinvests such cash dividends in Stock as provided in Paragraph 4.1 of the Rabbi Trust. The Company shall from time to time as needed make available to the Trustee sufficient shares of Stock for allocation to Participants' accounts in connection with such discounted purchase of Stock with cash dividends. Each such Stock account shall be charged with any distribution made to a Participant when made. (d) The Stock in a Participant's account shall be distributed to him (or to his beneficiary in the event of his death) promptly (but not sooner than sixty (60) days) following his termination of employment with the Company or its subsidiaries; provided, however, that a Participant may upon written notice to the Committee given at least one year prior to his termination of employment, elect an annual distribution of such Stock over a period of time of up to ten (10) years (e.g. if a ten year election, one tenth of the balance at the time of the first distribution, one ninth at the time of the second distribution, etc.) and provided further that a Participant may upon written notice to the Committee given at least one year prior to his termination of employment elect to delay until the next calendar year following his termination of employment either the distribution of or, if the Participant has elected annual distributions over a period of time, the initial distribution from his account. During the first fifty (50) days following a Participant's termination of employment, the Participant (or the Participant's beneficiary in the event of the Participant's death) shall have the right to elect to have the Participant's account distributed in cash, Stock or a combination of cash and Stock. Upon receipt of a written request from a Participant that a part or all of the distribution be made in cash, the Company shall direct the Trustee to credit such Participant's account with an amount (the "Cash Portion") equal to the product of the number of shares of Stock then credited to Participant's account necessary to comply with the request (the "Diversified Shares") and the closing price of the Stock on the New York Stock Exchange Composite Tape as of the date the request is received by the Company. Thereafter, the Trustee shall keep such Participant's account as if the Cash Portion were invested in cash, cash equivalents, mutual funds or marketable securities as directed by the Commitee from time to time and as if the Diversified Shares had been sold. (e) Notwithstanding any other provision herein, upon any distribution of Stock to a Section 16 Participant (as defined below) pursuant to Section 7(d) which occurs within six months after an allocation pursuant to either Section 7(b) or Section 7(c), the Participant agrees, as a condition to participation, to refrain from disposing of any such distributed Stock until six months have elapsed from the Section 7(b) or Section 7(c) allocation. A Section 16 Participant is a Participant who is or at any time during the prior six months has been designated by the Company as a Section 16 Officer for purposes of Section 16 of the Securities Exchange Act of 1934. (f) Notwithstanding the foregoing, in the event of a "Change in Control" of the Company (as defined in the Rabbi Trust), the Company shall purchase for cash all shares of Stock then in all Participants' accounts which have been held in such accounts for at least six months at a per-share price equal to the the Change in Control Price, and the Trustee is directed to sell such shares upon such terms. Thereafter, with regard to any shares which have not been held in such accounts for at least six months, the Company shall purchase such shares for cash as soon as they have been held in such accounts for at least six months. Immediately after the Company purchases any shares pursuant to this Section 7(f), the Committee shall cause the Trustee to effect a distribution of all cash proceeds to the Participants in accordance with their accounts. As used herein, "Change in Control Price" means the higher of (i) the highest reported sales price, regular way, of a share of Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national securities exchange on which such shares are listed or on NASDAQ, as applicable, during the 60-day period prior to and including the date of a Change in Control and (ii) if the Change in Control is the result of a tender or exchange offer or a Business Combination (as defined in the Rabbi Trust), the highest price per share of Stock paid in such tender or exchange offer or Business Combination. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non- cash consideration shall be determined by the Incumbent Board (as defined in the Rabbi Trust). (g) In the event that the Committee determines that the laws of a country in which a Participant resides make it impracticable to allocate Stock to the account of such Participant, the election of Stock in lieu of pay pursuant to this Section 7 shall not be available to such Participant. However, at the discretion of the Committee, the Participant may be placed in a plan to be designated the Stock Equivalent Unit Plan which will provide deferred compensation in the same manner and amounts as would have been provided under this Plan except such amounts will not be funded through the Rabbi Trust. Notwithstanding the foregoing, in the event of a Change in Control, the Company shall fund accounts in the Stock Equivalent Unit Plan with cash in a manner similar to that described in Section 7(f) above. (h) Participants shall not be eligible to elect to receive Stock in lieu of pay pursuant to this Section 7 for a period of twelve (12) months following the receipt of a hardship distribution from any cash or deferred compensation plan of the Company maintained pursuant to Section 401(k) of the Internal Revenue Code. 8. Designation of Beneficiaries. Each Participant from time to time may name any person or persons (who may be named concurrently, contingently or successively) to whom his benefits under the Plan are to be paid if he dies before he receives his Incentive Award or the proceeds of his Rabbi Trust account. Each such beneficiary designation will revoke all prior designations by the Participant, shall not require the consent of any previously named beneficiary, shall be in a form prescribed by the Committee, and will be effective only when filed with the Committee during the Participant's lifetime. If a Participant fails to designate a beneficiary before his death, the beneficiary shall be the Participant's estate. 9. General. No Participant or other person shall have any right, title or interest in any amount awarded under this Plan prior to the payment thereof to such person or in any property of the Company. No rights or interests of Participants under this Plan shall be assignable either voluntarily or involuntarily nor shall the establishment or continuance of this Plan affect or enlarge the employment rights of any Participant or constitute a contract of employment with any Participant. Neither the Company nor any Committee member shall be personally liable for any act done or omitted to be done in good faith in the administration of the Plan. Except as provided in Section 7 hereof, nothing herein shall require the Company to segregate or set aside any funds or other property for the purpose of paying any amounts, the payment of which has been deferred under the Plan. 10. Facility of Payment. When a person entitled to benefits under the Plan is under legal disability, or, in the Committee's opinion, is in any way incapacitated so as to be unable to manage his affairs, the Committee may direct the payment of benefits to such person's legal representative, or to a relative or friend of such person for such person's benefit, or the Committee may direct the application of such benefits for the benefit of such person. Any payments made in accordance with the preceding sentence shall be a full and complete discharge of any liability for such payment under the Plan. 11. Withholding for Taxes. Notwithstanding any other provision of the Plan, the Committee may on behalf of the Participant withhold or direct the Trustee to withhold from any payment to be made under the Plan, whether in the form of cash or shares of Stock, such amount or amounts as may be required for purposes of complying with appropriate federal, state or foreign tax withholding provisions, provided, however, that any decision by the Committee to withhold Stock and any withholding of Stock by the Trustee from the account of a Section 16 Participant shall only be made during a window period (as defined below) and provided further that no Stock that has been held in the account of a Section 16 Participant for less than six months shall be withheld under the provisions of this Section 11. A window period shall be the period beginning on the third business day following the date of release for publication of an annual or quarterly summary statement of the sales and earnings of the Company and its consolidated subsidiaries and ending on the twelfth business day following such date. Subject to the discretion of the Committee, no distribution will be made to the Participant until all tax withholding obligations have been satisfied and, if Stock is withheld pursuant to this Section 11, until the window period during which the Stock is withheld. 12. Benefit Statements. The Company shall provide statements of account to Participants on a periodic basis but not less than annually in such form and at such time as it deems appropriate. 13. Amendment and Termination. Because unforeseen circumstances may make it undesirable to continue the Plan in any form, or to continue it without change, the Board of Directors of the Company must necessarily reserve and hereby has reserved the right to amend the Plan from time to time and to terminate the Plan at any time, except that (i) no such amendment or any termination of the Plan shall change the terms and conditions of payment of any Incentive Award theretofore awarded to a Participant without the consent of the Participant concerned, nor shall any termination of the Plan eliminate any obligations of the Company which theretofore shall have arisen under the Plan and (ii) the provisions dealing with reinvestment of cash distributions may not be changed more than once every six months other than to conform with changes in the Internal Revenue Code, the Employee Retirement Income Security Act or any rules promulgated thereunder. 16. Controlling Law. The laws of Wisconsin shall be controlling in all matters relating to the Plan. 17. Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the plural shall include the singular and the singular shall include the plural. ------------------------------------------- Exhibit 10(f) HARNISCHFEGER INDUSTRIES, INC. SUPPLEMENTAL RETIREMENT AND STOCK FUNDING PLAN (as amended and restated October 9, 1995) SECTION 1: Introduction 1.1 The Plan and its Effective Date. Harnischfeger Industries, Inc. Supplemental Retirement and Stock Funding Plan (the "Supplemental Plan") is the amendment and restatement effective as of October 1, 1990 of the plan that was originally established by Harnischfeger Industries, Inc., a Delaware corporation (the "Company"), effective March 1, 1987 as the Harnischfeger Industries, Inc. Supplemental Retirement Plan. 1.2 Purpose. The Company maintains a Harnischfeger Salaried Employees' Retirement Plan (the "Retirement Plan"), which is intended to meet the requirements of a "qualified plan" under the Internal Revenue Code of 1986, as amended (the "Code"). While the Code and the Employee Retirement Income Security Act of 1974, as amended (the "Act"), place limitations on the benefits which may be paid from a qualified plan, the Code and the Act permit the payment under a non-qualified supplemental retirement plan of the benefits which may not be paid under the qualified plan because of such limitations. The purposes of this Supplemental Plan are (i) to provide benefits which may not be provided under the Retirement Plan because of limitations imposed by the Code or the Act, including those relating to nondiscrimination and maximum benefit limitations, elections to defer compensation made by the participants, and the granting of past service credits and (ii) to provide the opportunity for qualified executives to have their supplemental benefits converted into shares of the Company's common stock upon the terms hereinafter set forth. SECTION 2: Participation and Benefits 2.1 Eligibility for Benefits Related to Retirement Plan. Subject to the conditions and limitations hereof, if a participant in the Retirement Plan (i) has been granted credit for prior service or elected to defer compensation which may not be taken into account under the Retirement Plan because of applicable nondiscrimination or other rules, or (ii) has accrued a vested pension benefit under the Retirement Plan (or would have accrued a vested benefit if his prior service were taken into account), and such benefit has been limited as a result of the maximum benefit limitations imposed by Sections 401(a)(17) and 415 of the Code, he shall be a participant ("Participant") in this Supplemental Plan and shall be entitled to receive under this Supplemental Plan the portion of his benefits under the Retirement Plan, determined without regard to the limitations on the inclusions of prior service or deferred compensation or the maximum benefit limitations therein, which exceeds the benefits payable to him under the Retirement Plan after applying such limitations. If a Participant was employed by another "Harnischfeger Company", as defined in the Retirement Plan, and such other company also maintains a supplemental plan covering the Participant, the benefits hereunder and under such other plan shall be limited so as to not be duplicative and the Participant's benefits hereunder and under such other plan shall be paid by the Company and such other Harnischfeger Company in such proportions as the Company shall determine. The term "Company" as hereinafter used shall be deemed to include a reference to each such other Harnischfeger Company. 2.2 Payment of Benefits. Except to the extent a Participant becomes entitled to receive Company common stock as provided in Section 3, his benefits under this Supplemental Plan shall be paid to him, or in the event of his death to his beneficiary, at the same time and in the same manner as his pension benefits under the Retirement Plan. 2.3 Funding. Benefits payable under this Supplemental Plan to a Participant or his beneficiary shall be paid directly by the Company or at its discretion through Harnischfeger Industries Deferred Compensation Trust ("Rabbi Trust"), a grantor trust established by the Company. Prior to a "Change in Control" of the Company (as hereinafter defined), the Company shall not be required (but may do so in its discretion) to fund through the Rabbi Trust or otherwise any benefits under this Supplemental Plan, except that shares of Company stock shall be issued and transferred to the Rabbi Trust as herein provided. SECTION 3: Conversion of Benefits into Common Stock 3.1 Eligible Stock Participant. As used herein, the term "Eligible Stock Participant" means each Participant who is an active senior executive of the Company as of October 1, 1990 (and each Participant designated from time to time hereafter by the Committee, as defined in Section 4.1 hereof) whose accrued benefits as of October 1, 1990 under this Supplemental Plan equals or exceeds a monthly normal retirement annuity of $1,000 per month. 3.2 Initial Stock Funding. Each Eligible Stock Participant shall have the right to elect to have all benefits payable under this Supplemental Plan converted, on the terms hereinafter set forth, into shares of the Company's common stock and delivered into the Rabbi Trust for the benefit of such Participant. The present value of each such electing Participant's prospective supplemental pension benefits shall be calculated as of October 1, 1990 using the most recent assumptions adopted by the Company for purposes of calculating the actuarial present value of the Company's pension obligations, provided, however, that the discount rate used herein shall be one half percent less than the discount rate used in such assumptions. Shares of stock equal to the number (rounded to the nearest integer) derived by dividing the average closing price for the Company's common stock reflected on the New York Stock Exchange Composite Tape for the month of September, 1990 into the aforesaid present value shall be registered by the Company in the name of the trustee of the Rabbi Trust (the "Trustee") and delivered to the Rabbi Trust for allocation to such Participant's account. The aforesaid calculation and funding of each Participant's account shall take place as soon as is practicable after October 1, 1990. The shares allocated to an Eligible Stock Participant's account pursuant to Sections 3.2 or 3.3 may be either treasury shares or newly issued shares provided any treasury or newly issued shares are duly registered pursuant to applicable federal and state securities, and stock exchange, regulations. Although the Company intends to exert its best efforts so that the shares allocated or distributed to Participants hereunder will be registered under, or exempt from the registration requirements of, the Securities Act of 1933 (the "Securities Act") and any applicable state securities laws, if the allocation or distribution would otherwise result in the violation by the Company of any provision of the Securities Act or of any state securities law, the Company may require that such allocation or distribution be deferred until the Company has taken appropriate action to avoid any such violation. 3.3 Subsequent Stock Funding. As soon as practicable after November 1st of each year (beginning with November of 1991), the present value of each Eligible Stock Participant's prospective supplemental pension benefits payable hereunder shall be calculated as of such November 1st using the then current assumptions adopted by the Company for purposes of calculating the actuarial present value of the Company's pension obligations, provided that the discount rate used for purposes of such calculation shall be one half percent less than the rate used in such assumptions. Shares of the Company's common stock equal to the number (rounded to the nearest integer) derived by dividing the average closing price of the Company's common stock on the New York Stock Exchange Composite Tape for the immediately preceding month of October into the difference between the aforesaid present value and the amount of the present value calculated for the immediately preceding year pursuant to the terms of this Supplemental Plan (if no previous calculation has been made, a zero value shall be used for the previous calculation) shall be registered by the Company in the name of the Trustee and delivered to the Rabbi Trust (if adequate shares or other consideration have not theretofore been delivered by the Company to the Rabbi Trust) for allocation to such Participant's account, provided, however, that the total number of shares that may be delivered by the Company to the Rabbi Trust for the accounts of all Eligible Stock Participants during any fiscal year shall not exceed one percent of the total number of shares outstanding at the beginning of such fiscal year adjusted for any stock split, stock dividend, combination of shares or similar change in Stock, provided further that if there are not sufficient available shares during any fiscal year to fully fund the accounts of the Eligible Stock Participants, all available shares for that fiscal year shall be allocated to Eligible Stock Participant accounts on a pro rata basis and the balance of each Participant's account shall be paid to the Participant in cash. The stock allocated to an Eligible Stock Participant's account pursuant hereto may at the Company's option be acquired through open market purchases or may be either treasury shares or newly issued shares provided that any treasury or newly issued shares are duly registered pursuant to applicable federal and state securities laws and stock exchange regulations. Although the Company intends to exert its best efforts so that the shares allocated or distributed to Participants hereunder will be registered under, or exempt from the registration requirements of, the Securities Act and any applicable state securities laws, if the allocation or distribution would otherwise result in the violation by the Company of any provision of the Securities Act or of any state securities law, the Company may require that such allocation or distribution be deferred until the Company has taken appropriate action to avoid any such violation. 3.4 Non-Electing Eligible Stock Participants. If any Eligible Stock Participant shall elect not to have his supplemental benefits earned prior to October 1, 1990 converted into the Company's common stock as provided in Section 3.2, such supplemental benefits shall be calculated and paid as if this Supplemental Plan had terminated on October 1, 1990. Any supplemental pension benefits accruing to such Participant after October 1, 1990 shall be converted into shares of the Company's common stock pursuant to the provisions of Section 3.3 and shall be calculated as if such Participant first became an employee of the Company on October 1, 1990. 3.5 Participants' Accounts. An account shall be maintained in the name of each Eligible Stock Participant which will reflect the shares of the Company's common stock into which his benefits have been converted. Each Eligible Stock Participant's account shall be credited to reflect all dividends, stock splits and other distributions with respect to such shares, and all non-stock distributions with respect to Company shares shall be invested by the Trustee in shares of the Company's common stock through open market or other appropriate purchases as soon as practicable after receipt of same or, if the Rabbi Trust has unallocated shares, using such shares valued at the last closing price for the Company's common stock on the New York Stock Exchange Composite Tape immediately preceding such allocation. Each such stock account shall be charged with any distribution made to a Participant when made. In addition, appropriate plan records shall be maintained to reflect a Participant's benefits under Section 2 which have not been converted into the Company's common stock, including benefits accrued up to date of termination. 3.6 Payment of Benefits. 3.6.1 Stock Benefits. As used in this section, the term "Stock Benefits" shall mean all shares of the Company's common stock, all distributions thereon not used by the Trustee to purchase additional shares of the Company's common stock, any other amounts allocable to an Eligible Stock Participant's account as of the date of such determination, and the amount of any benefits accrued hereunder that have not been converted into shares of the Company's common stock. 3.6.2 Payments. Benefits forming a portion of the Stock Benefits that have not been funded at the distribution date shall be paid directly by the Company. 3.6.2.1 If an Eligible Stock Participant voluntarily terminates his employment with the Company prior to attaining age 55 or is terminated with "Cause" (as hereinafter defined) at any age, all Stock Benefits shall be forfeited to the Company and such Participant shall receive benefits under Section 2 to the same extent as if none of his benefits had ever been funded with Company stock under Section 3 of this Supplemental Plan (subject to any prior payments made pursuant to the provisions of Section 3.4). 3.6.2.2 Subject the Committee's sole discretion to waive the provisions of this Section, if an Eligible Stock Participant's employment is voluntarily terminated after the attainment of age 55 and prior to attainment of age 62, his Stock Benefits shall be reduced in accordance with the early retirement reduction factors under the Retirement Plan based upon his attained age at his termination of employment and paid to him in a lump sum; that portion of his Stock Benefits not paid to him due to such reduction shall be forfeited to the Company. 3.6.2.3 If an Eligible Stock Participant's employment is (a) voluntarily terminated following attainment of age 62 (55 in the event the Committee elects to waive the provisions of Section 3.6.2.2 hereof) or (b) is involuntarily terminated at any age without Cause, including termination due to death or disability, all of his Stock Benefits shall be distributed to him (or to his beneficiary in the event of his death) promptly (but not sooner than sixty (60) days) following his termination of employment with the Company or its subsidiaries; provided, however, that a Participant may upon written notice to the Committee given at least one year (ninety (90) days for any such notice given prior to January 1, 1995) prior to his termination, elect an annual distribution of such Stock over a period of time of up to ten (10) years (e.g. if a ten year election, one tenth of the balance at the time of the first distribution, one ninth of the balance at the time of the second distribution, etc.) and provided further that a Participant may upon written notice to the Committee given at least one year (ninety (90) days for any such notice given prior to January 1, 1995) prior to his termination of employment elect to delay until the next calendar year following his termination of employment either the distribution of or, if the Participant has elected annual distributions over a period of time, the initial distribution from his account. During the first fifty (50) days following a Participant's termination of employment, the Participant (or the Participant's beneficiary in the event of the Participant's death) shall have the right to elect to have the Participant's account distributed in cash, stock or a combination of cash and stock. Upon receipt of a written request that a part or all of the distribution be made in cash, the Company shall direct the Trustee to credit such Participant's account with an amount (the "Cash Portion") equal to the product of the number of shares of Stock then credited to Participant's account necessary to comply with the request (the "Diversified Shares") and the closing price of the Stock on the New York Stock Exchange Composite Tape as of the date the request is received by the Company. Thereafter, the Trustee shall keep such Participant's account as if the Cash Portion were invested in cash, cash equivalents, mutual funds or marketable securities as directed by the Commitee from time to time and as if the Diversified Shares had been sold. 3.6.2.4 Notwithstanding any other provision herein, upon any distribution to a Participant pursuant to Section 3.6.1 which occurs within six months after an allocation pursuant to Section 3.3 or 3.5, the Participant agrees, as a condition to participation, to refrain from disposing of any such distributed stock until six months have elapsed from the Section 3.3 or 3.5 allocation. 3.6.3 Change In Control. Notwithstanding the foregoing, in the event of a "Change in Control" of the Company (as defined in the Rabbi Trust), the Company shall purchase for cash all shares of Company common stock then forming a portion of the Stock Benefits which have been held in such accounts for at least six months at a per- share price equal to the the Change in Control Price, and the Trustee shall be directed to sell such shares upon such terms. Thereafter, with regard to any shares which have not been held in such accounts for at least six months, the Company shall purchase such shares for cash as soon as they have been held in such accounts for at least six months. Immediately after the Company purchases any shares pursuant to this Section 3.6.3, the Committee shall cause the Trustee to effect a distribution of all Stock Benefits, including such cash proceeds, to the Eligible Stock Participants. As used herein, "Change in Control Price" means the higher of (i) the highest reported sales price, regular way, of a share of Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national securities exchange on which such shares are listed or on NASDAQ, as applicable, during the 60-day period prior to and including the date of a Change in Control and (ii) if the Change in Control is the result of a tender or exchange offer or a Business Combination (as defined in the Rabbi Trust), the highest price per share of Stock paid in such tender or exchange offer or Business Combination. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined by the Incumbent Board (as defined in the Rabbi Trust). 3.6.4 Cause. For purposes of this Supplemental Plan, "Cause" shall mean termination upon (a) Participant's willful and continued failure to perform substantially the reasonably assigned duties with the Company consistent with those duties specified pursuant to his contract of employment prior to a Change in Control of the Company (other than any such failure resulting from incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Participant by the Chairman of the Board or Chief Executive Officer of the Company which specifically identifies the manner in which such person believes that Participant has not substantially performed such assigned duties, or (b) Participant's willful engagement in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this Section, no act, or failure to act on Participant's part shall be considered "willful" unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company. Notwithstanding the foregoing, Participant shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to Participant and an opportunity for Participant, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board Participant was guilty of the conduct set forth above in (a) or (b) of this Section and specifying the particulars thereof in detail. 3.7 Diversification. After an Eligible Stock Participant reaches age 55, he shall have the right, subject to the provisions of this Section 3.7, to elect to have up to 50% of the value of his Stock Benefits determined as if such portion were thereafter invested in such investments, and in such manner, as the Company's Pension and Investment Committee shall from time to time authorize. A diversification may only take place pursuant to an irrevocable election made by the Participant during a window period (as defined below) provided that such election is made at least six months after any previous diversification under this Section 3.7. A window period shall be the period beginning on the third business day following the date of release for publication of an annual or quarterly summary statement of the sales and earnings of the Company and its consolidated subsidiaries and ending on the twelfth business day following such date. SECTION 4: General Provisions 4.1 Committee. This Supplemental Plan shall be administered by a committee of two or more directors, each of whom has not, during the one year prior to or during service as an administrator of the Supplemental Plan been granted or awarded equity securities of the Company pursuant to the Supplemental Plan or any other plan of the Company other than a plan meeting the requirements of paragraphs (c)(2)(i)(A)-(D) of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934 (the "Committee"), disregarding any changes in the members of the Committee following a Change in Control of the Company. The Company shall pay the cost of administration of the Supplemental Plan. The Committee shall have the power, right and duty to interpret the provisions of the Supplemental Plan and may from time to time adopt rules with respect to the administration of the Supplemental Plan and the determination and distribution of benefits under the Supplemental Plan, and may amend any and all rules previously established. Any decision made by the Committee in good faith in connection with its administration of or responsibilities under the Supplemental Plan, including the interpretation of any provision of the Supplemental Plan, the application of any rule established under the Supplemental Plan, any determination as to the officers eligible to participate in the Supplemental Plan, the amount allocated to each and the manner, conditions and terms of payment of such amount, shall be conclusive on all persons. 4.2 Beneficiary. A Participant's "beneficiary" under this Supplemental Plan means any person who becomes entitled to benefits under the Retirement Plan because of the Participant's death; provided that, if a Participant dies while his benefits under this Supplemental Plan are payable to him in installments, his beneficiary under this Supplemental Plan shall be either (i) the person or persons designated by him by signing and filing with the Committee a form furnished by the Committee, or (ii) if the Participant failed to designate a beneficiary in (i) above, or if the beneficiary designated in (i) above dies before the date of the Participant's death, the Participant's estate. 4.3 Discretion. Notwithstanding any provisions in this Supplemental Plan to the contrary, the Committee shall have the discretion to allow any benefits to be paid that would otherwise be forfeited. 4.4 Employment Rights. Establishment of the Supplemental Plan shall not be construed to give any Participant the right to be retained in the Company's service or to any benefits not specifically provided by the Supplemental Plan. 4.5 Interests Not Transferable. Except as to withholding of any tax under the laws of the United States or any state, the interests of the Participants and their beneficiaries under the Supplemental Plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily transferred, assigned, alienated or encumbered. No Participant shall have any right to any benefit payments hereunder prior to his termination of employment with the Company other than pursuant to Section 3.6.3. 4.6 Payment with Respect to Incapacitated Participants or Beneficiaries. If any person entitled to benefits under the Supplemental Plan is under a legal disability or in the Committee's opinion is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may direct the payment of all or a portion of such benefits to such person's legal representative or to a relative or friend of such person for such person's benefit, or the Committee may direct the application of such benefits for the benefit of such person in any manner which the Committee may elect that is consistent with the Supplemental Plan. Any payments made in accordance with the foregoing provisions of this section shall be a full and complete discharge of any liability for such payments. 4.7 Limitation of Liability. To the extent permitted by law, no person (including the Company, its Board of Directors, the Committee, any present or former member of the Company's Board of Directors or the Committee, and any present or former officer of the Company) shall be personally liable for any act done or omitted to be done in good faith in the administration of the Supplemental Plan. 4.8 Controlling Law. The laws of Wisconsin shall be controlling in all matters relating to the Supplemental Plan. 4.9 Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the plural shall include the singular and the singular shall include the plural. 4.10 Successor to the Company. The term "Company" as used in the Supplemental Plan shall include any successor to the Company by reason of merger, consolidation, the purchase of all or substantially all of the Company's assets or otherwise. 4.11 Withholding for Taxes. Notwithstanding any other provision of this Supplemental Plan, the Committee may on behalf of the Participant withhold or direct the Trustee to withhold from any payment to be made under this Supplemental Plan, whether in the form of cash or shares of stock, such amount or amounts as may be required for purposes of complying with appropriate federal, state or foreign tax withholding provisions, provided, however, that any decision by the Committee to withhold stock and any withholding of stock by the Trustee from the account of a Participant shall only be made during a window period and provided further that no stock that has been held in the account of a Participant for less than six months shall be withheld under the provisions of this Section 4.11. Subject to the discretion of the Committee, no distribution will be made to the Participant until all tax withholding obligations have been satisfied and, if stock is withheld pursuant to this Section 4.11, until the window period during which the stock is withheld. SECTION 5: Amendment and Termination 5.1 Amendment and Termination. The Board of Directors of the Company reserves the right to amend the Supplemental Plan from time to time or to terminate the Supplemental Plan at any time, provided that (i) no amendment of the Supplemental Plan nor the termination of the Supplemental Plan may cause the reduction, forfeiture or cessation of any benefits that were accrued as of the date of such amendment or termination and which would otherwise be payable under this Supplemental Plan, but for such amendment or termination and (ii) the provisions dealing with the reinvestment of cash distributions may not be changed more than once every six months other than to conform with changes in the Internal Revenue Code, the Employee Retirement Income Security Act or any rules promulgated thereunder. - ----------------------------------------------- Exhibit 10(i) KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT This Agreement is made and entered into and effective as of October 8, 1995 between Jeffery T. Grade ( Executive ) and Harnischfeger Industries, Inc., a Delaware corporation ("Company"). W I T N E S S E T H : WHEREAS, the Company has determined it is in the best interests of the Company and its stockholders to assure that Executive is in a position to objectively evaluate all proposals for acquisition of the Company (recognizing that no such proposal is pending) and has determined this Agreement, including the severance provisions, will assure such independent evaluation; WHEREAS, the Company recognizes the need to provide a level of compensation and relative security that is competitive with that of other publicly held companies and which provides the necessary economic and performance incentives that will be of benefit to Company stockholders in the long term; WHEREAS, in the event that Executive's position is eliminated or his employment is terminated as a result of an acquisition of the Company it would be difficult to calculate the losses and detriment which would be incurred by Executive in such circumstances; and WHEREAS, in view of Executive's intimate knowledge of the business and affairs of Company and his experience and demonstrated skill and ability in performing services for Company and his unique qualifications which are needed by the Company, and to assure that Executive shall continue to serve the Company; WHEREAS, the Company requested an independent review by its attorneys of the terms of this Key Executive Employment And Severance Agreement ( Agreement ) and following such review its attorneys have recommended certain amendments to this Agreement; and WHEREAS, the Company s Human Resources Committee has reviewed such proposed amendments with such attorneys and has determined such amendments to be necessary and appropriate. In consideration of each of the specific premises set forth above and in further consideration of the mutual agreements set forth herein, the parties agree as follows: 2 1. Employment by the Company of Executive and Acceptance by Executive. The Company hereby employs Executive during the term of this Agreement in such capacities and upon such conditions concerning rates of compensation, benefits and other matters as are hereinafter stated. Executive hereby accepts such employment and agrees faithfully, diligently and to the best of his ability to discharge the responsibilities of the offices which he shall, as provided herein, occupy. 2. Capacity. Executive shall be employed during the term of this Agreement as President and Chief Executive Officer of the Company and Chairman of the Board of Directors of the Company with such duties, functions, responsibilities and authority which are commensurate with and appropriate for such positions and as are from time-to-time set forth in the Bylaws of the Company and otherwise delegated to Executive by the Board of Directors of the Company; provided that such duties, functions and responsibilities shall not be materially changed, without Executive's consent, from such duties, functions and responsibilities as are currently performed and enjoyed by Executive. Executive shall be a full-time employee of the Company and shall devote his best efforts to the performance and fulfillment of such duties, functions and responsibilities; provided that Executive shall be permitted such vacations and other time off as are consistent with his position and period of service and the general rules and practices of the Company in that regard, it being understood for this purpose that such rules and practices shall not be materially less favorable to Executive than those presently in effect. 3. Place of Employment; Moving. While it is recognized that the performance of Executive's duties hereunder will occasionally require Executive to travel on behalf of the Company, the principal office of Executive and the principal place for performance by him of his services hereunder shall be in the Milwaukee, Wisconsin metropolitan area, and Executive shall not, without his consent, be required to perform the principal portion of his services hereunder outside of such area. However, the Company may require from time-to-time that Executive perform such services outside the Milwaukee, Wisconsin metropolitan area as are required for the proper performance by him of his duties during any reasonable period or periods, but, unless the consent of Executive is obtained, such periods shall not exceed in the aggregate two months during any twelve-month period. If Executive shall consent to carry out his duties hereunder at some place other than the Milwaukee, Wisconsin metropolitan area, and, as a result thereof, it shall be or become necessary for Executive to move his place of residence, the Company shall reimburse Executive under the terms of the Company's employee relocation assistance plan in effect as of the date of this Agreement or, if more favorable to Executive, under the terms of any such practice adopted by the Company in the future. 4. Term. Subject to the other provisions of this Agreement, the term of this Agreement and Executive's employment hereunder shall be deemed to have commenced on the date of this Agreement and shall continue for a period of three years thereafter or, if earlier, until Executive reaches age 65 or until his death or Disability (as hereafter defined), whichever occurs first. Subject to the other provisions of this Agreement, commencing on the first 3 anniversary of this Agreement and on each anniversary thereafter, the term of this Agreement and Executive's employment hereunder shall, unless Executive has reached age 62 or died or become "Disabled" (as hereinafter defined) before such date, be automatically extended for a period of one additional year unless at least thirty days prior to such date Executive shall notify the Company in writing that Executive does not extend the term of this Agreement or the Company notifies Executive that, for Cause (as hereafter defined), the Company does not extend the term of this Agreement, which notice shall be in writing and set forth the grounds for Cause. Notwithstanding the foregoing but subject to Executive's right to terminate his employment for Good Reason (as hereafter defined), in the event of a Potential Change in Control (as hereafter defined) or a Change in Control (as hereafter defined) Executive will not terminate employment with the Company until the earliest of (i) a date which is twelve months from the occurrence of such Potential Change in Control, (ii) the termination of Executive's employment due to Disability or retirement at age 65 or (iii) a date which is twelve months from the occurrence of such Change in Control. In the event of a Change In Control, the term of this Agreement shall be extended for three years from the date of such Change In Control and there shall be no further extension of the term. The provisions of this Agreement, if extended, shall be identical to those of this Agreement as in effect immediately prior to such extension except that the annual base salary provided for herein shall be equal to the annual rate of base salary currently being paid to Executive immediately preceding the date on which such extension becomes effective. 5. Change in Control. For the purposes of this Agreement, a Change in Control shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section l3 (d) (3) or l4 (d) (2) of the Securities Exchange Act of l934, as amended (the Exchange Act )) (a Person ) of beneficial ownership (within the meaning of Rule l3d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock ) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities ); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iii) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection c; or (b) Individuals who, as of the date hereof, constitute the Board (the Incumbent Board ) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company s shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an 4 actual or threatened election contest with respect to the election or removal of directors or any other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation of a reorganization, merger or consolidation or a sale or other disposition of all or substantially all of the assets of the Company (a Business Combination ) in each case, unless, following such Business Combination, (i) all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 80% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least two-thirds (2/3) of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. . 6. Potential Change in Control. One or more of the following shall constitute and be defined as a Potential Change in Control : (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or (b) any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) who is or becomes the Beneficial Owner, directly or indirectly, of 9.5% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, 5 increases his beneficial ownership of such stock or securities by 5% or more over the percentage so owned by such Person; or (c) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change In Control has occurred. For all purposes of this Agreement, if the facts giving rise to a Potential Change in Control cease to exist without any Change in Control having occurred, the provisions of this Agreement which are triggered by such Potential Change in Control shall no longer be effective unless another Potential Change in Control or any Change in Control occurs. 7. Salary Compensation. As salary compensation to Executive for his performance of the services to be rendered hereunder and for his acceptance of the responsibilities described herein and for his performance of all the usual obligations of employment, the Company agrees to pay to Executive, and Executive agrees to accept, during the term of this Agreement an annual base salary of not less than $600,000 per year or such greater amount as the Board of Directors may from time-to-time determine, payable in equal semi-monthly installments. At least annually the Board of Directors of the Company, or the Human Resources Committee or such other committee to which the Board may have delegated such authority, shall review such base salary to determine whether it should be increased on the basis of Executive's performance, that of the Company, or other circumstances then prevailing. The results of each review shall be communicated to and discussed with Executive by the Board of Directors or such Committee. 8. Bonus and Incentive Compensation. In addition to the salary compensation payable to Executive as provided in Paragraph 7 hereof, Executive shall be entitled during the term of this Agreement to receive such bonus and incentive compensation each year as may be awarded by the Human Resources Committee (or other appropriate committee) of the Board of Directors of the Company pursuant to the Company's bonus, incentive compensation and similar plans as are presently in effect or as may hereafter be adopted or amended. 8A. Salary, Bonus and Other Compensation Following a Change in Control. Upon the occurrence of a Change in Control, Executive shall be entitled, at a minimum, to the following in each year that Executive remains employed by the Company: (a) an annual base salary of no less than that paid immediately prior to such Change in Control plus a minimum annual salary increase, on each anniversary of this Agreement, equal to the cumulative change in the Consumer Price Index; (b) bonus and incentive compensation (including both cash and stock components) each year of no less than the greater of (i) the amount of bonus and incentive compensation received in the year immediately prior to such Change in Control or (ii) in the event Executive was promised or led to expect bonus and/or incentive compensation under any plans based upon the achievement of financial, operating or personal targets or goals, the amount that would have been payable to Executive as if such targets or goals were met for the 6 year in question ( Par Bonus ); (c) pension benefits, supplemental retirement benefits, deferred compensation and salaried continuation plans, incentive stock awards, stock option plans, medical, health, life, accident and disability insurance plans and programs, auto and business expense reimbursements, vacations and other benefits of not less than the type and amount paid or granted to Executive immediately prior to such Change in Control; (d) office space and secretarial services equivalent to those existing immediately prior to such Change in Control. 9. Further Benefits. In addition to the compensation provided in Paragraph 7 and Paragraph 8 hereof, Executive shall, during the term of this Agreement (and thereafter to the extent provided herein or in such plans), be covered by all applicable Company pension and retirement plans, insurance and death benefits in effect for all salaried employees, together with any future improvements in such plans and benefits. In addition, Executive shall be entitled during the term of this Agreement (and thereafter to the extent provided for herein or in any such plan) to receive such other and further benefits, including, without limitation, benefits under stock option plans, supplemental retirement plans, performance unit plans, deferred compensation and salary continuation plans, medical, health, life, accident and disability insurance programs, pension benefits, vacations, expense reimbursements and any and all other benefits as shall be generally made applicable to key executive employees of the Company, and such additional benefits, as may be granted to him from time-to-time by the Board of Directors of the Company or the appropriate committee thereof. 10. Covenant Against Competition. Except as hereafter provided, executive agrees that at all times during the term of this Agreement and for a period of one year following the date on which Executive's employment is terminated, Executive will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, as owner, partner, officer or employee, engage in any business which is substantially competitive with any business then actively conducted by the Company or by any of its subsidiaries, or undertake to consult with or advise any such competitive business, or otherwise, directly or indirectly, engage in any activity which is substantially competitive with or in any way adversely and substantially affecting any activity of the Company or any of its subsidiaries, provided, however, that ownership by Executive of not more than 5% of the outstanding shares of stock of any such business listed on any national stock exchange or quoted on an automated quotation system, or of not more than 15% of the stock of any such business not so listed or quoted, shall not be deemed a violation of this covenant. In the event of the occurrence of a Change in Control the foregoing sentence shall be void and not applicable. 11. Confidentiality and Proprietary Information. Executive agrees to be bound by the provisions of the Employee Proprietary Rights and Confidentiality Agreement attached hereto as Exhibit "A and incorporated herein. The provisions of such agreement supplement and are in addition to Executive's obligations under this Agreement. 12. Certain Remedies. If Executive commits a breach or threatens to commit a 7 breach of any of the provisions of Paragraph 10 hereof or the agreement described in Paragraph 11, the Company shall have the right and remedy, in addition to any other remedy that may be available, at law or in equity, to have the provisions of Paragraph 10 and the agreement described in Paragraph ll specifically enforced by any court having equity jurisdiction together with an accounting for any damages sustained, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. Such an injunction shall be available without the posting of any bond or other security, and Executive hereby consents to the issuance of such injunction. If any covenant contained in Paragraph 10 or the agreement described in Paragraph 11, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration and/or area of such covenant and, in its reduced form, said covenant shall then be enforceable. 13. Disability. Employee shall be considered disabled (or a Disability shall have occurred) in the event Executive is unable to perform his services under this Agreement for a continuous period of six months by reason of his physical or mental illness or incapacity. If there is any dispute as to whether Executive is or was physically or mentally unable to perform his duties under this Agreement, such question shall be submitted to a licensed physician agreed to by Executive (or any legal guardian lawfully appointed) and the Company, or, if they are unable to so agree, appointed by the President of the Medical Society of Milwaukee County, Wisconsin at the request of either Executive (or such guardian) or the Company. Executive shall submit to such examinations and provide such information as such physician may reasonably request and the determination of such physician as to Executive's physical or mental condition shall be binding and conclusive upon Executive and the Company. If Executive shall become Disabled, in lieu of any further salary or other compensation provided for in Paragraph 7 and Paragraph 8 hereof (except to the extent that such salary or other compensation was earned but not paid prior to Disability), the Company shall thereafter pay to Executive the benefits under the Company's short-term disability plan as long as applicable and then the Company's long-term disability plan in effect at the date of this Agreement, together with any improvements in said plans in the future which provide additional or more favorable benefits to Executive. 14. Prior Service Credit. Executive is hereby granted credit, for purposes of the Company's pension plans, for the years of continuous employment with Executive's immediate prior employer, IC Industries, Inc. However, any payments under the Company's pension plans to Executive shall be reduced by any pension or similar benefits payable to Executive by such prior employer. 15. Termination by Company. (a) The Company shall have the right to terminate this Agreement (and Executive's 8 employment) only upon the death or Disability of Executive or for Cause. For purpose of this Agreement, Cause shall mean (i) Executive's willful and continued failure to substantially perform the reasonably assigned duties with the Company which are consistent with Executive s position and job description referred to in this Agreement and, in the event of a Change in Control, those duties assigned prior to the Change in Control, other than any such failure resulting from incapacity due to physical or mental illness, after a written demand for substantial performance is delivered to Executive by the Board of Directors of the Company which specifically identifies the manner in which Executive has not substantially performed the assigned duties, or (ii) Executive's willful engagement in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph, no act, or failure to act, on Executive's part shall be considered willful unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or based upon the advise of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board of Directors Executive was guilty of the conduct set forth above in (i) or (ii) of this paragraph and specifying the particulars thereof in detail. (b) Forfeiture. If Executive is terminated for Cause pursuant to Paragraph 15, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). 16. Termination of this Agreement by Executive in Certain Circumstances. (a) Voluntary Termination. Subject to the restrictions in Paragraph 4, Executive may terminate this Agreement other than for Good Reason (as hereinafter defined) upon 30 days prior written notice to the Company. Upon such termination, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). (b) Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement for Good Reason at any time during the term hereof unless this Agreement has previously expired or been terminated by reason of (i) the death or Disability of Executive, (ii) attainment by Executive of age 65, (iii) termination of this Agreement by the Company for Cause, or (iv) voluntary termination of this Agreement by Executive other than for Good Reason. Termination by Executive for Good Reason shall mean termination by Executive of his employment hereunder (1) for any reason within the twelve (12) months following the expiration of the committed employment period specified in Paragraph 4(i), (ii) or (iii) hereof (provided a Change in Control has occurred), or (2) because of: 9 (a) the assignment to Executive without his express written consent of any duties or functions inconsistent with his present positions, duties, responsibilities, authority and status with the Company, or a change in his present reporting responsibilities, titles or offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such positions; or (b) failure to provide Executive with the bonus and incentive compensation required by Paragraph 8A(b) of this Agreement or the exclusion of Executive from any management, incentive compensation or bonus programs maintained by the Company from time-to-time in its discretion and of a type in which Executive participated at the inception of this Agreement or in which key executives in general participate; or (c) the failure by the Company to provide or maintain the benefits described in Paragraph 8A(c) and (d) of this Agreement or the failure by the Company to maintain the deferred compensation plans, pension and retirement plans (including supplemental retirement plans), life insurance and other fringe benefit plans maintained by the Company at the inception of this Agreement; or (d) the failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (e) the failure by the Company to pay the annual base salary and annual increases required by Paragraph 8A(a) of this Agreement or any reduction in the base salary currently being paid to Executive; or (f) any other material breach by the Company of any of the terms of this Agreement; or (g) any purported termination by the Company of this Agreement or Executive's employment hereunder which is not effected pursuant to a Notice of Termination (as hereinafter defined) and which does not satisfy the requirements of Paragraph 15 hereof. (c) Termination Payments. Upon any termination by Executive of his employment under this Agreement pursuant to Paragraph 16(b), or upon any termination of Executive's employment by the Company during the term hereof other than for Cause, Disability or death, the Company shall forthwith: (i) pay to Executive in cash the following accrued benefits ( Accrued Benefits ) (a) all salary earned or accrued through the termination date; (b) reimburse Executive for any and all monies advanced in connection with 10 Executive's employment for reasonable and necessary expenses incurred by Executive through the termination date; (c) pay any and all bonus, cash and other benefits previously earned through the termination date and deferred at the election of Executive or pursuant to any deferred compensation plans then in effect; (d) make a pro rata (based upon the portion of such fiscal year that Executive was an employee of the Company) lump sum payment of any bonus and incentive compensation (including both cash and stock components) otherwise payable to Executive with respect to the year in which termination occurs under any bonus and incentive plan(s) in which Executive is a participant; and (e) pay all other amounts and benefits to which Executive may be entitled under the terms of any benefit plan of the Company. Payment of amounts other than those described in subsections (d) and (e) hereof shall be made within 10 days after the termination date. Payment of amounts under subsections (d) and (e) hereof shall be made pursuant to the terms of any such plans either by the Company or a trust implementing such plan; plus (ii) pay to Executive in cash in a lump sum an amount equal to the product of three (3) (or, if less, the whole number of years (rounded upward) remaining, at the time of such termination, until Executive would attain age 65) times the sum of (1) the annual base salary payable to Executive hereunder immediately prior to such termination plus (2) the greater of the average annual amount to which Executive became entitled (whether paid, payable or deferred) under all bonus, incentive compensation and other plan(s) of the Company during the three years (or number of years that Executive participated therein, if less) preceding such termination or the Par Bonus; and (iii) to the extent permissible under the applicable plans, take all actions necessary to cause all restricted stock, stock options and any accompanying stock appreciation rights to become automatically vested and exercisable upon such termination; plus (iv) in addition to the retirement benefits to which Executive is entitled under the Company's retirement plan(s) or any successor plans thereto, the Company shall pay to Executive not later than the tenth day following the termination date, a lump sum, in cash, equal to the actuarial equivalent of the excess of (a) the retirement pension (determined as a straight life annuity commencing at age 65) which Executive would have accrued under the terms of the Company's retirement plan (without regard to the limitations imposed by section 415 of the Internal Revenue Code of 1954, as amended (the Code ), or any amendment to the retirement plan made subsequent to a Change in Control of the Company and on or prior to the termination date, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if Executive had rendered (after the termination date) three additional years of credited service thereunder, and as if Executive had accumulated three additional calendar years of compensation (for purposes of determining Monthly Compensation as defined in the Company's retirement plan), each in an amount equal to the amount for the highest calendar year out of the final ten calendar years preceding the termination date, but in no event shall Executive be deemed to have accumulated additional credited service after Executive's 65th birthday, over (b) the retirement pension (determined as a straight life annuity commencing at age 65), which Executive had then accrued pursuant to the provisions of the Company's retirement plan(s). For purposes of this Subsection, actuarial equivalent shall be determined using the same methods and assumptions utilized under the Company's retirement plan(s) immediately prior to the Change in Control of the Company. Provided, however, that to the extent that all or a portion of such amount is payable pursuant to any other arrangement established by the Company, the amount to which Executive shall be entitled pursuant to this Subsection shall be reduced by such amount; and (v) pay Executive in cash for any vacation time earned but not taken at the termination date, at an hourly rate equal to the annual base salary as in effect immediately prior to the termination date divided by 2080. Notwithstanding any other provisions of this Agreement, for purposes of the Company's salaried pension plan and its medical, health, life, accident and disability insurance programs, Executive shall, in the event of any termination which entitles Executive to the payments described in Paragraph 16(c) hereof, be considered and deemed, for a period of 3 years following such termination or until Executive attains the age of 65 or until reasonably equivalent benefits are paid or extended by a new employer, whichever first occurs, to be a full-time employee of the Company and be entitled to all benefits, rights and privileges thereunder. If at the end of three years Executive has not attained the age of 65 or has not previously received or is not then receiving equivalent benefits from a new employer, the Company shall arrange, at its sole cost and expense, to enable Executive to convert the coverage under such policies to equivalent individual policies. To the extent necessary for application of this paragraph, Executive's annual compensation during the aforesaid period shall be deemed to be equal to the amount described in Paragraph 16(c)(ii)(1) plus the amount described in Paragraph 16(c)(ii)(2). 17. Tax Protection. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section l7) (a Payment ) would be subject to the excise tax imposed by Section 4999 of the Code (or any amendments thereof or any similar tax that may be imposed, and regulations thereunder) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the Excise Tax ), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains 11 an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section l7 (a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $l0,000 (taking into account both income taxes and any Excise Tax) as compared to the net after- tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount ( the Reduced Amount ) such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. (b) Subject to the provisions of Section l7(c), all determinations required to be made under this Section l7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Price Waterhouse or such other nationally recognized certified public accounting firm as may be designated by the Executive (the Accounting Firm ) which shall provide detailed supporting calculations both to the Company and the Executive within l5 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section l7, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ( Underpayment ), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section l7(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross- Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the 12 Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time-to-time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section l7(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance; or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section l7(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company s complying with the requirements of Section l7(c)) promptly pay to the Company the amount of such refund (together with any interest paid 13 or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section l7(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) It is the intent of this provision to avoid any diminution in payments to which Executive is entitled under this Agreement by virtue of the imposition of any excise or similar taxes (excluding income taxes) and to make Executive whole should any such taxes be imposed. 18. No Diminution of Payments. Executive shall not be required to mitigate the amount of any payment provided for in Paragraph 16, Paragraph 17 or any other provision of this Agreement, and no such payment shall be reduced by any present value factor or any other compensation or amount payable to Executive by the Company or any other employer or source, or for any other reason. The payments provided by Paragraph 16 and Paragraph 17 are in addition to, and not in lieu of, any other rights, benefits or entitlements Executive may have under the provisions of any other plan. It is the expectation and agreement of the parties, in consideration of the mutual promises herein, that no amount payable hereunder shall be reduced by any court or arbitrator, regardless of the legal theory advanced. 19. Notice of Termination; Effect. (a) Notice. Any purported termination of this Agreement by the Company for Cause or Disability or by Executive pursuant to Paragraph 16(b) hereof shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. No such purported termination shall be effective if not effected pursuant to a Notice of Termination satisfying the requirements of this Paragraph 19. (b) Effect. No termination of this Agreement shall affect any right or obligation of any party accrued prior thereto and no such termination shall affect the provisions of Paragraph 10, 11, 12, 16, 17, 18, 19, 20, 21, 22 and 23 hereof, all of which shall remain in effect notwithstanding any such termination. 20. Payment Obligations Absolute. The Company's obligation during and after the term hereof to pay or cause to be paid to Executive the compensation and payments provided for in this Agreement and to make the arrangements provided herein shall be absolute and 14 unconditional and shall not be diminished, reduced or affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against Executive or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final. 21. Superseding Effect - Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties with respect to the subject matter hereof and constitutes the entire agreement of the parties with respect thereto. No provision of this Agreement (including this Paragraph 21) may be waived, amended, or otherwise modified except by a subsequent written agreement executed by the parties hereto. 22. Venue; Expenses. Any action concerning this Agreement may be brought in the federal or state courts located in the County of Milwaukee, Wisconsin, and each party consents to the venue and jurisdiction of such courts. The Company shall pay all legal fees and expenses incurred by Executive in connection with or as a result of termination following a Change in Control (including any fees incurred in contesting or disputing any termination). In addition, if a dispute arises with respect to the Company's obligations or Executive's rights under this Agreement, or if any legal proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, or in the event of any other litigation involving this Agreement, Executive shall recover from the Company all attorneys' fees and costs and disbursements incurred as a result of such dispute or legal proceeding, regardless of the outcome, plus prejudgment interest on any money judgement obtained by the Executive, calculated at the rate of interest announced by First Wisconsin National Bank of Milwaukee from time-to-time as its prime rate, plus 2.0%, from the date that payments to Executive should have been made under this Agreement. 23. Assignment; Binding Effect. (a) This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties hereto and their respective successors and assigns, provided that (i) this Agreement is a personal service agreement and no right hereunder may be assigned by Executive except as contemplated by Paragraph 23(c) hereof and (ii) unless the Company shall have complied with this Paragraph 23, no right hereunder may be assigned or transferred by the Company by operation of law or otherwise. Any purported assignment or transfer in violation of this Paragraph 23 shall be null and void. (b) The Company will obtain from any purchaser or other assignee or transferee of or successor to all or substantially all of the business or assets of the Company, (whether direct or indirect, by purchase, merger, consolidation or otherwise), an agreement in form and substance satisfactory to Executive, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it as if no such purchase had taken place. As used in this Agreement, the term Company shall mean 15 Harnischfeger Industries, Inc., as hereinbefore defined and any successor to or purchaser, transferee or assignee of its business or assets. The failure to obtain such an assumption within sixty days following the closing of any such purchase, assignment or transfer shall thereupon immediately entitle Executive to invoke all rights granted in Paragraph 16. (c) This Agreement shall inure to the benefit of and be enforceable by the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of Executive. 24. Withholding. The Company shall be entitled to withhold from amounts to be paid to Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time-to-time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of any such withholding shall arise. 25. Invalidity. If a court shall determine that any provision of this Agreement is invalid or unenforceable as written, it is the intention of the parties that such provision be interpreted or judicially modified so as to enable such provision to be enforced to the maximum extent permissible. Any invalid or unenforceable provision which cannot be so modified shall be severed from this Agreement and shall not affect the validity or enforceability of any other provisions of this Agreement. 26. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Harnischfeger Industries, Inc., Attention: Secretary, 13400 Bishops Lane, Brookfield, Wisconsin 53005, or if to Executive, at the address set forth below the Executive's signature line of this Agreement, or to such other address as the party to be notified shall have given in writing to the other. 27. No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provisions of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 28. Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provisions of this Agreement. IN WITNESS WHEREOF, Executive has affixed his hand hereto, and pursuant to due authorization from its Board of Directors the Company has caused this instrument to be executed by a duly authorized officer thereof, as of the day and year first above written. 16 /s/Jeffery T. Grade ------------------- Jeffery T. Grade 1925 Emerald Woods Lane Highland Park, IL 60035 HARNISCHFEGER INDUSTRIES, INC. By /s/K. Thor Lundgren -------------------- Executive Vice-President Law and Government Affairs Secretary and General Counsel Exhibit 10(j) KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT This Agreement is made, entered into and effective as of October 8, 1995 between Francis M. Corby, Jr. ( Executive ) and Harnischfeger Industries, Inc., a Delaware corporation ("Company"). W I T N E S S E T H : WHEREAS, the Company has determined it is in the best interests of the Company and its stockholders to assure that Executive is in a position to objectively evaluate all proposals for acquisition of the Company (recognizing that no such proposal is pending) and has determined this Agreement, including the severance provisions, will assure such independent evaluation; WHEREAS, the Company recognizes the need to provide a level of compensation and relative security that is competitive with that of other publicly held companies and which provides the necessary economic and performance incentives that will be of benefit to Company stockholders in the long term; WHEREAS, in the event that Executive's position is eliminated or his employment is terminated as a result of an acquisition of the Company it would be difficult to calculate the losses and detriment which would be incurred by Executive in such circumstances; and WHEREAS, in view of Executive's intimate knowledge of the business and affairs of Company and his experience and demonstrated skill and ability in performing services for Company and his unique qualifications which are needed by the Company, and to assure that Executive shall continue to serve the Company; WHEREAS, the Company requested an independent review by its attorneys of the terms of this Key Executive Employment And Severance Agreement ( Agreement ) and following such review its attorneys have recommended certain amendments to this Agreement; and WHEREAS, the Company s Human Resources Committee has reviewed such proposed amendments with such attorneys and has determined such amendments to be necessary and appropriate and the Board of Directors of the Company ( Board ) has further approved such amendments; In consideration of each of the specific premises set forth above and in further consideration of the mutual agreements set forth herein, the parties agree as follows: 2 1. Employment by the Company of Executive and Acceptance by Executive. The Company hereby employs Executive during the term of this Agreement in such capacities and upon such conditions concerning rates of compensation, benefits and other matters as are hereinafter stated. Executive hereby accepts such employment and agrees faithfully, diligently and to the best of his ability to discharge the responsibilities of the offices which he shall, as provided herein, occupy. 2. Capacity. Executive shall be employed during the term of this Agreement as Executive Vice President Finance and Administration and Chief Financial Officer of the Company with such duties, functions, responsibilities and authority which are commensurate with and appropriate for such positions and as are from time-to-time set forth in the Bylaws of the Company and otherwise delegated to Executive by the Chief Executive Officer or the Board of Directors of the Company; provided that such duties, functions and responsibilities shall not be materially changed, without Executive's consent, from such duties, functions and responsibilities as are currently performed and enjoyed by Executive. Executive shall be a full-time employee of the Company and shall devote his best efforts to the performance and fulfillment of such duties, functions and responsibilities; provided that Executive shall be permitted such vacations and other time off as are consistent with his position and period of service and the general rules and practices of the Company in that regard, it being understood for this purpose that such rules and practices shall not be materially less favorable to Executive than those presently in effect. 3. Place of Employment; Moving. While it is recognized that the performance of Executive's duties hereunder will occasionally require Executive to travel on behalf of the Company, the principal office of Executive and the principal place for performance by him of his services hereunder shall be in the Milwaukee, Wisconsin metropolitan area, and Executive shall not, without his consent, be required to perform the principal portion of his services hereunder outside of such area. However, the Company may require from time-to-time that Executive perform such services outside the Milwaukee, Wisconsin metropolitan area as are required for the proper performance by him of his duties during any reasonable period or periods, but, unless the consent of Executive is obtained, such periods shall not exceed in the aggregate two months during any twelve-month period. If Executive shall consent to carry out his duties hereunder at some place other than the Milwaukee, Wisconsin metropolitan area, and, as a result thereof, it shall be or become necessary for Executive to move his place of residence, the Company shall reimburse Executive under the terms of the Company's employee relocation assistance plan in effect as of the date of this Agreement or, if more favorable to Executive, under the terms of any such practice adopted by the Company in the future. 4. Term. Subject to the other provisions of this Agreement, the term of this Agreement and Executive's employment hereunder shall be deemed to have commenced on the date of this Agreement and shall continue for a period of three years thereafter or, if earlier, until Executive reaches age 65 or until his death or Disability (as hereafter defined), whichever occurs first. Subject to the other provisions of this Agreement, commencing on the first 3 anniversary of this Agreement and on each anniversary thereafter, the term of this Agreement and Executive's employment hereunder shall, unless Executive has reached age 62 or died or become "Disabled" (as hereinafter defined) before such date, be automatically extended for a period of one additional year unless at least thirty days prior to such date Executive shall notify the Company in writing that Executive does not extend the term of this Agreement or the Company notifies Executive that, for Cause (as hereafter defined), the Company does not extend the term of this Agreement, which notice shall be in writing and set forth the grounds for Cause. Notwithstanding the foregoing but subject to Executive's right to terminate his employment for Good Reason (as hereafter defined), in the event of a Potential Change in Control (as hereafter defined) or a Change in Control (as hereafter defined) Executive will not terminate employment with the Company until the earliest of (i) a date which is twelve months from the occurrence of such Potential Change in Control, (ii) the termination of Executive's employment due to Disability or retirement at age 65 or (iii) a date which is twelve months from the occurrence of such Change in Control. In the event of a Change In Control, the term of this Agreement shall be extended for three years from the date of such Change In Control and there shall be no further extension of the term. The provisions of this Agreement, if extended, shall be identical to those of this Agreement as in effect immediately prior to such extension except that the annual base salary provided for herein shall be equal to the annual rate of base salary currently being paid to Executive immediately preceding the date on which such extension becomes effective. 5. Change in Control. For the purposes of this Agreement, a Change in Control shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section l3 (d) (3) or l4 (d) (2) of the Securities Exchange Act of l934, as amended (the Exchange Act )) (a Person ) of beneficial ownership (within the meaning of Rule l3d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock ) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities ); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iii) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection c; or (b) Individuals who, as of the date hereof, constitute the Board (the Incumbent Board ) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company s shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an 4 actual or threatened election contest with respect to the election or removal of directors or any other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation of a reorganization, merger or consolidation or a sale or other disposition of all or substantially all of the assets of the Company (a Business Combination ) in each case, unless, following such Business Combination, (i) all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 80% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least two-thirds (2/3) of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. . 6. Potential Change in Control. One or more of the following shall constitute and be defined as a Potential Change in Control : (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or (b) any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) who is or becomes the Beneficial Owner, directly or indirectly, of 9.5% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, 5 increases his beneficial ownership of such stock or securities by 5% or more over the percentage so owned by such Person; or (c) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change In Control has occurred. For all purposes of this Agreement, if the facts giving rise to a Potential Change in Control cease to exist without any Change in Control having occurred, the provisions of this Agreement which are triggered by such Potential Change in Control shall no longer be effective unless another Potential Change in Control or any Change in Control occurs. 7. Salary Compensation. As salary compensation to Executive for his performance of the services to be rendered hereunder and for his acceptance of the responsibilities described herein and for his performance of all the usual obligations of employment, the Company agrees to pay to Executive, and Executive agrees to accept, during the term of this Agreement an annual base salary of not less than $324,000 per year or such greater amount as the Board of Directors may from time-to-time determine, payable in equal semi-- monthly installments. At least annually the Board of Directors of the Company, or the Human Resources Committee or such other committee to which the Board may have delegated such authority, shall review such base salary to determine whether it should be increased on the basis of Executive's performance, that of the Company, or other circumstances then prevailing. The results of each review shall be communicated to and discussed with Executive by the Chief Executive Officer or Board of Directors or such Committee. 8. Bonus and Incentive Compensation. In addition to the salary compensation payable to Executive as provided in Paragraph 7 hereof, Executive shall be entitled during the term of this Agreement to receive such bonus and incentive compensation each year as may be awarded by the Human Resources Committee (or other appropriate committee) of the Board of Directors of the Company pursuant to the Company's bonus, incentive compensation and similar plans as are presently in effect or as may hereafter be adopted or amended. 8A. Salary, Bonus and Other Compensation Following a Change in Control. Upon the occurrence of a Change in Control, Executive shall be entitled, at a minimum, to the following in each year that Executive remains employed by the Company: (a) an annual base salary of no less than that paid immediately prior to such Change in Control plus a minimum annual salary increase, on each anniversary of this Agreement, equal to the cumulative change in the Consumer Price Index; (b) bonus and incentive compensation (including both cash and stock components) each year of no less than the greater of (i) the amount of bonus and incentive compensation received in the year immediately prior to such Change in Control or (ii) in the event Executive was promised or led to expect bonus and/or incentive compensation under any plans based upon the achievement of financial, operating or personal targets or goals, the amount that would have been payable to Executive as if such targets or goals were met for the 6 year in question ( Par Bonus ); (c) pension benefits, supplemental retirement benefits, deferred compensation and salaried continuation plans, incentive stock awards, stock option plans, medical, health, life, accident and disability insurance plans and programs, auto and business expense reimbursements, vacations and other benefits of not less than the type and amount paid or granted to Executive immediately prior to such Change in Control; (d) office space and secretarial services equivalent to those existing immediately prior to such Change in Control. 9. Further Benefits. In addition to the compensation provided in Paragraph 7 and Paragraph 8 hereof, Executive shall, during the term of this Agreement (and thereafter to the extent provided herein or in such plans), be covered by all applicable Company pension and retirement plans, insurance and death benefits in effect for all salaried employees, together with any future improvements in such plans and benefits. In addition, Executive shall be entitled during the term of this Agreement (and thereafter to the extent provided for herein or in any such plan) to receive such other and further benefits, including, without limitation, benefits under stock option plans, supplemental retirement plans, performance unit plans, deferred compensation and salary continuation plans, medical, health, life, accident and disability insurance programs, pension benefits, vacations, expense reimbursements and any and all other benefits as shall be generally made applicable to key executive employees of the Company, and such additional benefits, as may be granted to him from time-to-time by the Board of Directors of the Company or the appropriate committee thereof. 10. Covenant Against Competition. Except as hereafter provided, executive agrees that at all times during the term of this Agreement and for a period of one year following the date on which Executive's employment is terminated, Executive will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, as owner, partner, officer or employee, engage in any business which is substantially competitive with any business then actively conducted by the Company or by any of its subsidiaries, or undertake to consult with or advise any such competitive business, or otherwise, directly or indirectly, engage in any activity which is substantially competitive with or in any way adversely and substantially affecting any activity of the Company or any of its subsidiaries, provided, however, that ownership by Executive of not more than 5% of the outstanding shares of stock of any such business listed on any national stock exchange or quoted on an automated quotation system, or of not more than 15% of the stock of any such business not so listed or quoted, shall not be deemed a violation of this covenant. In the event of the occurrence of a Change in Control the covenant against competition contained in this paragraph shall be void and not applicable. 11. Confidentiality and Proprietary Information. Executive agrees to be bound by the provisions of the Employee Proprietary Rights and Confidentiality Agreement attached hereto as Exhibit "A and incorporated herein. The provisions of such agreement supplement and are in addition to Executive's obligations under this Agreement. 12. Certain Remedies. If Executive commits a breach or threatens to commit a 7 breach of any of the provisions of Paragraph 10 hereof or the agreement described in Paragraph 11, the Company shall have the right and remedy, in addition to any other remedy that may be available, at law or in equity, to have the provisions of Paragraph 10 and the agreement described in Paragraph ll specifically enforced by any court having equity jurisdiction together with an accounting for any damages sustained, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. Such an injunction shall be available without the posting of any bond or other security, and Executive hereby consents to the issuance of such injunction. If any covenant contained in Paragraph 10 or the agreement described in Paragraph 11, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration and/or area of such covenant and, in its reduced form, said covenant shall then be enforceable. 13. Disability. Employee shall be considered disabled (or a Disability shall have occurred) in the event Executive is unable to perform his services under this Agreement for a continuous period of six months by reason of his physical or mental illness or incapacity. If there is any dispute as to whether Executive is or was physically or mentally unable to perform his duties under this Agreement, such question shall be submitted to a licensed physician agreed to by Executive (or any legal guardian lawfully appointed) and the Company, or, if they are unable to so agree, appointed by the President of the Medical Society of Milwaukee County, Wisconsin at the request of either Executive (or such guardian) or the Company. Executive shall submit to such examinations and provide such information as such physician may reasonably request and the determination of such physician as to Executive's physical or mental condition shall be binding and conclusive upon Executive and the Company. If Executive shall become Disabled, in lieu of any further salary or other compensation provided for in Paragraph 7 and Paragraph 8 hereof (except to the extent that such salary or other compensation was earned but not paid prior to Disability), the Company shall thereafter pay to Executive the benefits under the Company's short-term disability plan as long as applicable and then the Company's long-term disability plan in effect at the date of this Agreement, together with any improvements in said plans in the future which provide additional or more favorable benefits to Executive. 14. Prior Service Credit. Executive is hereby granted credit, for purposes of the Company's pension plans, for the years of continuous employment with Executive's immediate prior employer, Joy Manufacturing Company. However, any payments under the Company's pension plans to Executive shall be reduced by any pension or similar benefits payable to Executive by such prior employer. 15. Termination by Company. (a) The Company shall have the right to terminate this Agreement (and Executive's 8 employment) only upon the death or Disability of Executive or for Cause. For purpose of this Agreement, Cause shall mean (i) Executive's willful and continued failure to substantially perform the reasonably assigned duties with the Company which are consistent with Executive s position and job description referred to in this Agreement and, in the event of a Change in Control, those duties assigned prior to the Change in Control, other than any such failure resulting from incapacity due to physical or mental illness, after a written demand for substantial performance is delivered to Executive by the Board of Directors of the Company which specifically identifies the manner in which Executive has not substantially performed the assigned duties, or (ii) Executive's willful engagement in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph, no act, or failure to act, on Executive's part shall be considered willful unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or based upon the advise of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board of Directors Executive was guilty of the conduct set forth above in (i) or (ii) of this paragraph and specifying the particulars thereof in detail. (b) Forfeiture. If Executive is terminated for Cause pursuant to Paragraph 15, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). 16. Termination of this Agreement by Executive in Certain Circumstances. (a) Voluntary Termination. Subject to the restrictions in Paragraph 4, Executive may terminate this Agreement other than for Good Reason (as hereinafter defined) upon 30 days prior written notice to the Company. Upon such termination, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). (b) Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement for Good Reason at any time during the term hereof unless this Agreement has previously expired or been terminated by reason of (i) the death or Disability of Executive, (ii) attainment by Executive of age 65, (iii) termination of this Agreement by the Company for Cause, or (iv) voluntary termination of this Agreement by Executive other than for Good Reason. Termination by Executive for Good Reason shall mean termination by Executive of his employment hereunder (1) for any reason within the twelve (12) months following the expiration of the committed employment period specified in Paragraph 4(i), (ii) or (iii) hereof (provided a Change in Control has occurred), or (2) because of: 9 (a) the assignment to Executive without his express written consent of any duties or functions inconsistent with his present positions, duties, responsibilities, authority and status with the Company, or a change in his present reporting responsibilities, titles or offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such positions; or (b) failure to provide Executive with the bonus and incentive compensation required by Paragraph 8A(b) of this Agreement or the exclusion of Executive from any management, incentive compensation or bonus programs maintained by the Company from time-to-time in its discretion and of a type in which Executive participated at the inception of this Agreement or in which key executives in general participate; or (c) the failure by the Company to provide or maintain the benefits described in Paragraph 8A(c) and (d) of this Agreement or the failure by the Company to maintain the deferred compensation plans, pension and retirement plans (including supplemental retirement plans), life insurance and other fringe benefit plans maintained by the Company at the inception of this Agreement; or (d) the failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (e) the failure by the Company to pay the annual base salary and annual increases required by Paragraph 8A(a) of this Agreement or any reduction in the base salary currently being paid to Executive; or (f) any other material breach by the Company of any of the terms of this Agreement; or (g) any purported termination by the Company of this Agreement or Executive's employment hereunder which is not effected pursuant to a Notice of Termination (as hereinafter defined) and which does not satisfy the requirements of Paragraph 15 hereof. (c) Termination Payments. Upon any termination by Executive of his employment under this Agreement pursuant to Paragraph 16(b), or upon any termination of Executive's employment by the Company during the term hereof other than for Cause, Disability or death, the Company shall forthwith: (i) pay to Executive in cash the following accrued benefits ( Accrued Benefits ) (a) all salary earned or accrued through the termination date; (b) reimburse Executive for any and all monies advanced in connection with Executive's employment for reasonable and necessary expenses incurred by 10 Executive through the termination date; (c) pay any and all bonus, cash and other benefits previously earned through the termination date and deferred at the election of Executive or pursuant to any deferred compensation plans then in effect; (d) make a pro rata (based upon the portion of such fiscal year that Executive was an employee of the Company) lump sum payment of any bonus and incentive compensation (including both cash and stock components) otherwise payable to Executive with respect to the year in which termination occurs under any bonus and incentive plan(s) in which Executive is a participant; and (e) pay all other amounts and benefits to which Executive may be entitled under the terms of any benefit plan of the Company. Payment of amounts other than those described in subsections (d) and (e) hereof shall be made within 10 days after the termination date. Payment of amounts under subsections (d) and (e) hereof shall be made pursuant to the terms of any such plans either by the Company or a trust implementing such plan; plus (ii) pay to Executive in cash in a lump sum an amount equal to the product of three (3) (or, if less, the whole number of years (rounded upward) remaining, at the time of such termination, until Executive would attain age 65) times the sum of (1) the annual base salary payable to Executive hereunder immediately prior to such termination plus (2) the greater of the average annual amount to which Executive became entitled (whether paid, payable or deferred) under all bonus, incentive compensation and other plan(s) of the Company during the three years (or number of years that Executive participated therein, if less) preceding such termination or the Par Bonus; and (iii) to the extent permissible under the applicable plans, take all actions necessary to cause all restricted stock, stock options and any accompanying stock appreciation rights to become automatically vested and exercisable upon such termination; plus (iv) in addition to the retirement benefits to which Executive is entitled under the Company's retirement plan(s) or any successor plans thereto, the Company shall pay to Executive not later than the tenth day following the termination date, a lump sum, in cash, equal to the actuarial equivalent of the excess of (a) the retirement pension (determined as a straight life annuity commencing at age 65) which Executive would have accrued under the terms of the Company's retirement plan (without regard to the limitations imposed by section 415 of the Internal Revenue Code of 1954, as amended (the Code ), or any amendment to the retirement plan made subsequent to a Change in Control of the Company and on or prior to the termination date, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if Executive had rendered (after the termination date) three additional years of credited service thereunder, and as if Executive had accumulated three additional calendar years of compensation (for purposes of determining Monthly Compensation as defined in the Company's retirement plan), each in an amount equal to the amount for the 11 highest calendar year out of the final ten calendar years preceding the termination date, but in no event shall Executive be deemed to have accumulated additional credited service after Executive's 65th birthday, over (b) the retirement pension (determined as a straight life annuity commencing at age 65), which Executive had then accrued pursuant to the provisions of the Company's retirement plan(s). For purposes of this Subsection, actuarial equivalent shall be determined using the same methods and assumptions utilized under the Company's retirement plan(s) immediately prior to the Change in Control of the Company. Provided, however, that to the extent that all or a portion of such amount is payable pursuant to any other arrangement established by the Company, the amount to which Executive shall be entitled pursuant to this Subsection shall be reduced by such amount; and (v) pay Executive in cash for any vacation time earned but not taken at the termination date, at an hourly rate equal to the annual base salary as in effect immediately prior to the termination date divided by 2080. Notwithstanding any other provisions of this Agreement, for purposes of the Company's salaried pension plan and its medical, health, life, accident and disability insurance programs, Executive shall, in the event of any termination which entitles Executive to the payments described in Paragraph 16(c) hereof, be considered and deemed, for a period of 3 years following such termination or until Executive attains the age of 65 or until reasonably equivalent benefits are paid or extended by a new employer, whichever first occurs, to be a full-time employee of the Company and be entitled to all benefits, rights and privileges thereunder. If at the end of three years Executive has not attained the age of 65 or has not previously received or is not then receiving equivalent benefits from a new employer, the Company shall arrange, at its sole cost and expense, to enable Executive to convert the coverage under such policies to equivalent individual policies. To the extent necessary for application of this paragraph, Executive's annual compensation during the aforesaid period shall be deemed to be equal to the amount described in Paragraph 16(c)(ii)(1) plus the amount described in Paragraph 16(c)(ii)(2). 17. Tax Protection. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section l7) (a Payment ) would be subject to the excise tax imposed by Section 4999 of the Code (or any amendments thereof or any similar tax that may be imposed, and regulations thereunder) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the Excise Tax ), then the Executive shall be entitled to receive an additional payment (a Gross-Up Payment ) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 12 Notwithstanding the foregoing provisions of this Section l7 (a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $l0,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount ( the Reduced Amount ) such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. (b) Subject to the provisions of Section l7(c), all determinations required to be made under this Section l7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Price Waterhouse or such other nationally recognized certified public accounting firm as may be designated by the Executive (the Accounting Firm ) which shall provide detailed supporting calculations both to the Company and the Executive within l5 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section l7, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ( Underpayment ), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section l7(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: 13 (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time-to-time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section l7(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance; or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section l7(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company s complying with the requirements of Section l7(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an 14 amount advanced by the Company pursuant to Section l7(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) It is the intent of this provision to avoid any diminution in payments to which Executive is entitled under this Agreement by virtue of the imposition of any excise or similar taxes (excluding income taxes) and to make Executive whole should any such taxes be imposed. 18. No Diminution of Payments. Executive shall not be required to mitigate the amount of any payment provided for in Paragraph 16, Paragraph 17 or any other provision of this Agreement, and no such payment shall be reduced by any present value factor or any other compensation or amount payable to Executive by the Company or any other employer or source, or for any other reason. The payments provided by Paragraph 16 and Paragraph 17 are in addition to, and not in lieu of, any other rights, benefits or entitlements Executive may have under the provisions of any other plan. It is the expectation and agreement of the parties, in consideration of the mutual promises herein, that no amount payable hereunder shall be reduced by any court or arbitrator, regardless of the legal theory advanced. 19. Notice of Termination; Effect. (a) Notice. Any purported termination of this Agreement by the Company for Cause or Disability or by Executive pursuant to Paragraph 16(b) hereof shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. No such purported termination shall be effective if not effected pursuant to a Notice of Termination satisfying the requirements of this Paragraph 19. (b) Effect. No termination of this Agreement shall affect any right or obligation of any party accrued prior thereto and, further, no such termination shall affect the provisions of Paragraph 10, 11, 12, 16, 17, 18, 19, 20, 21, 22 and 23 hereof, all of which shall remain in effect notwithstanding any such termination. 20. Payment Obligations Absolute. The Company's obligation during and after the term hereof to pay or cause to be paid to Executive the compensation and payments provided for in this Agreement and to make the arrangements provided herein shall be absolute and unconditional and shall not be diminished, reduced or affected by any circumstances, including, 15 without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against Executive or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final. 21. Superseding Effect - Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties with respect to the subject matter hereof and constitutes the entire agreement of the parties with respect thereto. No provision of this Agreement (including this Paragraph 21) may be waived, amended, or otherwise modified except by a subsequent written agreement executed by the parties hereto. 22. Venue; Expenses. Any action concerning this Agreement may be brought in the federal or state courts located in the County of Milwaukee, Wisconsin, and each party consents to the venue and jurisdiction of such courts. The Company shall pay all legal fees and expenses incurred by Executive in connection with or as a result of termination following a Change in Control (including any fees incurred in contesting or disputing any termination). In addition, if a dispute arises with respect to the Company's obligations or Executive's rights under this Agreement, or if any legal proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, or in the event of any other litigation involving this Agreement, Executive shall recover from the Company all attorneys' fees and costs and disbursements incurred as a result of such dispute or legal proceeding, regardless of the outcome, plus prejudgment interest on any money judgement obtained by the Executive, calculated at the rate of interest announced by First Wisconsin National Bank of Milwaukee from time-to-time as its prime rate, plus 2.0%, from the date that payments to Executive should have been made under this Agreement. 23. Assignment; Binding Effect. (a) This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties hereto and their respective successors and assigns, provided that (i) this Agreement is a personal service agreement and no right hereunder may be assigned by Executive except as contemplated by Paragraph 23(c) hereof and (ii) unless the Company shall have complied with this Paragraph 23, no right hereunder may be assigned or transferred by the Company by operation of law or otherwise. Any purported assignment or transfer in violation of this Paragraph 23 shall be null and void. (b) The Company will obtain from any purchaser or other assignee or transferee of or successor to all or substantially all of the business or assets of the Company, (whether direct or indirect, by purchase, merger, consolidation or otherwise), an agreement in form and substance satisfactory to Executive, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it as if no such purchase had taken place. As used in this Agreement, the term Company shall mean Harnischfeger Industries, Inc., as hereinbefore defined and any successor to or purchaser, 16 transferee or assignee of its business or assets. The failure to obtain such an assumption within sixty days following the closing of any such purchase, assignment or transfer shall thereupon immediately entitle Executive to invoke all rights granted in Paragraph 16. (c) This Agreement shall inure to the benefit of and be enforceable by the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of Executive. 24. Withholding. The Company shall be entitled to withhold from amounts to be paid to Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time-to-time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of any such withholding shall arise. 25. Invalidity. If a court shall determine that any provision of this Agreement is invalid or unenforceable as written, it is the intention of the parties that such provision be interpreted or judicially modified so as to enable such provision to be enforced to the maximum extent permissible. Any invalid or unenforceable provision which cannot be so modified shall be severed from this Agreement and shall not affect the validity or enforceability of any other provisions of this Agreement. 26. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Harnischfeger Industries, Inc., Attention: Secretary, 13400 Bishops Lane, Brookfield, Wisconsin 53005, or if to Executive, at the address set forth below the Executive's signature line of this Agreement, or to such other address as the party to be notified shall have given in writing to the other. 27. No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provisions of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 28. Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provisions of this Agreement. IN WITNESS WHEREOF, Executive has affixed his hand hereto, and pursuant to due authorization from its Board of Directors the Company has caused this instrument to be executed by a duly authorized officer thereof, as of the day and year first above written. 17 /s/Francis M. Corby, Jr. ------------------------ Francis M. Corby, Jr. 18960 Alta Vista Drive Brookfield, WI 53045 HARNISCHFEGER INDUSTRIES, INC. By /s/Jeffery T. Grade -------------------- Chief Executive Officer and Chairman of the Board exhibit 10(k) KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT This Agreement is made, entered into and effective as of October 8, 1995 between K. Thor Lundgren ( Executive ) and Harnischfeger Industries, Inc., a Delaware corporation ("Company"). W I T N E S S E T H : WHEREAS, the Company has determined it is in the best interests of the Company and its stockholders to assure that Executive is in a position to objectively evaluate all proposals for acquisition of the Company (recognizing that no such proposal is pending) and has determined this Agreement, including the severance provisions, will assure such independent evaluation; WHEREAS, the Company recognizes the need to provide a level of compensation and relative security that is competitive with that of other publicly held companies and which provides the necessary economic and performance incentives that will be of benefit to Company stockholders in the long term; WHEREAS, in the event that Executive's position is eliminated or his employment is terminated as a result of an acquisition of the Company it would be difficult to calculate the losses and detriment which would be incurred by Executive in such circumstances; and WHEREAS, in view of Executive's intimate knowledge of the business and affairs of Company and his experience and demonstrated skill and ability in performing services for Company and his unique qualifications which are needed by the Company, and to assure that Executive shall continue to serve the Company; WHEREAS, the Company requested an independent review by its attorneys of the terms of this Key Executive Employment And Severance Agreement ( Agreement ) and following such review its attorneys have recommended certain amendments to this Agreement; and WHEREAS, the Company s Human Resources Committee has reviewed such proposed amendments with such attorneys and has determined such amendments to be necessary and appropriate and the Board of Directors of the Company ( Board ) has further approved such amendments; In consideration of each of the specific premises set forth above and in further consideration of the mutual agreements set forth herein, the parties agree as follows: 2 1. Employment by the Company of Executive and Acceptance by Executive. The Company hereby employs Executive during the term of this Agreement in such capacities and upon such conditions concerning rates of compensation, benefits and other matters as are hereinafter stated. Executive hereby accepts such employment and agrees faithfully, diligently and to the best of his ability to discharge the responsibilities of the offices which he shall, as provided herein, occupy. 2. Capacity. Executive shall be employed during the term of this Agreement as Executive Vice President Law and Government Affairs, Secretary and General Counsel of the Company with such duties, functions, responsibilities and authority which are commensurate with and appropriate for such positions and as are from time-to-time set forth in the Bylaws of the Company and otherwise delegated to Executive by the Chief Executive Officer or the Board of Directors of the Company; provided that such duties, functions and responsibilities shall not be materially changed, without Executive's consent, from such duties, functions and responsibilities as are currently performed and enjoyed by Executive. Executive shall be a full- time employee of the Company and shall devote his best efforts to the performance and fulfillment of such duties, functions and responsibilities; provided that Executive shall be permitted such vacations and other time off as are consistent with his position and period of service and the general rules and practices of the Company in that regard, it being understood for this purpose that such rules and practices shall not be materially less favorable to Executive than those presently in effect. 3. Place of Employment; Moving. While it is recognized that the performance of Executive's duties hereunder will occasionally require Executive to travel on behalf of the Company, the principal office of Executive and the principal place for performance by him of his services hereunder shall be in the Milwaukee, Wisconsin metropolitan area, and Executive shall not, without his consent, be required to perform the principal portion of his services hereunder outside of such area. However, the Company may require from time-to-time that Executive perform such services outside the Milwaukee, Wisconsin metropolitan area as are required for the proper performance by him of his duties during any reasonable period or periods, but, unless the consent of Executive is obtained, such periods shall not exceed in the aggregate two months during any twelve-month period. If Executive shall consent to carry out his duties hereunder at some place other than the Milwaukee, Wisconsin metropolitan area, and, as a result thereof, it shall be or become necessary for Executive to move his place of residence, the Company shall reimburse Executive under the terms of the Company's employee relocation assistance plan in effect as of the date of this Agreement or, if more favorable to Executive, under the terms of any such practice adopted by the Company in the future. 4. Term. Subject to the other provisions of this Agreement, the term of this Agreement and Executive's employment hereunder shall be deemed to have commenced on the date of this Agreement and shall continue for a period of three years thereafter or, if earlier, until Executive reaches age 65 or until his death or Disability (as hereafter defined), whichever occurs first. Subject to the other provisions of this Agreement, commencing on the first 3 anniversary of this Agreement and on each anniversary thereafter, the term of this Agreement and Executive's employment hereunder shall, unless Executive has reached age 62 or died or become "Disabled" (as hereinafter defined) before such date, be automatically extended for a period of one additional year unless at least thirty days prior to such date Executive shall notify the Company in writing that Executive does not extend the term of this Agreement or the Company notifies Executive that, for Cause (as hereafter defined), the Company does not extend the term of this Agreement, which notice shall be in writing and set forth the grounds for Cause. Notwithstanding the foregoing but subject to Executive's right to terminate his employment for Good Reason (as hereafter defined), in the event of a Potential Change in Control (as hereafter defined) or a Change in Control (as hereafter defined) Executive will not terminate employment with the Company until the earliest of (i) a date which is twelve months from the occurrence of such Potential Change in Control, (ii) the termination of Executive's employment due to Disability or retirement at age 65 or (iii) a date which is twelve months from the occurrence of such Change in Control. In the event of a Change In Control, the term of this Agreement shall be extended for three years from the date of such Change In Control and there shall be no further extension of the term. The provisions of this Agreement, if extended, shall be identical to those of this Agreement as in effect immediately prior to such extension except that the annual base salary provided for herein shall be equal to the annual rate of base salary currently being paid to Executive immediately preceding the date on which such extension becomes effective. 5. Change in Control. For the purposes of this Agreement, a Change in Control shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section l3 (d) (3) or l4 (d) (2) of the Securities Exchange Act of l934, as amended (the Exchange Act )) (a Person ) of beneficial ownership (within the meaning of Rule l3d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock ) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities ); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iii) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection c; or (b) Individuals who, as of the date hereof, constitute the Board (the Incumbent Board ) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company s shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, 4 for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or any other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation of a reorganization, merger or consolidation or a sale or other disposition of all or substantially all of the assets of the Company (a Business Combination ) in each case, unless, following such Business Combination, (i) all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 80% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least two-thirds (2/3) of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. . 6. Potential Change in Control. One or more of the following shall constitute and be defined as a Potential Change in Control : (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or (b) any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) who is or becomes the Beneficial Owner, directly or indirectly, of 9.5% or 5 more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, increases his beneficial ownership of such stock or securities by 5% or more over the percentage so owned by such Person; or (c) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change In Control has occurred. For all purposes of this Agreement, if the facts giving rise to a Potential Change in Control cease to exist without any Change in Control having occurred, the provisions of this Agreement which are triggered by such Potential Change in Control shall no longer be effective unless another Potential Change in Control or any Change in Control occurs. 7. Salary Compensation. As salary compensation to Executive for his performance of the services to be rendered hereunder and for his acceptance of the responsibilities described herein and for his performance of all the usual obligations of employment, the Company agrees to pay to Executive, and Executive agrees to accept, during the term of this Agreement an annual base salary of not less than $250,920 per year or such greater amount as the Board of Directors may from time-to-time determine, payable in equal semi-- monthly installments. At least annually the Board of Directors of the Company, or the Human Resources Committee or such other committee to which the Board may have delegated such authority, shall review such base salary to determine whether it should be increased on the basis of Executive's performance, that of the Company, or other circumstances then prevailing. The results of each review shall be communicated to and discussed with Executive by the Chief Executive Officer or Board of Directors or such Committee. 8. Bonus and Incentive Compensation. In addition to the salary compensation payable to Executive as provided in Paragraph 7 hereof, Executive shall be entitled during the term of this Agreement to receive such bonus and incentive compensation each year as may be awarded by the Human Resources Committee (or other appropriate committee) of the Board of Directors of the Company pursuant to the Company's bonus, incentive compensation and similar plans as are presently in effect or as may hereafter be adopted or amended. 8A. Salary, Bonus and Other Compensation Following a Change In Control. Upon the occurrence of a Change in Control, Executive shall be entitled, at a minimum, to the following in each year that Executive remains employed by the Company: (a) an annual base salary of no less than that paid immediately prior to such Change in Control plus a minimum annual salary increase, on each anniversary of this Agreement, equal to the cumulative change in the Consumer Price Index; (b) bonus and incentive compensation (including both cash and stock components) each year of no less than the greater of (i) the amount of bonus and incentive compensation received in the year immediately prior to such Change in Control or (ii) in the event Executive was promised or led to expect bonus and/or incentive compensation under any plans based upon the achievement of financial, operating or personal targets or goals, the 6 amount that would have been payable to Executive as if such targets or goals were met for the year in question ( Par Bonus ); (c) pension benefits, supplemental retirement benefits, deferred compensation and salaried continuation plans, incentive stock awards, stock option plans, medical, health, life, accident and disability insurance plans and programs, auto and business expense reimbursements, vacations and other benefits of not less than the type and amount paid or granted to Executive immediately prior to such Change in Control; (d) office space and secretarial services equivalent to those existing immediately prior to such Change in Control. 9. Further Benefits. In addition to the compensation provided in Paragraph 7 and Paragraph 8 hereof, Executive shall, during the term of this Agreement (and thereafter to the extent provided herein or in such plans), be covered by all applicable Company pension and retirement plans, insurance and death benefits in effect for all salaried employees, together with any future improvements in such plans and benefits. In addition, Executive shall be entitled during the term of this Agreement (and thereafter to the extent provided for herein or in any such plan) to receive such other and further benefits, including, without limitation, benefits under stock option plans, supplemental retirement plans, performance unit plans, deferred compensation and salary continuation plans, medical, health, life, accident and disability insurance programs, pension benefits, vacations, expense reimbursements and any and all other benefits as shall be generally made applicable to key executive employees of the Company, and such additional benefits, as may be granted to him from time-to-time by the Board of Directors of the Company or the appropriate committee thereof. 10. Covenant Against Competition. Except as hereafter provided, executive agrees that at all times during the term of this Agreement and for a period of one year following the date on which Executive's employment is terminated, Executive will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, as owner, partner, officer or employee, engage in any business which is substantially competitive with any business then actively conducted by the Company or by any of its subsidiaries, or undertake to consult with or advise any such competitive business, or otherwise, directly or indirectly, engage in any activity which is substantially competitive with or in any way adversely and substantially affecting any activity of the Company or any of its subsidiaries, provided, however, that ownership by Executive of not more than 5% of the outstanding shares of stock of any such business listed on any national stock exchange or quoted on an automated quotation system, or of not more than 15% of the stock of any such business not so listed or quoted, shall not be deemed a violation of this covenant. In the event of the occurrence of a Change in Control the covenant against competition contained in this paragraph shall be void and not applicable. 11. Confidentiality and Proprietary Information. Executive agrees to be bound by the provisions of the Employee Proprietary Rights and Confidentiality Agreement attached hereto as Exhibit "A and incorporated herein. The provisions of such agreement supplement and are in addition to Executive's obligations under this Agreement. 7 12. Certain Remedies. If Executive commits a breach or threatens to commit a breach of any of the provisions of Paragraph 10 hereof or the agreement described in Paragraph 11, the Company shall have the right and remedy, in addition to any other remedy that may be available, at law or in equity, to have the provisions of Paragraph 10 and the agreement described in Paragraph ll specifically enforced by any court having equity jurisdiction together with an accounting for any damages sustained, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. Such an injunction shall be available without the posting of any bond or other security, and Executive hereby consents to the issuance of such injunction. If any covenant contained in Paragraph 10 or the agreement described in Paragraph 11, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration and/or area of such covenant and, in its reduced form, said covenant shall then be enforceable. 13. Disability. Employee shall be considered disabled (or a Disability shall have occurred) in the event Executive is unable to perform his services under this Agreement for a continuous period of six months by reason of his physical or mental illness or incapacity. If there is any dispute as to whether Executive is or was physically or mentally unable to perform his duties under this Agreement, such question shall be submitted to a licensed physician agreed to by Executive (or any legal guardian lawfully appointed) and the Company, or, if they are unable to so agree, appointed by the President of the Medical Society of Milwaukee County, Wisconsin at the request of either Executive (or such guardian) or the Company. Executive shall submit to such examinations and provide such information as such physician may reasonably request and the determination of such physician as to Executive's physical or mental condition shall be binding and conclusive upon Executive and the Company. If Executive shall become Disabled, in lieu of any further salary or other compensation provided for in Paragraph 7 and Paragraph 8 hereof (except to the extent that such salary or other compensation was earned but not paid prior to Disability), the Company shall thereafter pay to Executive the benefits under the Company's short-term disability plan as long as applicable and then the Company's long-term disability plan in effect at the date of this Agreement, together with any improvements in said plans in the future which provide additional or more favorable benefits to Executive. 14. Prior Service Credit. Executive is hereby granted credit, for purposes of the Company's pension plans, for the years of continuous employment with Executive's immediate prior employer, Michael Best & Friedrich. However, any payments under the Company's pension plans to Executive shall be reduced by any pension or similar benefits payable to Executive by such prior employer. 15. Termination by Company. 8 (a) The Company shall have the right to terminate this Agreement (and Executive's employment) only upon the death or Disability of Executive or for Cause. For purpose of this Agreement, Cause shall mean (i) Executive's willful and continued failure to substantially perform the reasonably assigned duties with the Company which are consistent with Executive s position and job description referred to in this Agreement and, in the event of a Change in Control, those duties assigned prior to the Change in Control, other than any such failure resulting from incapacity due to physical or mental illness, after a written demand for substantial performance is delivered to Executive by the Board of Directors of the Company which specifically identifies the manner in which Executive has not substantially performed the assigned duties, or (ii) Executive's willful engagement in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph, no act, or failure to act, on Executive's part shall be considered willful unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or based upon the advise of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board of Directors Executive was guilty of the conduct set forth above in (i) or (ii) of this paragraph and specifying the particulars thereof in detail. (b) Forfeiture. If Executive is terminated for Cause pursuant to Paragraph 15, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). 16. Termination of this Agreement by Executive in Certain Circumstances. (a) Voluntary Termination. Subject to the restrictions in Paragraph 4, Executive may terminate this Agreement other than for Good Reason (as hereinafter defined) upon 30 days prior written notice to the Company. Upon such termination, Executive shall be entitled to receive only the Accrued Benefits described in Paragraph 16(c)(i). (b) Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement for Good Reason at any time during the term hereof unless this Agreement has previously expired or been terminated by reason of (i) the death or Disability of Executive, (ii) attainment by Executive of age 65, (iii) termination of this Agreement by the Company for Cause, or (iv) voluntary termination of this Agreement by Executive other than for Good Reason. Termination by Executive for Good Reason shall mean termination by Executive of his employment hereunder (1) for any reason within the twelve (12) months following the expiration of the committed employment period specified in 9 Paragraph 4(i), (ii) or (iii) hereof (provided a Change in Control has occurred), or (2) because of: (a) the assignment to Executive without his express written consent of any duties or functions inconsistent with his present positions, duties, responsibilities, authority and status with the Company, or a change in his present reporting responsibilities, titles or offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such positions; or (b) failure to provide Executive with the bonus and incentive compensation required by Paragraph 8A(b) of this Agreement or the exclusion of Executive from any management, incentive compensation or bonus programs maintained by the Company from time-to-time in its discretion and of a type in which Executive participated at the inception of this Agreement or in which key executives in general participate; or (c) the failure by the Company to provide or maintain the benefits described in Paragraph 8A(c) and (d) of this Agreement or the failure by the Company to maintain the deferred compensation plans, pension and retirement plans (including supplemental retirement plans), life insurance and other fringe benefit plans maintained by the Company at the inception of this Agreement; or (d) the failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (e) the failure by the Company to pay the annual base salary and annual increases required by Paragraph 8A(a) of this Agreement or any reduction in the base salary currently being paid to Executive; or (f) any other material breach by the Company of any of the terms of this Agreement; or (g) any purported termination by the Company of this Agreement or Executive's employment hereunder which is not effected pursuant to a Notice of Termination (as hereinafter defined) and which does not satisfy the requirements of Paragraph 15 hereof. (c) Termination Payments. Upon any termination by Executive of his employment under this Agreement pursuant to Paragraph 16(b), or upon any termination of Executive's employment by the Company during the term hereof other than for Cause, Disability or death, the Company shall forthwith: (i) pay to Executive in cash the following accrued benefits ( Accrued Benefits ) (a) all salary earned or accrued through the termination date; (b) 10 reimburse Executive for any and all monies advanced in connection with Executive's employment for reasonable and necessary expenses incurred by Executive through the termination date; (c) pay any and all bonus, cash and other benefits previously earned through the termination date and deferred at the election of Executive or pursuant to any deferred compensation plans then in effect; (d) make a pro rata (based upon the portion of such fiscal year that Executive was an employee of the Company) lump sum payment of any bonus and incentive compensation (including both cash and stock components) otherwise payable to Executive with respect to the year in which termination occurs under any bonus and incentive plan(s) in which Executive is a participant; and (e) pay all other amounts and benefits to which Executive may be entitled under the terms of any benefit plan of the Company. Payment of amounts other than those described in subsections (d) and (e) hereof shall be made within 10 days after the termination date. Payment of amounts under subsections (d) and (e) hereof shall be made pursuant to the terms of any such plans either by the Company or a trust implementing such plan; plus (ii) pay to Executive in cash in a lump sum an amount equal to the product of three (3) (or, if less, the whole number of years (rounded upward) remaining, at the time of such termination, until Executive would attain age 65) times the sum of (1) the annual base salary payable to Executive hereunder immediately prior to such termination plus (2) the greater of the average annual amount to which Executive became entitled (whether paid, payable or deferred) under all bonus, incentive compensation and other plan(s) of the Company during the three years (or number of years that Executive participated therein, if less) preceding such termination or the Par Bonus; and (iii) to the extent permissible under the applicable plans, take all actions necessary to cause all restricted stock, stock options and any accompanying stock appreciation rights to become automatically vested and exercisable upon such termination; plus (iv) in addition to the retirement benefits to which Executive is entitled under the Company's retirement plan(s) or any successor plans thereto, the Company shall pay to Executive not later than the tenth day following the termination date, a lump sum, in cash, equal to the actuarial equivalent of the excess of (a) the retirement pension (determined as a straight life annuity commencing at age 65) which Executive would have accrued under the terms of the Company's retirement plan (without regard to the limitations imposed by section 415 of the Internal Revenue Code of 1954, as amended (the Code ), or any amendment to the retirement plan made subsequent to a Change in Control of the Company and on or prior to the termination date, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if Executive had 11 rendered (after the termination date) three additional years of credited service thereunder, and as if Executive had accumulated three additional calendar years of compensation (for purposes of determining Monthly Compensation as defined in the Company's retirement plan), each in an amount equal to the amount for the highest calendar year out of the final ten calendar years preceding the termination date, but in no event shall Executive be deemed to have accumulated additional credited service after Executive's 65th birthday, over (b) the retirement pension (determined as a straight life annuity commencing at age 65), which Executive had then accrued pursuant to the provisions of the Company's retirement plan(s). For purposes of this Subsection, actuarial equivalent shall be determined using the same methods and assumptions utilized under the Company's retirement plan(s) immediately prior to the Change in Control of the Company. Provided, however, that to the extent that all or a portion of such amount is payable pursuant to any other arrangement established by the Company, the amount to which Executive shall be entitled pursuant to this Subsection shall be reduced by such amount; and (v) pay Executive in cash for any vacation time earned but not taken at the termination date, at an hourly rate equal to the annual base salary as in effect immediately prior to the termination date divided by 2080. Notwithstanding any other provisions of this Agreement, for purposes of the Company's salaried pension plan and its medical, health, life, accident and disability insurance programs, Executive shall, in the event of any termination which entitles Executive to the payments described in Paragraph 16(c) hereof, be considered and deemed, for a period of 3 years following such termination or until Executive attains the age of 65 or until reasonably equivalent benefits are paid or extended by a new employer, whichever first occurs, to be a full-time employee of the Company and be entitled to all benefits, rights and privileges thereunder. If at the end of three years Executive has not attained the age of 65 or has not previously received or is not then receiving equivalent benefits from a new employer, the Company shall arrange, at its sole cost and expense, to enable Executive to convert the coverage under such policies to equivalent individual policies. To the extent necessary for application of this paragraph, Executive's annual compensation during the aforesaid period shall be deemed to be equal to the amount described in Paragraph 16(c)(ii)(1) plus the amount described in Paragraph 16(c)(ii)(2). 17. Tax Protection. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section l7) (a Payment ) would be subject to the excise tax imposed by Section 4999 of the Code (or any amendments thereof or any similar tax that may be imposed, and regulations thereunder) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the Excise Tax ), then the Executive shall 12 be entitled to receive an additional payment (a Gross-Up Payment ) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section l7 (a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $l0,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount ( the Reduced Amount ) such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. (b) Subject to the provisions of Section l7(c), all determinations required to be made under this Section l7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Price Waterhouse or such other nationally recognized certified public accounting firm as may be designated by the Executive (the Accounting Firm ) which shall provide detailed supporting calculations both to the Company and the Executive within l5 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section l7, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ( Underpayment ), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section l7(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. 13 The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time-to-time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section l7(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance; or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 14 (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section l7(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company s complying with the requirements of Section l7(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section l7(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) It is the intent of this provision to avoid any diminution in payments to which Executive is entitled under this Agreement by virtue of the imposition of any excise or similar taxes (excluding income taxes) and to make Executive whole should any such taxes be imposed. 18. No Diminution of Payments. Executive shall not be required to mitigate the amount of any payment provided for in Paragraph 16, Paragraph 17 or any other provision of this Agreement, and no such payment shall be reduced by any present value factor or any other compensation or amount payable to Executive by the Company or any other employer or source, or for any other reason. The payments provided by Paragraph 16 and Paragraph 17 are in addition to, and not in lieu of, any other rights, benefits or entitlements Executive may have under the provisions of any other plan. It is the expectation and agreement of the parties, in consideration of the mutual promises herein, that no amount payable hereunder shall be reduced by any court or arbitrator, regardless of the legal theory advanced. 19. Notice of Termination; Effect. (a) Notice. Any purported termination of this Agreement by the Company for Cause or Disability or by Executive pursuant to Paragraph 16(b) hereof shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. No such purported termination shall be effective if not effected pursuant to a Notice of Termination satisfying the requirements of this Paragraph 19. (b) Effect. No termination of this Agreement shall affect any right or obligation of any party accrued prior thereto and, further, no such termination shall affect the provisions of Paragraph 10, 11, 12, 16, 17, 18, 19, 20, 21, 22 and 23 hereof, all of which shall remain in effect notwithstanding any such termination. 15 20. Payment Obligations Absolute. The Company's obligation during and after the term hereof to pay or cause to be paid to Executive the compensation and payments provided for in this Agreement and to make the arrangements provided herein shall be absolute and unconditional and shall not be diminished, reduced or affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against Executive or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final. 21. Superseding Effect - Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties with respect to the subject matter hereof and constitutes the entire agreement of the parties with respect thereto. No provision of this Agreement (including this Paragraph 21) may be waived, amended, or otherwise modified except by a subsequent written agreement executed by the parties hereto. 22. Venue; Expenses. Any action concerning this Agreement may be brought in the federal or state courts located in the County of Milwaukee, Wisconsin, and each party consents to the venue and jurisdiction of such courts. The Company shall pay all legal fees and expenses incurred by Executive in connection with or as a result of termination following a Change in Control (including any fees incurred in contesting or disputing any termination). In addition, if a dispute arises with respect to the Company's obligations or Executive's rights under this Agreement, or if any legal proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, or in the event of any other litigation involving this Agreement, Executive shall recover from the Company all attorneys' fees and costs and disbursements incurred as a result of such dispute or legal proceeding, regardless of the outcome, plus prejudgment interest on any money judgement obtained by the Executive, calculated at the rate of interest announced by First Wisconsin National Bank of Milwaukee from time-to-time as its prime rate, plus 2.0%, from the date that payments to Executive should have been made under this Agreement. 23. Assignment; Binding Effect. (a) This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties hereto and their respective successors and assigns, provided that (i) this Agreement is a personal service agreement and no right hereunder may be assigned by Executive except as contemplated by Paragraph 23(c) hereof and (ii) unless the Company shall have complied with this Paragraph 23, no right hereunder may be assigned or transferred by the Company by operation of law or otherwise. Any purported assignment or transfer in violation of this Paragraph 23 shall be null and void. (b) The Company will obtain from any purchaser or other assignee or transferee of or successor to all or substantially all of the business or assets of the Company, (whether direct or indirect, by purchase, merger, consolidation or otherwise), an agreement in form and 16 substance satisfactory to Executive, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it as if no such purchase had taken place. As used in this Agreement, the term Company shall mean Harnischfeger Industries, Inc., as hereinbefore defined and any successor to or purchaser, transferee or assignee of its business or assets. The failure to obtain such an assumption within sixty days following the closing of any such purchase, assignment or transfer shall thereupon immediately entitle Executive to invoke all rights granted in Paragraph 16. (c) This Agreement shall inure to the benefit of and be enforceable by the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of Executive. 24. Withholding. The Company shall be entitled to withhold from amounts to be paid to Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time-to-time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of any such withholding shall arise. 25. Invalidity. If a court shall determine that any provision of this Agreement is invalid or unenforceable as written, it is the intention of the parties that such provision be interpreted or judicially modified so as to enable such provision to be enforced to the maximum extent permissible. Any invalid or unenforceable provision which cannot be so modified shall be severed from this Agreement and shall not affect the validity or enforceability of any other provisions of this Agreement. 26. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Harnischfeger Industries, Inc., Attention: Secretary, 13400 Bishops Lane, Brookfield, Wisconsin 53005, or if to Executive, at the address set forth below the Executive's signature line of this Agreement, or to such other address as the party to be notified shall have given in writing to the other. 27. No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provisions of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 28. Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provisions of this Agreement. IN WITNESS WHEREOF, Executive has affixed his hand hereto, and pursuant to due authorization from its Board of Directors the Company has caused this instrument to be 17 executed by a duly authorized officer thereof, as of the day and year first above written. /s/K. Thor Lundgren -------------------- K. Thor Lundgren 9911 Corey Lane Mequon, WI 53092 HARNISCHFEGER INDUSTRIES, INC. By /s/Jeffery T. Grade -------------------- Chief Executive Officer and Chairman of the Board Exhibit 10(l) INDEPENDENT CONSULTANT ---------------------- AGREEMENT ---------- This Agreement is made and entered into by and between John A. McKay ("McKay") and Harnischfeger Industries, Inc. ("Harnischfeger") in order to set forth the terms of the consultancy arrangement between the parties. WHEREAS: Harnischfeger is desirous of securing McKay's services as a consultant for a period of two (2) years beginning November 1, 1995 and ending October 31, 1997; and WHEREAS: McKay desires to perform consulting services for Harnischfeger for a period of two (2) years beginning November 1, 1995 and ending October 31, 1997; NOW THEREFORE, the parties agree as follows: 1.McKay will serve as a consultant to Harnischfeger as assigned by Harnischfeger's Chief Executive Officer. The total number of hours of service provided by McKay as a consultant shall not exceed 500 hours per year of the two year agreement. 2.As full consideration for the services to be rendered by McKay to Harnischfeger, McKay shall be paid $29,225 per month, less any deductions, withholdings or payments which are required by law for taxes and similar charges. 3.Harnischfeger agrees to reimburse McKay for any expenses reasonably incurred by McKay in performing the services requested by the Chief Executive Officer. These expenses shall be reimbursed in accordance with Harnischfeger's policies in effect for the reimbursement of expenses at the time the expenses are incurred. 4.McKay shall have the right to provide services to other companies and/or organizations EXCEPT: McKay shall not, for the period of this Agreement and for one year following the expiration or termination of this Agreement, without the prior written approval of the Board of Directors of Harnischfeger, directly or indirectly, as owner, partner, officer or employee, engage in any business, in any country where Harnischfeger promotes its products or does business, which is directly and substantially competitive with any business actively conducted by Harnischfeger or by any of its subsidiaries or undertake to consult with or advise any such competitive business, or otherwise, directly or indirectly, engage in any activity which is directly and substantially competitive with or in any way adversely and substantially affecting any such activity engaged in by Harnischfeger or any of its subsidiaries; provided, however, that ownership by McKay of not more than 5% of the outstanding shares of stock of any such business listed on any national stock exchange or quoted on an automated quotation system, or of not more than 15% of the stock of any such business not so listed or quoted, shall not be deemed a violation of this paragraph; and further provided that McKay shall not be deemed to violate this restriction if Harnischfeger acquires or becomes engaged in a new business which is competitive with a business in which McKay has previously been engaged. Harnischfeger shall be entitled to a remedy of specific performance to enforce this paragraph of the Agreement. 5.McKay agrees to be bound by the provisions of the Independent Contractor and Consultant Proprietary Rights and Confidentiality Agreement ("Confidentiality Agreement") attached hereto as Exhibit A and incorporated herein. The provisions of such agreement supplement and are in addition to McKay's obligations under this Agreement. 6. If McKay commits a breach or threatens to commit a breach of any of the provisions of paragraph 4 or 5 hereof or the Confidentiality Agreement, Harnischfeger shall have the right and remedy, in addition to any other remedy that may be available, at law or in equity, to have the provisions of paragraphs 4 and 5 and the Confidentiality Agreement specifically enforced by any court having equity jurisdiction together with an accounting for any damages sustained, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to Harnischfeger and that money damages will not provide an adequate remedy to Harnischfeger. Such an injunction shall be available without the posting of any bond or other security, and McKay hereby consents to the issuance of such injunction. Furthermore, if Harnischfeger is forced to bring action in court to enforce the provisions of paragraph 4 or 5 hereof or the Confidentiality Agreement and the court finds in Harnischfeger's favor, McKay agrees to pay Harnischfeger's attorneys' fees and costs in pursuing the court action. If any covenant contained in paragraph 4 or 5 or the Confidentiality Agreement, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration and/or area of such covenant and, in its reduced form, said covenant shall then be enforceable. 7. McKay and Harnischfeger agree that the terms of this Agreement shall expire and no further monthly payments pursuant to paragraph 2 and no further expenses pursuant to paragraph 3 (except for any reasonable expenses already incurred by McKay on the date of termination), shall be paid by Harnischfeger, after the occurrence of any of the following situation(s), act(s) or omission(s): (a) McKay dies or becomes incapacitated such that he is unable to perform any further consulting services; (b) McKay willfully and continually fails to substantially perform the duties reasonably assigned by the Chief Executive Officer; McKay willfully engages in illegal conduct which is materially and demonstrably injurious to Harnischfeger or any of its subsidiaries; or (d) McKay breaches or threatens to breach paragraphs 4 or 5 above or the Confidentiality Agreement. 8. No termination of this Agreement shall affect the provisions of paragraphs 4, 5, 6, 8, 9, 10 or the Confidentiality Agreement, all of which shall remain in effect notwithstanding any such termination. 9. This Agreement supersedes any prior agreements or understandings, oral or written, with respect to the consultant arrangement between McKay and Harnischfeger and constitutes the entire agreement of the parties with respect thereto. No provision of this Agreement (including this paragraph 9) may be waived, amended, or otherwise modified except by a subsequent written agreement executed by the parties hereto. 10. Any action concerning this Agreement may be brought in the federal or state courts located in the County of Milwaukee, Wisconsin, and each party consents to the venue and jurisdiction of such courts. AGREED TO: \s\John A. McKay June 16, 1995 - ----------------------- ----------------- John A. McKay Date HARNISCHFEGER INDUSTRIES, INC. ATTEST: BY \s\Jeffery T. Grade \s\Sandra L. McKenzie - ----------------------- --------------------- EX-4 3 Exhibit 4(j) Amendment One to Harnischfeger Industries, Inc. Stock Employee Compensation Trust THIS AMENDMENT (the "Amendment") made effective as of January 1, 1994, adopted by Harnischfeger Industries, Inc., a Delaware corporation, and Marshall & Ilsley Trust Company, a Wisconsin corporation. WHEREAS, pursuant to a trust agreement (the "Agreement") made effective as of March 23, 1993, Harnischfeger Industries, Inc. (the "Company") and Marshall & Ilsley Trust Company (the "Trustee") established a trust (the "Trust") known as the Harnischfeger Industries, Inc. Stock Employee Compensation Trust; WHEREAS, the Agreement provides that the Company retains the power to amend the Trust to correct any errors or clarify any ambiguities or similar issues of interpretation in the Agreement; WHEREAS, the Agreement provides for the voting by the Trustee of shares of the Company's common stock held in the Trust Fund (as defined in the Agreement); WHEREAS, it is the intent of the Company that, in voting shares of the Company's common stock in the Trust Fund, the Trustee follow directions of each Plan Participant (as defined in the Agreement) and each trustee of any trust established under a DC Plan (as defined in the Agreement) in proportion to the number of shares of the Company's common stock allocated to such Plan Participant or trust during the Relevant Period which is defined in the Agreement to be the period from the beginning of fiscal year 1992 until the end of the close of business on the 30th day prior to the date of the relevant stockholders' meeting; WHEREAS, the Company and Trustee consider it desirable to correct or clarify any error or ambiguity that may exist as to the voting by the Trustee of shares of the Company's common stock held in the Trust Fund; NOW, THEREFORE, by virtue and in exercise of the power reserved to the Company by Section 8.1 of the Agreement, the Agreement be and hereby is amended, effective as of the date first mentioned above, in the following particulars: By substituting for Section 5.4 (a) of the Agreement the following: (a) Voting of Company Stock. The Trustee shall follow the directions of each Plan Participant, or in the case of a DC Plan, each trustee of any trust established under a DC Plan, as to the manner in which shares of Company Stock held by the Trust are to be voted on each matter brought before an annual or special stockholders' meeting of the Company or the manner in which any consent is to be executed, in each case as provided below. Before each such meeting of stockholders, the Trustee shall cause to be furnished to each Plan Participant and to the trustee of each trust established under each DC Plan, as the case may be, a copy of the proxy solicitation material received by the Trustee, together with a form requesting confidential instructions as to how to vote the shares of Company Stock held by the Trustee. Upon timely receipt of directions from the Plan Participants and of the DC Plans Trustee Certification, as the case may be, the Trustee shall on each such matter vote the number of shares (including fractional shares) of Company Stock held by the Trust as follows: The Trustee shall first divide the Company Stock held in the Trust Fund into those shares to be directed by Plan participants other than with respect to each DC Plan ("Participant Shares") and those to be directed pursuant to the DC Plans Trustee Certification ("DC Shares"), which division shall be in the same ratio as the cumulative number of shares of Company Stock allocated to the Plans other than the DC Plans, whether or not from the Trust, from the beginning of fiscal year 1992 until the end of the close of business on the 30th day prior to the date of such stockholders' meeting (the "Relevant Period") bears to the number of shares of Company Stock allocated to the DC Plans, whether or not from the Trust, with respect to such period. The Participant Shares shall be voted by the Trustee as directed by the Plan Participants with each Plan Participant directing a number of shares of Company Stock (the "Participant Directed Amount") equal to the product of (x) the total number of Participant Shares and (y) a fraction, the numerator of which is the number of Shares of Company Stock allocated to such Plan Participant for the Relevant Period (as reflected in the Plan Committee Certification) and the denominator of which is the total number of shares of Company Stock allocated to all Plan Participants during the Relevant Period, other than by reason of allocations to a DC Plan. Any Participant Shares for which the Trustee does not receive a signed voting-direction instrument shall be voted for, against or to abstain in the same proportions as those Participant Shares for which the Trustee did receive instructions. Notwithstanding the foregoing, if more than 15% of the Company Stock held by the Trust would be Participant Shares directed by Plan Participants subject to Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Section 16 Officers"), who are not otherwise excluded from voting on the particular matter, shares of Company Stock in excess of such percentage held by the Trust which would be voted in accordance with the instructions of such participants shall instead be voted in the same proportion as all other Company Stock held by the Trustee is voted. For purposes of this Section 5.4, the Trustee shall, with respect to each DC Plan, assign to each DC Participant, a number of shares (the "DC Participant Directed Amount") equal to the product of (x) the total number of DC Shares, and (y) a fraction, the numerator of which is the number of shares of Company Stock allocated to such DC Participant's account in any DC Plan for the Relevant Period, whether or not from the Trust, and the denominator of which is the total number of shares of Company Stock contributed to the trustees of the trusts established under all the DC Plans with respect to the Relevant Period, whether or not from the Trust, in each case, as reflected in the DC Plans Trustee Certification. Each share assigned to each DC Participant in accordance with the previous sentence shall be voted in accordance with such participant's direction to the trustee of the DC Plan in which he participates with respect to shares of Company Stock allocated to his account in such DC Plan, as reflected in the DC Plans Trustee Certification. Any DC Shares which remain undirected pursuant to the foregoing provisions shall be voted for, against or to abstain in the same proportions as the DC Shares for which the Trustee is directed as provided above. Similar provisions shall apply in the case of any action by shareholder consent without a meeting. IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its behalf by the undersigned duly authorized officer this 31 day of January, 1994. HARNISCHFEGER INDUSTRIES, INC. Jeffery T. Grade By: \s\Jeffery T. Grade ------------------ Its: Chairman and Chief Executive Officer ATTEST: \s\ Kenneth J. Stark ------------------- Kenneth J. Stark Assistant Treasurer The Trustee hereby consents to the foregoing amendment. MARSHALL & ILSLEY TRUST COMPANY - ------------------------------ By: /s/James L. Neubauer ------------------------- Its: Vice President ------------------------- Date: 3/24/94 ATTEST /s/Forrest Dupre ---------------------- ITS Vice President ---------------------- Exhibit 4(k) Amendment Two to Harnischfeger Industries, Inc. Stock Employee Compensation Trust THIS AMENDMENT (the "Amendment") made effective as of May 6, 1995, adopted by Harnischfeger Industries, Inc., a Delaware corporation, and Marshall & Ilsley Trust Company, a Wisconsin corporation. WHEREAS, pursuant to a trust agreement (the "Agreement") made effective as of March 23, 1993, Harnischfeger Industries, Inc. (the "Company") and Marshall & Ilsley Trust Company (the "Trustee") established a trust (the "Trust") known as the Harnischfeger Industries, Inc. Stock Employee Compensation Trust; WHEREAS, the Company deems it desirable to amend the Agreement to provide for more efficient administration of the Trust. NOW, THEREFORE, by virtue and in exercise of the power reserved to the Company by Section 8.1 of the Agreement, the Agreement be and hereby is amended, effective as of the date first mentioned above, in the following particulars: I. By substituting for Section 2.1 of the Agreement the following: 2.1 Contributions. The Company shall contribute to the Trust in cash such amount, which together with dividends, as provided in Section 2.2, and any other earnings of the Trust, shall enable the Trustee to make all payments of principal and interest due during an Allocation Cycle under the Loan on a timely basis. Unless otherwise expressly provided herein, the Trustee shall apply all such contributions, dividends and earnings to the payment of principal and interest due under the Loan. If, at the end of any Allocation Cycle, no such contribution has been made in cash, such contribution shall be deemed to have been made in the form of forgiveness of principal and interest on the Loan to the extent of the Company s failure to make contributions as required by this Section 2.1. All contributions made under the Trust shall be delivered to the Trustee. The Trustee shall be accountable for all contributions received by it, but shall have no duty to require any contributions to be made to it. II. By substituting for Section 6.2 of the Agreement the following: 6.2 Fiscal Year. The fiscal year of the Trust shall be the twelve month period beginning on November 1 and ending on October 31 of each calendar year. IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its behalf by the undersigned duly authorized officer this 18th day of October, 1995. HARNISCHFEGER INDUSTRIES, INC. /s/Jeffery T. Grade ----------------------- By: Jeffery T. Grade Its: Chairman and Chief Executive Officer The Trustee hereby consents to the foregoing amendment. MARSHALL & ILSLEY TRUST COMPANY /s/Charlene Kehrmann ------------------------ By: Charlene Kehrmann Its: Vice President Date: 11/21/95 /s/Steven P. Palmer ------------------------ By: Steven P. Palmer Its: Vice President Date: 11/22/95 EX-3 4 Exhibit 3(b) 12/11/95 B Y L A W S OF HARNISCHFEGER INDUSTRIES, INC. ARTICLE I OFFICES ------ The initial registered office of the corporation required by the Delaware General Corporation Law shall be 100 West Tenth Street, City of Wilmington, County of New Castle, State of Delaware, and the address of the registered office may be changed from time to time by the Board of Directors. The principal business office of the corporation shall be located in the Village of Brookfield, County of Waukesha, State of Wisconsin. The corporation may have such other offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation required by the Wisconsin Business Corporation Law may be, but need not be, the same as its place of business in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II STOCKHOLDERS -------------- SECTION 1. Annual Meeting. The annual meeting of the stockholders shall be held on the second Tuesday in the month of April in each year, beginning with the year 1996, at the hour of 10:00 o'clock A.M., or at such other hour as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state where the meeting is to be held, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for the annual meeting of the stockholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as is convenient. SECTION 2. Special Meeting. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chief Executive Officer or by the Board of Directors. SECTION 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the corporation in the State of Wisconsin. SECTION 4. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the Chief Executive Officer, or the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, addressed to the stockholder at the stockholder's address as it appears on the records of the corporation, with postage thereon prepaid. Any previously scheduled meeting of the stockholders may be postponed, and any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders. SECTION 5. Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors of the corporation may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty days and, in case of a meeting of stockholders, not less than ten days prior to the date on which the particular action, requiring such determination of stockholders, is to be taken. If no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the close of business on the date next preceding the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. Voting Lists. The officer or agent having charge of the stock ledger of the corporation shall make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each; which list, for a period of ten days prior to such meeting, shall be kept at the place where the meeting is to be held, or at another place within the city where the meeting is to be held, which other place shall be specified in the notice of meeting and the list shall be subject to inspection by any stockholder for any purpose germane to the meeting, at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock ledger shall be prima facie evidence as to who are the stockholders entitled to examine such list or ledger or to vote at any meeting of stockholders. Failure to comply with the requirements of this section will not affect the validity of any action taken at such meeting. SECTION 7. Quorum. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by Delaware law, the Articles of Incorporation, or these Bylaws. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. Any stockholders meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the Chairman of the meeting without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 8. Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by the stockholder's duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. SECTION 9. Voting of Shares. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of any class or classes are enlarged, limited or denied by the Articles of Incorporation or in the manner therein provided. SECTION 10. Voting of Shares by Certain Holders. Neither treasury shares nor shares of the corporation held by another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall be entitled to vote or to be counted for quorum purposes. Nothing in this paragraph shall be construed as limiting the right of the corporation to vote its own stock held by it in a fiduciary capacity. Shares standing in the name of another corporation, domestic or foreign, may be voted in the name of such corporation by its President or such other officer as the President may appoint or pursuant to any proxy executed in the name of such corporation by its President or such other officer as the President may appoint in the absence of express written notice filed with the Secretary that such President or other officer has no authority to vote such shares. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by such administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors, either in person or by proxy, without a transfer of such shares into the name of such administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors. Shares standing in the name of a fiduciary may be voted by such fiduciary, either in person or by proxy. A stockholder whose shares are pledged shall be entitled to vote such shares unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the pledgee's proxy, may represent such stock and vote thereon. SECTION 11. Stockholder Proposals. No proposal for a stockholder vote shall be submitted by a stockholder (a "Stockholder Proposal") to the corporation's stockholders unless the stockholder submitting such proposal (the "Proponent") shall have filed a written notice setting forth with particularity (I) the names and business addresses of the Proponent and all Persons acting in concert with the Proponent (ii) the name and address of the Proponent and the Persons identified in clause (I), as they appear on the corporation's books (if they so appear), (iii) the class and number of shares of the corporation beneficially owned by the Proponent and the Persons identified in clause (I); (iv) a description of the Stockholder Proposal containing all material information relating thereto; and (v) such other information as the Board of Directors reasonably determines is necessary or appropriate to enable the Board of Directors and stockholders of the corporation to consider the Stockholder Proposal. As used in this Section, the term "Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity. The presiding officer at any stockholders' meeting may determine that any Stockholder Proposal was not made in accordance with the procedures prescribed in these Bylaws or is otherwise not in accordance with law, and if it is so determined, such officer shall so declare at the meeting and the Stockholder Proposal shall be disregarded. Stockholder Proposals shall be delivered to the Secretary at the principal executive office of the corporation not less than ninety (90) days before the date of the stockholders' meeting if such Stockholder Proposal is to be submitted at an annual stockholders' meeting (provided, however, that if such annual meeting is called to be held before the date specified in Section 1 hereof, such Stockholder Proposal shall be delivered no later than the close of business on the 15th day following the day on which notice of the date of the annual stockholders' meeting was given). Stockholder Proposals shall be so delivered to the Secretary at the principal executive office of the corporation no later than the close of business on the 15th day following the day on which notice of the date of a special meeting of stockholders was given if the Stockholder Proposal is to be submitted at a special stockholders' meeting. SECTION 12. Inspectors of Election; Opening and Closing the Polls. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the corporation in other capacities, including without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector shall have the duties prescribed by law. The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting. SECTION 13. Stockholder Consent Procedures. (a) Record Date for Action by Written Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days after the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in Delaware, its principal place of business or to any officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. (b) Inspectors of Written Consent. In the event of the delivery, in the manner provided by Section 13(a), to the corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the corporation shall engage nationally recognized independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the corporation that the consents delivered to the corporation in accordance with Section 13(a) represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to test the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation). (c) Effectiveness of Written Consent. Every written consent shall bear the signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated written consent was received in accordance with Section 13(a), a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in Section 13(a). ARTICLE III BOARD OF DIRECTORS ----------------- SECTION 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors. SECTION 2. Number. Tenure and Qualifications. The number of directors of the corporation shall be twelve. Each of the three classes of Directors established by the corporation's Certificate of Incorporation shall consist of four members, subject to modification by resolution of the Board of Directors. Each director shall hold office for the term provided in the Certificate of Incorporation and until such director's successor shall have been elected and qualified, or until such director's earlier death or resignation. No director shall be or be deemed to be removed from office prior to the expiration of such director's term in office by virtue of a reduction in the number of directors. Directors need not be residents of the State of Delaware or stockholders of the corporation. SECTION 3. Annual Meetings. An annual meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Stockholders. SECTION 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them. SECTION 5. Notice. Notice of any special meeting shall be given at least 48 hours previous thereto by written notice delivered personally or mailed to each director at such director's business address, or by telegram. If mailed, such notice shall be deemed to be given when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be given when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because of the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 6. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 8. Nomination of Directors; Vacancies. Candidates for director shall be nominated either (I) by the Board of Directors or a committee appointed by the Board of Directors or (ii) by nomination at any stockholders' meeting by or on behalf of any stockholder entitled to vote at such meeting provided that written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the corporation not later than (1) with respect to an election to be held at an annual meeting of stockholders, ninety (90) days in advance of such meeting, and (2) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the corporation if so elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled for the remainder of the unexpired term by the affirmative vote of a majority of the directors then in office although less than a quorum. SECTION 9. Action by Directors Without a Meeting. Any action required to be taken at a meeting of directors, or at a meeting of a committee of directors, or any other action which may be taken at a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors or members of the committee thereof entitled to vote with respect to the subject matter thereof and such consent shall have the same force and effect as a unanimous vote. SECTION 10. Participation in a Meeting by Telephone. Members of the Board of Directors or any committee of directors may participate in a meeting of such Board or committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participating in a meeting pursuant to this section 10 shall constitute presence in person at such meeting. SECTION 11. Compensation. The Board of Directors, by majority vote of the directors then in office and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or to delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents and beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation. The Board of Directors may be paid their expenses, if any, of attendance at each such meeting of the Board. SECTION 12. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such director's dissent is entered in the minutes of the meeting or unless such director files a written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or forwards such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 13. Validity of Contracts. No contract or other transaction entered into by the corporation shall be affected by the fact that a director or officer of the corporation is in any way interested in or connected with any party to such contract or transaction, or is a party to such contract or transaction, even though in the case of a director the vote of the director having such interest or connection shall have been necessary to obligate the corporation upon such contract or transaction; provided, however, that in any such case (I) the material facts of such interest are known or disclosed to the directors or stockholders and the contract or transaction is authorized or approved in good faith by the stockholders or by the Board of Directors or a committee thereof through the affirmative vote of a majority of the disinterested directors (even though not a quorum), or (ii) the contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the stockholders, or by the Board of Directors, or by a committee thereof. SECTION 14. Indemnification and Insurance. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, arbitration, mediation or proceeding, whether civil, criminal, administrative or investigative, whether domestic or foreign (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent not prohibited by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, with respect to alleged action or inaction occurring prior to such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including without limitation attorneys' fees and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. Such indemnification as to such alleged action or inaction shall continue as to a person who has ceased after such alleged action or inaction to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in the following paragraph, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board unless such proceeding (or part thereof) is a counter claim, cross-claim, third party claim or appeal brought by such person in any proceeding. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the General Corporation law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further appeal that such director or officer is not entitled to be indemnified for such expenses under this Section or otherwise. The corporation may, by action of the Board, provide indemnification to an employee or agent of the corporation or to a director, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise of which the corporation owns fifty percent or more with the same scope and effect as the foregoing indemnification of directors and officers or such lesser scope and effect as shall be determined by action of the Board. If a claim under the preceding paragraph is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part in any such claim or suit, or in a claim or suit brought by the corporation to recover an advancement of expenses under this paragraph, the claimant shall be entitled to be paid also the expense of prosecuting or defending any such claim or suit. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the applicable standard of conduct which make it permissible under the General Corporation Law of the State of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. In any suit brought by such person to enforce a right to indemnification or to an advancement of expenses hereunder, or by the corporation to recover an advancement of expenses hereunder, the burden of proving that such person is not entitled to be indemnified, or to have or retain such advancement of expenses, shall be on the corporation. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise. The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. In the event that any of the provisions of this Section 14 (including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions are severable and shall remain enforceable to the full extent permitted by law. SECTION 15. Committees of Directors. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate committee members, who may replace any absent or disqualified member at any committee meeting. In the absence or disqualification of a committee member, the member or members present at any meeting and not disqualified from voting, whether such member or members constitute a quorum, may unanimously appoint another director to act at the meeting in place of the absent or disqualified member. Any such committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution(s) providing for the issuance of shares of stock adopted by the Board, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock, or to adopt a certificate of ownership and merger. ARTICLE IV OFFICERS --------- SECTION 1. Number. The officers of the corporation shall be a Chairman of the Board (who must be a member of the Board of Directors and who also may be an employee of the corporation), a Chief Executive Officer, a President, one or more Vice Presidents (the number thereof to be determined by the Board of Directors), a Secretary, a Treasurer and a Controller, each of whom shall be elected by the Board of Directors. The Board of Directors may also elect a Chief Operating Officer and one or more Group Presidents and may designate one or more of the Vice Presidents as Executive Vice Presidents or Senior Vice Presidents. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary, and the offices of President and Vice President. SECTION 2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until such officer's successor shall have been duly elected or until such officer's death or until such officer shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders. SECTION 6. Chief Executive Officer. The Chief Executive Officer shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall supervise and control all of the business and affairs of the corporation, and establish current and long-range objectives, plans and policies. The Chief Executive Officer shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as the Chief Executive Officer shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chief Executive Officer. The Chief Executive Officer shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, the Chief Executive Officer may authorize the President, an Executive Vice President, Senior Vice President, or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in the Chief Executive Officer's place and stead. In general, the Chief Executive Officer shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of the Chairman of the Board, the Chief Executive Officer shall, when present, preside at all meetings of the stockholders and the Board of Directors. SECTION 7. President. The President shall direct, administer and coordinate the activities of the corporation in accordance with policies, goals and objectives established by the Chief Executive Officer and the Board of Directors. The President shall also assist the Chief Executive Officer in the development of corporate policies and goals. In the absence of both the Chairman of the Board and the Chief Executive Officer, the President shall, when present, preside at all meetings of the stockholders and the Board of Directors. SECTION 8. The Chief Operating Officer, Group Presidents and the Vice Presidents. In the absence of the President or in the event of the President's death, inability or refusal to act, the Chief Operating Officer, the Group Presidents and the Executive Vice Presidents in the order designated at the time of their election, or, in the absence of any designation, then in the order of their election (or in the event there be no Chief Operating Officer, Group Presidents or Executive Vice Presidents or they are incapable of acting, the Senior Vice Presidents in the order designated at the time of their election, or, in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may designate certain Vice Presidents as being in charge of designated divisions, plants, or functions of the corporation's business and add appropriate description to their title. Any Chief Operating Officer, Group President or Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to such Chief Operating Officer, Group President or Vice President by the Chief Executive Officer or by the Board of Directors. SECTION 9. The Secretary. The Secretary shall: (a) keep the minutes of the stockholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents, the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep or cause to be kept a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) sign with the Chief Executive Officer, President, or any Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer or by the Board of Directors. SECTION 10. The Treasurer. The Treasurer shall give a bond for the faithful discharge of the Treasurer's duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article VI of these Bylaws; and (b) in general, perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the Chief Executive Officer or by the Board of Directors. SECTION 11. The Controller. The Controller shall: (a) keep, or cause to be kept, correct and complete books and records of account, including full and accurate accounts of receipts and disbursements in books belonging to the corporation; and (b) in general, perform all duties incident to the office of Controller and such other duties as from time to time may be assigned to the Controller by the Chief Executive Officer or by the Board of Directors. SECTION 12. Assistant Secretaries and AssistantTreasurers. The Assistant Secretaries may sign with the President, or any Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. Assistant Treasurers shall respectively give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer or the Board of Directors. SECTION 13. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the corporation. ARTICLE V APPOINTED EXECUTIVES --------------------- SECTION 1. Vice Presidents. The Chief Executive Officer may appoint, from time to time, as the Chief Executive Officer may see fit, and fix the compensation of, one or more Vice Presidents whose title will include words describing the function of such Vice President's office and the group, division or other unit of the Company in which such Vice President's office is located. Each of such appointed Vice Presidents shall hold office during the pleasure of the Chief Executive Officer, shall perform such duties as the Chief Executive Officer may assign, and shall exercise the authority set forth in the Chief Executive Officer's letter appointing such Vice President. SECTION 2. Assistants. The Chief Executive Officer may appoint, from time to time, as the Chief Executive Officer may see fit, and fix the compensation of, one or more Assistants to the Chairman, one or more Assistants to the President, and one or more Assistants to the Vice Presidents, each of whom shall hold office during the pleasure of the Chief Executive Officer, and shall perform such duties as the Chief Executive Officer may assign. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS ------------------------------------- SECTION 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VII CERTIFICATE FOR SHARES AND THEIR TRANSFER ----------------------------------------- SECTION 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the Chief Executive Officer, President, or any Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock ledger of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, destroyed or mutilated certificate, a new one may be issued therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe. SECTION 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock ledger of the corporation by the holder of record thereof or by such person's legal representative, who shall, if so required, furnish proper evidence of authority to transfer, or by such person's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VIII FISCAL YEAR ----------- The fiscal year of the corporation shall begin on the first day of November and end on the thirty-first day of October in each year. ARTICLE IX DIVIDENDS --------- The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and by the Articles of Incorporation. ARTICLE X SEAL ----- The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words "Corporate Seal". ARTICLE XI WAIVER OF NOTICE ---------------- Whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these Bylaws or under the provisions of the Articles of Incorporation or under the provisions of the Delaware General Corporation Law, a waiver thereof in writing, signed at any time by the person or persons entitled to such notice of the meeting, shall be deemed equivalent to the giving of such notice. ARTICLE XII AMENDMENTS ----------- These Bylaws may be amended or repealed and new Bylaws may be adopted by the Board of Directors at any regular or special meeting thereof only with the affirmative vote of at least 80% of the total number of Directors. EX-23 5 Exhibit 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 and in the Registration Statements on Form S-8 listed below of Harnischfeger Industries, Inc. of our report dated November 28, 1995 appearing in the Current Report on Form 8-K dated December 8, 1995, which is incorporated by reference in this Annual Report on Form 10-K. 1. Registration Statement on Form S-8 (Registration No. 33-42833) 2. Registration Statement on Form S-8 (Registration No. 33-23985) 3. Registration Statement on Form S-8 (Registration No. 33-18393) 4. Registration Statement on Form S-3 (Registration No. 33-51436) 5. Registration Statement on Form S-8 (Registration No. 33-46738) 6. Registration Statement on Form S-8 (Registration No. 33-46739) 7. Registration Statement on Form S-8 (Registration No. 33-46740) 8. Registration Statement on Form S-8 (Registration No. 33-57209) 9. Registration Statement on Form S-3 (Registration No. 33-57979) 10. Registration Statement on Form S-8 (Registration No. 33-58087) PRICE WATERHOUSE LLP January 29, 1996 Exhibit 23(b) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in Harnischfeger Industries, Inc.'s Form 10-K of our report dated March 25, 1994, included in Harnischfeger Industries, Inc.'s Form 8-K dated December 8, 1995. ARTHUR ANDERSEN LLP Pittsburgh, Pennsylvania, January 29, 1996 EX-21 6 EXHIBIT 21
HARNISCHFEGER INDUSTRIES, INC. SUBSIDIARIES October 31, 1995 Harnischfeger Industries, Inc. is publicly held and has no parent. The following subsidiaries are wholly-owned except as noted below: Description (1) Beloit Corporation (2) Delaware Beloit Canada Ltd./Ltee (3). Canada Beloit Industrial Ltda. (4) Brazil Beloit Poland S.A. (5) Poland BWRC, Inc. Delaware Beloit Asia Pacific Pte.Ltd Singapore Beloit Italia S.p.A.. Italy Beloit Lenox GmbH Germany Beloit Walmsley Limited United Kingdom J&L Fiber Services, Inc. Wisconsin Optical Alignment Systems and Inspection Services, Inc. New Hampshire Sandusky International, Inc.(6) Ohio Harnischfeger Corporation Delaware Birmingham Crane & Hoist, Inc. Alabama Blooma Engineering Pte. Limited (7) Singapore Harnischfeger of Australia Pty. Ltd. (8) Australia Harnischfeger do Brasil Comercio e Industria Limitada Brazil Harnischfeger de Chile Limitada Chile Harnischfeger Corporation of Canada, Ltd. Canada Harnischfeger GmbH (9) Germany Harnischfeger (South Africa) (Proprietary) Limited South Africa Harnischfeger Venezuela, S.A. Venezuela HCHC, Inc. Delaware Harnischfeger Contract Services, Inc. Delaware Harnischfeger Holdings Limited United Kingdom Harnischfeger Mexico Holdings S.A. de C.V. (10) Mexico SPH Crane and Hoist, Inc. Delaware Joy Technologies Inc.. Delaware Joy Manufacturing Company (Africa)(Pty)Ltd. South Africa Joy Manufacturing Company Pty. Limited Australia Joy MM Holdings (U.K.) Limited United Kingdom Joy Manufacturing Company (U.K.)Limited United Kingdom Joy Technologies Canada Inc. Canada
- -------------------------- (1) Where the name of a subsidiary is indented, it is wholly-owned by its immediate parent listed at the margin above it, unless otherwise indicated. (2) Harnischfeger Industries, Inc. owns 80% of the voting securities of Beloit Corporation. (3) Beloit Corporation owns 80% and Joy Technologies Canada owns 20% of the voting securities of Beloit Canada Ltd./Ltee. (4) Beloit Corporation owns 45% of the voting quotas and 100% of the non-voting quotas of Beloit Industrial Ltda. This gives Beloit Corporation an 82.1% ownership of Beloit Industrial Ltda. (5) Beloit Corporation owns 99.6% of the voting securities of Beloit Poland S.A. (6) BWRC, Inc. owns 50% of the voting securities of Sandusky International, Inc. (7) Harnischfeger Corporation owns 85% of Blooma Engineering Pte. Ltd. (8) Harnischfeger Corporation owns 75% of the voting securities of Harnischfeger of Australia Pty. Ltd. (9) Harnischfeger Corporation owns 75% and Harnischfeger of Australia Pty. Ltd. owns 25% of the voting securities of Harnischfeger GmbH. (10) HCHC, Inc. owns 90% and Harnischfeger Corporation owns 10% of the voting securities of Harnischfeger Mexico Holdings S.A. de C.V. EX-11 7 EXHIBIT 11
HARNISCHFEGER INDUSTRIES, INC. CALCULATIONS OF EARNINGS (LOSS) PER SHARE (Dollar amounts in thousands except per share amounts) Year Ended October 31, Determination of Number of Shares 1995 1994 --------------------------------- -------- ------- Average shares outstanding............................... 46,218,144 43,716,464 ========== =========== Net Income (Loss) ------------------ Income (Loss) from Continuing Operations................. $92,120 $ 36,593 Income (Loss) from Discontinued Operations, net of applicable income taxes......................... (31,235) (3,982) Extraordinary Loss on Retirement of Debt, net of applicable income taxes................................ (3,481) (4,827) Cumulative Effect of Accounting Change, net of applicable taxes and minority interest............................ - (81,696) -------- -------- Net Income (Loss)........................................ $ 57,404 $(53,912) ======== ======== Earnings (Loss) Per Share ------------------------- Income (loss) from continuing operations................. $ 1.99 $ 0.84 Income (loss) from discontinued operations............... (0.67) (0.09) Extraordinary loss on retirement of debt................. (0.08) (0.11) Cumulative effect of accounting change................... - (1.87) ------- -------- Net Income (Loss) Per Share.............................. $ 1.24 $(1.23) ======= ========
EXHIBIT 11 HARNISCHFEGER INDUSTRIES, INC. CALCULATIONS OF EARNINGS (LOSS) PER SHARE (Dollar amounts in thousands except per share amounts) Year Ended October 31, ---------------------------- Determination of Number of Shares 1993 --------------------------------- -------- Average shares outstanding............................... 44,393,043 =========== Net Income (Loss) ------------------ Income (Loss) from Continuing Operations................. $(27,450) Income (Loss) from Discontinued Operations, net of applicable income taxes......................... 7,760 Extraordinary Loss on Retirement of Debt, net of applicable income taxes................................ - Cumulative Effect of Accounting Change, net of applicable taxes and minority interest............................ - --------- Net Income (Loss)........................................ $(19,690) ========== Earnings (Loss) Per Share ------------------------- Income (loss) from continuing operations................. $(0.62) Income (loss) from discontinued operations............... 0.18 Extraordinary loss on retirement of debt................. - Cumulative effect of accounting change................... - ------- Net Income (Loss) Per Share.............................. $(0.44) =======
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