Exhibit 10.7
XXXXXXX AGREEMENT
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THIS AGREEMENT dated as of August 30, 2001, between THE GSI GROUP, INC., a
Delaware corporation, with its principal place of business in Assumption,
Illinois (the "Company") and XXXXX XXXXXXX ("Xxxxxxx").
RECITALS:
WHEREAS, the Company is a manufacturer and provider of agricultural
equipment and services, both nationally and internationally;
WHEREAS, Xxxxxxx has been an executive officer of the Company since April
of 1993;
WHEREAS, the parties heretofore entered into an Amended and Restated
Employment Agreement as of August 30, 2000;
WHEREAS, the parties are entering into a Stock Purchase Agreement as of the
same date as this Agreement;
WHEREAS, the parties hereto desire to define and set forth the terms and
conditions that Xxxxxxx will resign, in the future, his employment with the
Company; and
WHEREAS, the parties hereto each represent and warrant to the other that
each party has fully disclosed to the other any and all material facts regarding
the credit facility with the LaSalle Bank of Chicago as well as the indenture
agreement with LaSalle Bank as Trustee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Company and Xxxxxxx as
follows:
1. RESIGNATION. It is agreed and understood that Xxxxxxx will
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tender his written resignation to the Company effective August 31, 2001. The
form of Xxxxxxx'x resignation is attached hereto and made a part hereof as
Exhibit A.
2. DUTIES PENDING RESIGNATION. It is agreed and understood that
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between the date of this Agreement and November 15, 2001, Xxxxxxx shall continue
his employment with the Company as an employee but not as President or Chief
Operating Officer. Even though Xxxxxxx will continue his employment until
November 15, 2001, it is agreed that his responsibilities and duties will
significantly change from the duties that Xxxxxxx provided in the past. It is
agreed and understood that Xxxxxxx shall continue to provide such duties as may
be reasonably required by the Company to provide for a smooth transition between
the date of this Agreement and November 15, 2001. It is further agreed and
understood that Xxxxxxx shall provide such services as may be reasonably agreed
upon by Xxxxxxx and the CEO of the Company including, but not limited to,
working with banks that provide credit facilities to the Company; working with
the indenture holders; working with major customers of the Company; working with
dealers, and working with the Company employees all with a view to providing a
smooth transition after Xxxxxxx resigns as an employee of the Company on
November 15, 2001. These services shall be provided by Xxxxxxx at the reasonable
request of the CEO; however, it is further agreed and understood that all such
duties shall be with reasonable prior arrangements and notification between the
CEO and Xxxxxxx. It is specifically agreed and understood that the Company shall
not require Xxxxxxx to be at the Company's offices on a full-time basis and, in
fact, it is contemplated that Xxxxxxx will be absent from the Company's offices
for substantial periods in September and October.
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It is further agreed and understood that Xxxxxxx shall be entitled to
continue to receive his compensation and all benefits which were heretofore
provided by practice and/or pursuant to Xxxxxxx'x employment agreement between
the date this Agreement is executed and November 15, 2001. It is further agreed
that the Company will reimburse Xxxxxxx for any and all reasonable business
expense incurred on or before November 15, 2001, even though the bills are
actually received by the Company on or after November 15, 2001.
3. RESIGNATION AND PAYMENTS. As of November 15, 2001, Xxxxxxx shall no
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longer be entitled to the compensation and benefits he previously received as an
employee and which are more particularly defined in his employment agreement
dated August 30, 2000. As of November 15, 2001, Xxxxxxx shall only be entitled
to the consideration which is specially set forth in this Agreement.
Effective November 15, 2001, Xxxxxxx shall be entitled to severance
payments for eighteen (18) months which shall be computed at Xxxxxxx'x current
salary of Three Hundred Ten Thousand Dollars ($310,000.00) per annum which will
be payable in equal twice-monthly installments commencing on November 30, 2001,
i.e. the sum of $25,833.33 per month or $12,916.66 per pay period on the 15th
and last day of each month. The Company shall issue Xxxxxxx an IRS form 1099
each year.
Xxxxxxx shall not be required to mitigate the amount of any payment
provided for in this Agreement in connection with or following termination of
his employment by seeking other employment or otherwise, nor shall the amount of
any payments provided for herein be reduced by any compensation earned by
Xxxxxxx as the result of any future employment or services as a director,
consultant or otherwise.
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4. PERSONAL PROPERTY LOCATED WITHIN XXXXXXX'X OFFICE. It is agreed and
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understood that Xxxxxxx shall be entitled without any cost to him to remove any
and all items of personal property currently located within his office at the
time Xxxxxxx vacates his offices, i.e., on or before November 15, 2001. It is
agreed and understood that Xxxxxxx shall be entitled to take all such items of
personal property regardless of whether those items of personal property were
purchased by the Company or by Xxxxxxx. In other words, it is agreed and
understood that at the time Xxxxxxx vacates his offices he shall be entitled to
take any and all desks, chairs, bookcases, files, other furniture, pictures,
books, and computer(s) and any other items of personal property. The only
exception to the foregoing is that it is agreed and understood that Xxxxxxx
shall not be allowed to take any personal property that would be considered
confidential and/or proprietary in nature by the Company, i.e., certain computer
programs, data, etc. In addition, Xxxxxxx shall be entitled to retain the cell
phone equipment and accessories which he is currently using without cost to him.
5. PRIOR EMPLOYMENT AGREEMENT. As of November 15, 2001, it is agreed
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and understood that the employment agreement heretofore entered into between the
parties and dated as of August 30, 2000, shall be effectively cancelled and
shall have no further force or effect, i.e., Xxxxxxx shall not be entitled to
any further salary or benefits from the Company except as expressly set forth
herein.
6. COVENANT NOT TO COMPETE. As previously stated, the parties hereto
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are entering into a Stock Purchase Agreement at the same time this Agreement is
being executed. The obligations of the parties in this Agreement are in no way
contingent upon any of the terms and conditions of said Stock Purchase
Agreement. However, if the all of the terms and provisions of the Stock Purchase
Agreement are fully effectuated, it is agreed and understood that Xxxxxxx shall
not
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be employed by or otherwise engage in or be interested in any business in
competition with the Company for a period of eighteen (18) months commencing
November 15, 2001; provided, however, that Xxxxxxx'x ownership of stock in any
such business shall not be considered a violation of this paragraph if the stock
of such business is traded on a national securities exchange or NASDAQ and
Xxxxxxx owns less than one (1) percent of the equity thereof; and provided
further, that the foregoing shall not limit or prevent Xxxxxxx from (i) serving
on the board of directors of any corporation on which Xxxxxxx is now serving, or
(ii) investing in any business in which Xxxxxxx currently has an investment. For
purposes of this Agreement a business that is "in competition" with the Company
shall mean an entity that is engaged in the same or similar business as the
Company and derives at least fifty percent (50%) of its revenue from the
manufacture of grain storage systems, poultry feeding equipment and/or swine
producing equipment.
7. CONFIDENTIALITY. Xxxxxxx agrees he will not divulge or appropriate
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for his own use or for the use of a business in competition with the Company,
any secret or confidential information or knowledge pertaining to the business
of the Company, or of any of its subsidiaries, obtained by Xxxxxxx in any way
while he was employed by the Company. Further, the Company agrees it will not
divulge or release any confidential, secret, or personal information regarding
Xxxxxxx.
8. PERSONAL GUARANTEES. The Company believes that Xxxxxxx has not
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personally guaranteed any of the obligations of GSI, however, GSI will review
its records to attempt to identify any such personal undertakings by Xxxxxxx.
The Company agrees it shall request in writing to any person or entity to whom
Xxxxxxx may have provided a personal guarantee that Xxxxxxx be released from
such guarantee. It is agreed that other than the Company making this
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request in writing it shall not be obligated to take any other action, however,
it is also agreed and understood that to the extent Xxxxxxx is required to
satisfy any such obligation that Xxxxxxx may obtain reimbursement from the
Company regarding any such personal guarantee.
9. MUTUAL RELEASES.
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X. Xxxxxxx hereby releases and forever discharges the Company, Xxxx
Xxxxx Xxxxx, the shareholders, partners, agents, affiliates, subsidiaries,
departments, divisions, predecessors, successors, administrators, executors,
representatives and/or assigns, and any other person and entity acting on behalf
of the Company (collectively, all of the foregoing persons and entities are
referred to as the "GSI Released Parties"), from any and all claims, demands,
suits, covenants, contracts, agreements, obligations, controversies, debts,
costs, expenses, damages, judgments, orders, liabilities, and/or causes of
action, of whatever kind or nature, in law or equity, known or unknown, vested
or contingent, suspected or unsuspected, whether or not concealed or hidden,
whichever have or may have existed, or which do exist, that may now or hereafter
at any time be made or brought against the GSI Released Parties by Xxxxxxx or
anyone on Xxxxxxx'x behalf, arising out of or relating in any way to any
relationship or transaction (except as provided in 9.C. below) between Xxxxxxx
and the GSI Released Parties on or prior to the date hereof, including without
limiting the generality of the foregoing, any and all claims concerning
defamation, libel, slander, breach of any contract, breach of fiduciary duty,
wrongful termination, fraud, failure to pay or wrongful payment of dividends,
shareholder derivative action, and corporate control or management and any
claims or rights arising out of or relating to any agreements or contracts
(except as provided in 9.C. below) between Xxxxxxx and any of the GSI Released
Parties, including, but not limited to, any rights Xxxxxxx might have or claim
to have under the employment agreement dated August 30, 2000.
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B. The Company, on behalf of itself in its own corporate capacity and,
to the extent it has legal capacity to do so, on behalf of its affiliates,
subsidiaries, departments, divisions, predecessors, successors, administrators
and/or assigns (which shall be deemed to be included when the term "Company" is
used in this release) and Xxxx Xxxxx Xxxxx hereby release and forever discharge
Xxxxxxx, his spouse, successors, executors, representatives and/or assigns from
any and all claims, demands, suits, covenants, contracts, agreements,
obligations, controversies, debts, costs, expenses, damages, judgments, orders,
liabilities, and/or causes of action, of whatever kind or nature, in law or
equity, known or unknown, vested or contingent, suspected or unsuspected,
whether or not concealed or hidden, whichever have or may have existed, or which
do exist, that may now or hereafter at any time be made or brought against
Xxxxxxx by the Company, or anyone on the Company's behalf, arising out of or
relating in any way to any relationship or transaction (except as provided in
9.C. below) between the Company and Xxxxxxx on or prior to the date hereof,
including without limiting the generality of the foregoing, any and all claims
concerning defamation, libel, slander, breach of any contract, breach of
fiduciary duty, wrongful termination, fraud, failure to pay or wrongful payment
of dividends, shareholder derivative action, and corporate control or management
and any claims or rights arising out of or relating to any agreements or
contracts (except as provided in 9.C. below) between the Company and Xxxxxxx,
including, but not limited to, any rights the Company might have or claim to
have under the employment agreement dated August 30, 2000.
C. Notwithstanding the foregoing, nothing in this Agreement shall be
construed or deemed to release the Company, Xxxx Xxxxx Xxxxx, Xxxxxxx or any
other party from any claims arising directly under the terms of this Agreement,
including any breach of this Agreement by the
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Company, Xxxx Xxxxx Xxxxx or Xxxxxxx or to release the Company, Xxxx Xxxxx
Xxxxx, Xxxxxxx or any other party from any claims arising under the Stock
Purchase Agreement entered into on the same date as this agreement, including
any breach of the Stock Purchase Agreement by any party thereto. Further,
Xxxxxxx does not release the Company from any liability it may have to Xxxxxxx
by reason of COBRA or Xxxxxxx'x interest, if any, in any Company pension or
profit sharing plans including the Company's 401(k) Plan.
It is further understood that nothing in this Agreement shall be
construed or deemed to terminate the Second Amended and Restated Stock
Restriction and Buy-Sell Agreement dated March 3, 2001 among the Company, Xxxx
Xxxxx Xxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx or the Indemnification Agreement
dated July 1, 2001 between the Company and Xxxxxxx, and the mutual releases
contained herein shall not be construed or deemed to eliminate the rights or
obligations of any party under those agreements or to release any party from any
claims arising under those agreements. It is further understood and agreed that
the Company will continue to maintain and pay the premiums for the existing life
insurance which is currently in effect on Xxxxxxx'x life in the face amount of
$5,000,000.00 which is described in Section 6.5 of the Second Amended and
Restated Stock Restriction and Buy-Sell Agreement referred to above for as long
as Xxxxxxx continues to own any stock in the Company. The Company further agrees
to transfer said life insurance policies to Xxxxxxx, upon his request and at no
cost to Xxxxxxx, when he no longer owns any stock of the Company; provided that
Xxxxxxx shall be required to pay all premiums which become payable following any
transfer of the policies to him.
10. INDEMNIFICATION. The parties hereto are familiar with the by-laws of
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the Company, specifically including Article Five, Indemnification of Officers
and Directors. The
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Company agrees that it will make no material changes to Article Five for a
period of three (3) years from November 15, 2001, without the prior written
consent of Xxxxxxx and Xxxxxxx agrees his reasonable consent will not be
withheld. The Company acknowledges that it is its intention for Xxxxxxx to be
entitled to continuing indemnification for the Company as a prior employee,
officers and/or director, as the case may be. The Company further acknowledges
that it currently has in place an insurance policy commonly known and referred
to as a "D&O" policy. The Company agrees that it will keep said policy, or a
similar policy, in place for the same three (3) year period with policy limits
of not less than Ten Million Dollars ($10,000,000.00). The parties further agree
that the Indemnification Agreement dated July 1, 2001 between the Company and
Xxxxxxx shall remain in effect.
The Company further agrees to indemnify and hold harmless Xxxxxxx
against any taxes which he may become obligated to pay on account of income
earned by the Company during its current fiscal year or any adjustment which
results in an increase in the income previously reported by the Company on its
tax return in any previous fiscal year. The Company agrees that said payment
shall include a "gross-up", if necessary, to make Xxxxxxx "whole" with respect
to all federal and state income taxes.
11. ATTORNEYS' FEES AND COSTS. In the event of any dispute arising out
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of the subject matter of this Agreement, the prevailing party shall recover, in
addition to any other damages assessed, its attorneys' fees and court costs
incurred in litigating or otherwise settling or resolving such dispute, whether
or not an action is brought or prosecuted to judgment. In addition, the Company
agrees to pay Xxxxxxx'x attorneys fees incurred in connection with entering into
this Agreement not to exceed $7,500.
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12. GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Illinois.
13. RECITALS. The recitals and preparatory phrases in paragraphs set forth
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above are fully incorporated herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE GSI GROUP, INC., a Delaware
corporation
/s/ Xxxxx Xxxxxxx BY /s/ Xxxxx Xxxxx
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Xxxxx Xxxxxxx Its Chief Executive Officer
For valuable consideration the undersigned is executing this Agreement for
purposes of releasing Xxxxx Xxxxxxx pursuant to paragraph 9.B.
/s/ Xxxx Xxxxx Xxxxx
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Xxxx Xxxxx Xxxxx
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