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Mr. Kucklick’s agreement to enter into an employment agreement.
The redemption agreement required HII to pay Mr. Kucklick $1
million at closing and to deliver the installment note in the
principal amount of $2,953,642.56 for the balance, a total
payment of $3,953,642.56.7 The redemption agreement terminated
the stockholders agreement.
The redemption agreement contained an 8-year, worldwide
covenant not to compete (the 8-year covenant) to commence after
Mr. Kucklick retired from HII and its subsidiaries. The duration
and the scope of the 8-year covenant were very important
provisions to Mr. Hess and HII. Mr. Hess believed that the 8-
year covenant was important to him, because Mr. Kucklick was
still relatively young,8 and with his knowledge and contacts, he
could set up a competing company, he could consult, and he could
be a partner in, or work for, another company. Mr. Hess believed
that without the 8-year covenant, Mr. Kucklick could have done
considerable damage to HII, perhaps resulting in millions of
dollars in lost profits in a relatively short time period.
With respect to the duration of the 8-year covenant, Mr.
Kucklick originally wanted it to cover the period of his
employment and 2 years thereafter, the same duration as the
7Mr. Hess derived the total payment by reducing his $4
million offer to reflect an increase in the interest rate for the
installment note.
8Mr. Kucklick was approximately 50 years old in 1994.
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