EMPLOYMENT AGREEMENT
EXHIBIT 10.6
THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of December 31, 2003 (the “Effective
Date”), is entered into by and between CPM ACQUISITION CORP., a Delaware corporation (the
“Company”) and Xxxxx Xxxxxx (the “Executive”).
RECITALS
WHEREAS, the Executive has been an executive for companies engaged in the agricultural
equipment business for many years;
WHEREAS, the Company, the Executive and others have entered into that certain Stock Purchase
Agreement, dated December 31, 2003 (the “SPA”);
WHEREAS, the Company offered to employ Executive and place him in a position of responsibility
on terms and conditions agreed upon between the parties, including that Executive as a condition of
said employment would enter into an employment agreement including a covenant not to compete
extending twenty-four (24) months after Executive’s employment with the Company terminates, and to
provide him with confidential business information to enable Executive to perform his
responsibilities;
WHEREAS, Executive accepted said employment;
WHEREAS, the Company and Executive entered into an employment agreement dated August 22, 2001
(the “Prior Agreement”); and
WHEREAS, the Company and Executive deem it to be in their respective best interests to enter
into a new agreement providing for the Company’s employment of Executive on the terms and
conditions set forth below.
NOW, THEREFORE, strictly contingent upon the closing of the transaction as provided in the
SPA, in consideration of the foregoing and the mutual covenants, representations, agreements, and
promises set forth herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Employment
1.1. Term. The Company agrees to employ the Executive as General Manager of the
Company’s Xxxxxxx Champion Division and the Executive agrees to accept such employment, for a
period of three (3) years commencing as of the date of this Agreement (the “Term”). After the
third anniversary of the Effective Date, the Term shall be automatically extended for 12-month
periods, unless one party to this Agreement provides written notice of non-renewal to the other
party at least thirty (30) days before the last day of the Term, as extended.
1.2. Duties. During the Term, as General Manager of the Company’s Xxxxxxx Champion
Division, Executive shall perform such duties and functions as are assigned to him from time to
time by the Board of Directors of the Company (the “Board”) and/or Chief Executive Officer of the
Company (the “CEO”) that are consistent with Executive’s title and
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position, and Executive shall adhere to all of the Company’s policies and procedures as they
may from time to time be amended.
1.3. Time Devoted to Employment. Executive agrees to devote his entire working time,
attention and efforts to the Company and its subsidiaries, will use his best, good faith efforts to
promote the success of the Company’s business, and will cooperate fully with the Board in the
advancement of the best interests of the Company.
1.4. Location of Employment. Executive’s principal place of employment shall be at the
Company’s offices located in Waterloo, Iowa or at another office which the Company establishes as
its principal executive office within a radius of one hundred and fifty (150) miles of Waterloo,
Iowa.
2. Compensation and Related Matters.
2.1. Base Salary. As compensation for services rendered hereunder, effective as of
January 1, 2004, the Company shall pay the Executive an annual base salary of One Hundred
Fifty-Eight Thousand Two Hundred Dollars ($158,200) or such higher amount as the Company, in its
sole judgment and discretion, may provide during the Term (the “Annual Base”), which amount shall
be paid in accordance with the Company’s customary payroll practices.
2.2. Performance Bonus. The Company shall award a bonus to Executive on each September
30 during the term, which bonus shall be comprised of elements determined by the Compensation
Committee of the Board of Directors or the CEO, in their sole judgment and discretion.
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2.3. Benefits. The Executive will be eligible to participate in the Company’s employee
benefit plans made available to similarly situated employees of the Company, including medical,
dental, life insurance, and 401(k) plan, all in accordance with Company policies and subject to the
terms of those benefit plans, as they may from time to time be amended. The Executive will be
afforded the same vacations as other executives.
2.4. Equity Plans. The Company will create a new stock option plan pursuant to which
the Executive will be granted restricted stock and options to purchase a number of shares of Common
Stock as determined by the Board of Directors, at a purchase price per share equal to the net worth
per share of the Common Stock on such date.
2.5. Withholding. The Company shall make such deductions and withhold such amounts
from each payment made to Executive under this Agreement as may be required from time to time by
law, governmental regulation or order and in accordance with the Company’s customary payroll
practices.
3. Termination of Employment.
3.1. Termination. The Executive’s employment hereunder may be terminated prior to the
end of the Term of this Agreement under the following circumstances:
(a) Death. The Executive’s employment hereunder shall terminate upon his death.
(b) Disability. If, as a result of the incapacity of the Executive due to physical or
mental illness, the Executive shall have been absent from the full-time performance
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of his duties with the Company for a time equivalent to six (6) months during any eighteen
(18) month period, his employment may be terminated by the Company for “Disability.”
(c) Cause. Termination by the Company of the employment of the Executive for “Cause”
shall mean termination based upon the Executive’s (i) willful breach or willful neglect of his
duties and responsibilities, (ii) criminal conviction occurring on or after the execution of this
Agreement, (iii) material breach of this Agreement, (iv) acts of fraud, dishonesty,
misappropriation, embezzlement or moral turpitude, (v) violation of any material Legal Requirement
(as defined in Section 7.2 below), (vi) breach of his duty of loyalty or fiduciary duties,
or (vii) willful failure to comply with the Company’s reasonable orders or directives or the
Company’s reasonable rules, regulations, policies, procedures or practices; provided,
however, that in the case of any act or failure to act described in sub-sections (i),
(iii), (v), (vi), or (vii) above, such act or failure to act shall not constitute Cause if, within
ten (10) days after Notice of Termination is given to the Executive by the Company, Executive has
corrected such act or failure to act (if it is capable of correction) to the satisfaction of the
Board and the Board is otherwise satisfied that termination of the Executive’s employment is not in
the best interests of the Company.
(d) Good Reason. The Executive may terminate his employment during the Term of this
Agreement for “Good Reason.” Good Reason shall mean the Company’s material breach of this
Agreement, including a material reduction in the Executive’s duties or authority or a requirement
that Executive relocate to an area outside of a radius of one hundred fifty (150) miles of
Waterloo, Iowa, which breach is not cured by the Company within ten (10) days after Notice of
Termination is given by the Executive.
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3.2. Date of Termination. “Date of Termination” shall mean (a) the expiration of the
Term, (b) if the Executive’s employment is terminated due to his death, the date of his death, (c)
if the Executive’s employment is terminated due to Executive’s Disability, ten (10) days after
Notice of Termination is given to the Executive, and (d) if the Executive’s employment is otherwise
terminated by the Company or by Executive, the date upon which the Cause or Good Reason event
occurs or such other date set forth in the Notice of Termination. Nothing in this Section shall be
deemed to diminish the Company’s right to cause the Executive to cease performing his duties and
responsibilities as a President and employee of the Company at any time (“Termination Without
Cause”), or to limit either party’s right to give a Notice of Termination at any time during the
Term of this Agreement.
3.3. Notice of Termination. Any purported termination of the Executive’s employment by
the Company or by the Executive shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 9.4 of this Agreement. For purposes of this
Agreement, a “Notice of Termination” shall mean a written 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 of the Executive’s employment
under the provision so indicated.
4. Compensation Upon Termination.
4.1. Disability. During any period in which the Executive fails to perform his
full-time duties with the Company as a result of incapacity due to physical or mental illness, the
Executive shall continue to receive (a) his Annual Base at the rate in effect at the commencement
of any such period less any compensation payable to the Executive under the applicable
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disability insurance plan of the Company during such period, until the Executive’s employment
is terminated pursuant to Section 3 of this Agreement; and (b) within thirty (30) days
after the Date of Termination, the Company shall pay to the Executive an amount equal to two year’s
Annual Base (less any amounts received by Executive pursuant to insurance coverage where the
Company has paid the insurance premiums). Thereafter, the Executive’s benefits shall be as
provided under the Company’s insurance and other benefits programs then in effect in accordance
with the terms of such programs. The Company shall retain the right to provide (entirely at its
own cost) at any time, or from time to time, third party insurance coverage to provide insurance
benefits for, and in lieu of, all or a portion of the benefits set forth above in subparagraph
4.1(b).
4.2. Death. In the event the Executive’s employment is terminated by reason of his
death, the Executive’s beneficiary or estate shall be compensated as follows: (a) all earned, but
unpaid amounts of Annual Base, if any, to which the Executive was entitled as of the Date of
Termination shall be paid in accordance with the terms of this Agreement to the Executive’s
beneficiary, or, if no beneficiary has been designated by the Executive in a written notice prior
to his death, to the Executive’s estate; and (b) within thirty (30) days after the Date of
Termination, the Company shall pay Executive’s beneficiary or estate an amount equivalent to two
year’s Annual Base (less any amounts received by Executive pursuant to insurance coverage where the
Company has paid the insurance premiums). Thereafter, the Company shall have no further obligations
to the Executive’s beneficiary or estate under this Agreement. The Company shall retain the right
to provide (entirely at its own cost) at any time, or from time to time, third party insurance
coverage to provide insurance benefits for, and in lieu of, all or a portion of the benefits set
forth above in subparagraph 4.2(b).
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4.3. Cause; Termination by Executive Without Good Reason. In the event the Executive’s
employment is terminated by the Company for Cause or by the Executive without Good Reason, the
Company shall pay the Executive all earned, but unpaid amounts of his Annual Base, if any, to which
the Executive was entitled as of the Date of Termination and the Company shall have no further
obligations to the Executive under this Agreement.
4.4. Without Cause; Termination by Executive for Good Reason. In the event the
Executive’s employment is terminated by the Company without Cause or by the Executive for Good
Reason, the Company shall pay the Executive all earned, but unpaid amounts of his Annual Base, if
any, to which Executive was entitled as of the Date of Termination. In addition, the Company shall
pay to the Executive his Annual Base for a period of 12 months as if Executive continued his
employment with the Company. In addition, the Executive shall continue to receive medical coverage
at the Company’s expense for a period of one year; provided, however, his right to
receive medical coverage shall cease at such time as he obtains other employment.
5. Executive’s Covenants.
5.1. Confidential Information. Executive acknowledges that during his employment with
the Company, he shall be exposed to or given access to Confidential Information (as defined below
in Section 7.1). The Executive agrees, without limitation in time or until such information
shall become public other than by the Executive’s unauthorized disclosure (which shall not include
disclosures as are necessary or appropriate in connection with the performance by the Executive of
his duties as General Manager of the Company’s Xxxxxxx Champion Division), to maintain the
confidentiality of the Confidential Information and refrain
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from divulging, disclosing, or otherwise using in any respect the Confidential Information to
the detriment of the Company and any of its subsidiaries, affiliates, successors or assigns, or for
any other purpose or no purpose. Notwithstanding the foregoing, there shall be no prohibition
against the Executive using the general skill and knowledge which he has acquired as an employee of
the Company.
5.2. Ownership of Intellectual Property. Executive acknowledges and agrees that all
work performed, and all ideas, concepts, materials, products, software, documentation, designs,
architectures, specifications, flow charts, test data, programmer’s notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or other subject matter
related to the Company’s business (collectively, “Materials”) conceived, developed or prepared by
him, alone or with others, during the period of his employment or other relationship with the
Company in written, oral, electronic, photographic, optical or any other form, are the property of
the Company and its successors or assigns, and all rights, title and interest therein shall vest in
the Company and its successors or assigns, and all Materials shall be deemed to be works made for
hire and made in the course of his employment or other relationship with the Company. To the extent
that title to any Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for hire, Executive
hereby irrevocably assigns all rights, title and interest therein to the Company and its successors
or assigns. All Materials belong exclusively to the Company and its successors or assigns, with the
Company and its successors or assigns having the right to obtain and to hold in its or their own
name, copyrights, patents, trademarks, applications, registrations or such other protection as may
be appropriate to the subject matter, and any extensions and renewals thereof. Executive hereby
grants to the Company and its successors or assigns an
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irrevocable power of attorney to perform any and all acts and execute any and all documents
and instruments on his behalf as the Company and its successors or assigns may deem appropriate in
order to perfect or enforce the rights defined in this Section. Executive further agrees to give
the Company and its successors or assigns, or any person designated by the Company and its
successors or assigns, at the Company’s or its successors’ or assigns’ expense, any assistance
required to perfect or enforce the rights defined in this Section. Executive shall communicate and
deliver to the Company and its successors or assigns promptly and fully all Materials conceived or
developed by him (alone or jointly with others) during the period of his employment or other
relationship with the Company and its successors and assigns.
5.3. Restrictive Covenants.
(a) For a period commencing on the Closing Date and continuing until twenty-four (24) months
after the termination of the Executive’s employment with the Company, Executive shall not in any
city, town or county in any state of the United States where the Company or any of its
subsidiaries, affiliates, successors or assigns engages in the Business, directly or indirectly, do
any of the following:
(i) engage for the Executive’s own account in the business of supplying, repairing or
consulting to businesses involved in the supply or repair of equipment or parts related to the feed
mill equipment industry, oil seed processing and/or wood and/or waste pelleting industries
(“Business”);
(ii) enter the employ of, or render any services to or for, any entity that is engaged in the
Business; or
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(iii) become interested in any entity engaged in the Business in any capacity, including as
an individual, partner, member, shareholder, officer, director, principal, employee, agent,
investor, trustee or consultant.
Notwithstanding the foregoing, Executive may own, directly or indirectly, solely as a passive
investment, securities of any entity traded on any national securities exchange or automated
quotation system if the Executive is not a controlling person of, or a member of a group which
controls, such entity and does not, directly or indirectly, beneficially own 5.0% or more of any
class of securities of such entity.
(b) Noninterference. For a period commencing on the Closing Date and continuing until
twenty-four (24) months after the termination of the Executive’s employment with the Company, the
Executive shall not, directly or indirectly, do any of the following: solicit, induce, or attempt
to solicit or induce any person known by Executive to be a partner, principal, member, employee or
consultant of the Company or its subsidiaries, affiliates, successors or assigns, to terminate his
or her employment or other relationship with the Company or any of its subsidiaries, affiliates,
successors or assigns.
(c) Nonsolicitation. For a period commencing on the Closing Date and continuing until
twenty-four (24) months after the termination of Executive’s employment with Company, the Executive
shall not directly or indirectly solicit, induce, or attempt to solicit or induce any person or
entity then known to be a customer, client, vendor, supplier, distributor or consultant of the
Company or any of its subsidiaries, affiliates, successors or assigns (a “Customer or Supplier”) to
terminate for any purpose his, her or its relationship with the Company or any of its subsidiaries,
affiliates, successors or assigns.
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Notwithstanding the foregoing, this Section 5.3 shall lapse at such time as the
Executive’s employment is terminated by the Company other than for Cause or is terminated by the
Executive for Good Reason.
(d) Reasonableness of Restrictive Covenants. The Executive agrees that, due to the
uniqueness of his skills and abilities and the uniqueness of the confidential information that he
will possess in the course of his employment with the Company, the covenants set forth herein are
reasonable and necessary for the protection of the Company.
5.4. Return of Documents and Other Property. At the end of the Term or upon
termination of Executive’s employment, the Executive shall return to the Company all of its
property, equipment, documents, records, lists, files and any and all other Company materials
including, without limitation, computerized or electronic information that is in Executive’s
possession as of the Date of Termination (the “Company Property”). The Company Property shall be
delivered to the Company at its office in Waterloo, Iowa (or at such other location designated by
the Company), at Executive’s expense, within ten (10) business days after the Date of Termination.
Unless otherwise agreed by the Company in writing, Executive shall not retain any Company Property
or copies thereof.
5.5. Irreparable Injury. Executive acknowledges that the covenants contained in this
Section 5 and the Executive’s services under this Agreement are of a special and unique
character, which gives them a peculiar value to the Company, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and that a material breach
or threatened breach by him of any of the covenants contained in this Agreement will cause the
Company irreparable injury. Executive therefore agrees that the Company shall be
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entitled, in addition to any other right or remedy, to a temporary restraining order,
preliminary and permanent injunctions and any other appropriate equitable remedy that prevents
Executive from breaching this Agreement, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or restraining Executive from
any such violation or threatened violation.
6. Arbitration of Most Disputes.
(a) All disputes under this Agreement, except for claims under Section 5.5, will be
settled by arbitration in New York, New York, before a single arbitrator pursuant to the Rules of
Commercial Arbitration of the American Arbitration Association. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction. Any award rendered by the
arbitrator will be conclusive and binding upon the parties and there will be no right of appeal
therefrom (except as federal and/or state law provide limited rights of appeal of arbitration
decisions.
(b) Arbitration may be commenced at any time by any party hereto giving written notice to each
other party to a dispute that such dispute has been referred to arbitration under this Section
6.
(c) The arbitrator will be selected by the joint agreement of the parties hereto, but if they
do not so agree within 20 days after the date of the notice referred to above (or such longer time
to which they agree), they will request from the AAA a panel of seven (7) arbitrators from which
the parties will alternately strike names until a single arbitrator has been selected. The flip of
a coin will determine which party strikes the first name.
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(d) Each party will pay its own expenses of arbitration and the expenses of the arbitrator
will be equally shared.
7. Definitions. For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 7:
7.1. “Confidential Information” shall mean (i) any and all trade secrets, product
specifications, compositions, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current and planned research and development, current and planned manufacturing
and distribution methods and processes, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures and architectures (and
related processes, formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), of the Company and any other
information, however documented, of the Company that is a trade secret; (ii) any and all
information concerning the business and affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel training and techniques
and materials), however documented; and (iii) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
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7.2. “Legal Requirement” shall mean any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
8. Representations and Warranties of Executive. Executive represents and warrants to
the Company as follows:
(a) Executive’s signing and performance of this Agreement will not violate any agreement of
the Executive with any third party or otherwise violate the rights of any third party based upon
the relationship of the Executive with such third party.
(b) In performing his services for the Company pursuant to this Agreement the Executive will
not use Confidential Information of any other person in a manner which would violate the rights of
such person.
(c) In entering into this Agreement the Executive is not relying on any statements made by or
on behalf of the Company as to its business or prospects or otherwise; and as a person experienced
in, and knowledgeable with respect to, the company’s business, is relying solely on his own
analysis and investigations.
9. Miscellaneous.
9.1. Successors and Assigns; Binding Agreement. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns; provided, that the duties of the Executive
hereunder are personal to the Executive and may not be delegated or assigned by him.
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9.2. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The parties hereto irrevocably submit to the nonexclusive
jurisdiction of any New York state court sitting in the city or county of New York, New York and/or
any United States of America court sitting in New York, New York, in any suit, action or proceeding
arising out of or relating to this Agreement. The parties hereto irrevocably waive, to the fullest
extent permitted by law, any objection which a party may now or hereafter have to the laying of
venue of any such suit, action or proceeding brought in any such court, and the parties further
irrevocably waive any claim that such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
9.3. Waivers. The waiver by either party hereto of any right hereunder or any failure
to perform or breach by the other party hereto shall not be deemed a waiver of any other right
hereunder or of any other failure or breach by the other party hereto, whether of the same or a
similar nature or otherwise. No waiver shall be deemed to have occurred unless set forth in a
writing executed by or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall operate only as to
the specific term or condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.
9.4. Notices. All notices and communications that are required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given when delivered
personally or by overnight courier, as follows:
If to the Company, to:
CPM Acquisition Corp.
c/o Gilbert Global Equity Partners, L.P.
c/o Gilbert Global Equity Partners, L.P.
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000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
and
Mayer, Brown, Xxxx & Maw LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
If to the Executive, to:
Mr. Xxxxx Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxx 00000
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxx 00000
or to such other address as may be specified in a written notice personally delivered, faxed or
mailed by overnight courier or registered or certified mail, postage prepaid, return receipt
requested, given by one party to the other party hereunder.
9.5. Severability. If for any reason any term or provision of this Agreement is held
to be invalid or unenforceable, all other valid terms and provisions hereof shall remain in full
force and effect, and all of the terms and provisions of this Agreement shall be deemed to be
severable in nature. If for any reason any term or provision containing a restriction set forth
herein is held to cover an area or to be for a length of time which is unreasonable, or in any
other way is construed to be too broad or to any extent invalid, such term or provision shall not
be determined to be null, void and of no effect, but to the extent the same is or would be valid or
enforceable under applicable law, any court of competent jurisdiction shall construe and interpret
or reform this Agreement to provide for a restriction having the maximum enforceable area, time
period and other provisions (not greater than those contained herein) as shall be valid and
enforceable under applicable law.
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9.6. Amendment; Cancellation. This Agreement may not be amended or cancelled except by
mutual agreement of the parties in writing (without the consent of any other person) and, so long
as the Executive lives, no person, other than the Company, its successors and assigns and the
Executive shall have any rights under or interests in this Agreement or the subject matter hereof.
9.7. Descriptive Headings. The parties hereto agree that the headings of the several
paragraphs of this Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
9.8. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto, and supersedes all prior oral and/or written understandings and/or agreements
between the parties hereto relating to the subject matter hereof, including, without limitation,
the Prior Agreement.
9.9. Stock Purchase Closing. In the event that the transaction as provided for in the
SPA does not close, this Agreement shall be null and void and have no force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first
above written.
| CPM ACQUISITION CORP. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx, Xx. | |||
| Name: | Xxxxxxx X. Xxxxxxx, Xx. | |||
| Title: | Vice President | |||
| By: | /s/ Xxxxx Xxxxxx | |||
| Xxxxx Xxxxxx | ||||
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