EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and effective as of __________,
1997, by and between NORTH STAR PLATING COMPANY, a Minnesota corporation (the
Company"), and KIM D. WOOD (the "Employee"), with respect to the following
facts:
A. Pursuant to that certain Agreement and Plan of Merger dated as of
December 6, 1996 (the "Merger Agreement"), by and among Keystone Automotive
Industries, Inc. ("Keystone"), North Star Merger, Inc., a wholly owned
subsidiary of Keystone (the "Subsidiary"), the Company and certain shareholders
of the Company, among other things, (i) the Subsidiary will be merged with and
into the Company (the "Merger"), (ii) all shares of the capital stock of the
Company issued and outstanding immediately prior to the Merger will be converted
into the right to receive an aggregate of 2,450,000 shares of the Common Stock
of Keystone (or approximately 25.1% of the shares of the Common Stock of
Keystone to be issued and outstanding immediately after the Merger) and (iii)
the Employee, a director, officer and principal shareholder of the Company, will
become the President of the Company.
B. The Company desires to be assured of the continued association and
services of the Employee in order to take advantage of his experience, knowledge
and abilities in the Company's business, and is willing to employ the Employee,
and the Employee desires to be so employed, on the terms and conditions set
forth in the Agreement.
C. The Employee from time to time in the course of his employment may
learn trade secrets and other confidential information concerning the Company,
and the Company desires to safeguard such trade secrets and confidential
information against unauthorized use and disclosure.
D. The parties acknowledge that in the circumstances set forth in this
Agreement competition by the Employee would be detrimental to the Company's
business and to the expectations of Keystone under the Merger Agreement.
ACCORDINGLY, on the basis of the representations, warranties and
covenants contained herein, and as a material inducement to Keystone entering
into and consummating the transactions contemplated by the Merger Agreement, the
parties hereto agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby employs the Employee as
President, and the Employee hereby accepts such employment, on the terms and
conditions set forth below, to perform during the term of this Agreement such
services as are required hereunder.
EXHIBIT 10.6
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1.2 DUTIES. The Employee shall render such services to the
Company, and shall perform such duties and acts, as reasonably may be required
by the Company's Board of Directors in connection with any aspect of the
Company's business. The Employee shall not be required to relocate his home in
connection with his employment under this Agreement.
1.3 SERVICE TO OTHERS. The Employee shall devote his entire
productive time, ability and attention to, and shall diligently and
conscientiously use his best efforts to further, the Company's business, and
shall not, without the prior written consent of the Company's Board of Directors
in each instance, perform services of any kind, whether or not for compensation,
for any person other than the Company, which services, in the sole opinion of
the Company's Board of Directors, might materially interfere with the
performance of his duties hereunder.
2. COMPENSATION
2.1 COMPENSATION. As the total consideration for the services
which the Employee renders hereunder, the Employee shall be entitled to the
following:
(a) an annual base salary of $175,000, subject to such
periodic increases, if any, as the Company's Board of Directors may deem to be
appropriate in its sole discretion, less income tax and other applicable
withholdings, payable in weekly, bi-monthly or monthly installments as may be
agreed between the Employee and the Company;
(b) an annual bonus in such amount and upon the realization
of such performance criteria as may be established from time to time by the
Company's Board of Directors, less income tax and other applicable withholdings;
(c) participation in all benefit plans or programs
sponsored by the Company for executive officers in general, including, without
limitation, participation in any group health plan, medical reimbursement plan,
dental plan, disability insurance plan, life insurance plan and pension and
profit sharing plan;
(d) reimbursement of any and all reasonable and documented
expenses incurred by the Employee from time to time in the performance of his
duties hereunder;
(e) two (2) weeks paid vacation per year, at such time or
times as the Company's Board of Directors may authorize, and all paid holidays
observed by the Company; PROVIDED, however, that such vacation shall be taken
annually and shall not cumulate from year to year; and
(f) the use of an automobile substantially similar to that
currently provided by the Company to the Employee, together with reimbursement
of all expenses for insurance, fuel and maintenance.
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2.2 ILLNESS. Subject to the limitations contained in Section
3.2(c) and 3.3(i) of this Agreement, if the Employee shall be unable to render
the services required hereunder on account of personal injuries or physical or
mental illness, he shall continue to receive all payments provided in this
Agreement; PROVIDED, however, that any such payments may, at the sole option of
the Company, be reduced by any amount that the Employee receives for the period
covered by such payments as disability compensation under insurance policies, if
any, maintained by the Company or under government programs.
3. TERM OF EMPLOYMENT AND TERMINATION
3.1 TERM. Unless sooner terminated pursuant to Section 3.2 of
this Agreement, the term of employment under this Agreement shall be for a
period commencing on the date hereof and ending on the third anniversary date
thereof; PROVIDED, however, that such term of employment automatically shall be
renewed for successive two (2) year terms unless written notice of termination
is given by either the Company or the Employee not less than ninety (90) days
prior to the end of the initial term or any subsequent two (2) year renewal
term.
3.2 TERMINATION. Employment under this Agreement shall
terminate prior to the expiration of its term upon the happening of any of the
following events:
(a) the mutual agreement of the Company and the Employee;
(b) the death of the Employee;
(c) at the Company's option if, in the reasonable judgment
of the Company's Board of Directors, the Employee has become so physically or
mentally disabled as to be incapable of substantially performing his duties
hereunder for a period of six (6) consecutive months or an aggregate of 180 days
in any twelve (12) month period;
(d) at the Company's option, in the event of (i) a material
breach of this Agreement by reason of the Employee's continued and willful
failure or refusal to substantially perform his duties in accordance with this
Agreement or (ii) the conviction of the Employee of a felony or of a misdemeanor
involving financial impropriety or (iii) the material breach of the Employee's
fiduciary duty to the Company; PROVIDED, however, that no termination shall
occur under clause (i) unless the Employee first shall have received written
notice specifying the acts or omissions alleged to constitute such breach and,
if such breach can be corrected, it continues after the Employee shall have had
reasonable opportunity to correct it;
(e) at the Employee's option, in the event of (i) a
material breach of this Agreement by the Company or (ii) the assignment to the
Employee of duties inconsistent with his status as President of the Company or
(iii) a substantial alteration in the Employee's reporting responsibility, title
or office or (iv) a move of the Company's principal executive offices outside
the County of Hennepin, Minnesota; PROVIDED, however, that no termination shall
occur
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under clause (i) unless the Company first shall have received written notice
specifying the acts or omissions alleged to constitute such breach and, if such
breach can be corrected, it continues after the Company shall have had a
reasonable opportunity to correct it; or
(f) at the Company's option by resolution of the Board of
Directors for any reason whatsoever without cause.
3.3 DUTIES UPON TERMINATION. In the event that employment under
this Agreement is terminated, whether at the expiration of the initial term or
any subsequent two (2) year renewal term or prior thereto pursuant to Section
3.2 of this Agreement, neither the Company nor the Employee shall have any
remaining duties or obligations hereunder, except that (i) the Company shall pay
to the Employee, or his estate, such compensation as is due pursuant to Section
2.1, prorated through the date of termination (the "Termination Date"), (ii) the
Employee shall continue to be bound by Section 4 of this Agreement and (iii) in
the event that such termination shall occur pursuant to Section 3.2(a), (b),
(c), (e) or (f) of this Agreement or in the event that the Company terminates
this Agreement under Section 3.1 hereof effective at the end of the initial term
or any renewal term, except for any such termination for any reason described in
Section 3.2(d) hereof, the Company shall pay to the Employee, or his estate, or
bear the cost of, in the case of benefits described in Section 2.1(c), (A) such
compensation as would otherwise be due pursuant to Sections 2.1(a) and (c)
during the twelve (12) months commencing on the Termination Date and (B) such
compensation as would otherwise be due pursuant to Section 2.1(b) for the fiscal
year of the Company in which the Termination Date occurs; PROVIDED, however,
that such compensation due pursuant to Section 2.1(b) shall be determined
without regard to any condition thereto that requires the continued employment
of the Employee and shall be determined as though the Employee's performance
with respect to performance goals established before Termination Date continued
after the Termination Date at the same rate for each goal as was achieved before
the Termination Date.
4. TRADE SECRETS
4.1 TRADE SECRETS. The Employee shall not, without the prior
written consent of the Company's Board of Directors in each instance, disclose
or use in any way, during the term of his employment by the Company and for
twelve (12) months commencing on the Termination Date, except as required in the
course of such employment, any confidential business or technical information or
trade secret of the Company acquired in the course of such employment, whether
or not patentable, copyrightable or otherwise protected by law, and whether or
not conceived of or prepared by him (collectively, the "Trade Secrets"),
including, without limitation, any information concerning customer lists,
products, procedures, operations, investments, financing, costs, employees,
purchasing, accounting, marketing, merchandising, sales, salaries, pricing,
profits and plans for future development, the identity, requirements,
preferences, practices and methods of doing business of specific parties with
whom the Company transacts business, and all other information which is related
to any product, service or business of the Company, other than information which
is generally known in the industry in which the
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Company transacts business or is acquired from public sources; all of which
Trade Secrets are the exclusive and valuable property of the Company.
4.2 TANGIBLE ITEMS. All files, accounts, records, documents,
books, forms, notes, reports, memoranda, studies, compilations of information,
correspondence and all copies, abstracts and summaries of the foregoing, and all
other physical items related to the Company, other than a merely personal item,
whether of a public nature or not, and whether prepared by the Employee or not,
are and shall remain the exclusive property of the Company and shall not be
removed from the premises of the Company, except as required in the course of
employment by the Company, without the prior written consent of the Company's
Board of Directors in each instance, and the same shall be promptly returned to
the Company by the Employee on the expiration or termination of his employment
by the Company or at any time prior thereto upon the request of the Company.
4.3 SOLICITATION OF EMPLOYEES. During the term of his
employment by the Company and for eighteen (18) months commencing on the
Termination Date (such period not to include any period of violation hereof by
the Employee or period which is required for litigation to enforce this
paragraph and during which the Employee is in violation hereof), the Employee
shall not, directly or indirectly, either for his own benefit or purposes or the
benefit or purposes of any other person, employ or offer to employ, call on,
solicit, interfere with or attempt to divert or entice away any employee of the
Company in any capacity.
4.4 NONCOMPETITION.
(a) As used herein, the term "Competitive Activity" shall
mean any participation in, assistance of, employment by, ownership of any
interest in, acceptance of business from, engagement in business with or
assistance, promotion or organization of any person, partnership, corporation,
firm, association or other business organization, entity or enterprise which,
directly or indirectly, is engaged in, or hereinafter engages in, research on,
or development, production, marketing, leasing or selling of, any product,
process or service which is the same as, similar to or in competition with any
line of business or research in which the Company or any of its successors is
engaged directly or indirectly at the Termination Date.
(b) During the period commencing on the date hereof and
ending twelve (12) months after the Termination Date (any such period not to
include any period of violation of this paragraph by the Employee or period
which is required for litigation to enforce this paragraph and during which the
Employee is in violation hereof), the Employee shall not, without the prior
written consent of the Company in each instance, engage in any Competitive
Activity in any of the following geographic areas:
(i) the County of Hennepin, Minnesota;
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(ii) the Counties of Hennepin, Ramsey, Washington,
Anoka, Sherburne, Wright, Carver, Scott, Dakota, Sterns, Benton and Crow Wing,
Minnesota;
(iii) the State of Minnesota; and
(iv) the States of Minnesota, Iowa, Missouri,
Illinois, Wisconsin, North Carolina, South Carolina, Michigan, Kansas, Nebraska,
North Dakota and South Dakota.
4.5 INJUNCTIVE RELIEF. The Employee hereby acknowledges and
agrees that it would be difficult to fully compensate the Company for damages
resulting from the breach or threatened breach of this Section 4 and,
accordingly, that the Company shall be entitled to seek temporary and injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions, to enforce such provisions without the necessity of
proving actual damages and without the necessity of posting any bond or other
undertaking in connection therewith. This provision with respect to injunctive
relief shall not, however, diminish the Company's right to claim and recover
damages.
4.6 "COMPANY". For the purposes of this Section 4 of this
Agreement only, the term "Company" shall mean collectively Keystone Automotive
Industries, Inc., a California corporation, North Star Plating Company, a
Minnesota corporation, and their respective successors, assigns and nominees,
and all individuals, corporations and other entities that directly, or
indirectly through one or more intermediaries, control or are controlled by or
are under common control with any of the foregoing.
5. MISCELLANEOUS
5.1 SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable. For the purpose of determining the scope of the
covenant set forth in Section 4.4(b), each of subparagraphs (i), (ii), (iii) and
(iv) shall be considered a separate covenant such that if the geographic scope
of any such subparagraph shall be determined by a court of competent
jurisdiction to be excessive and invalid, such subparagraph shall be severed and
the remaining subparagraphs shall be deemed enforceable and remain in full force
and effect.
5.2 SUCCESSORS AND ASSIGNS. All of the terms, provisions and
obligations of this Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, representatives, successors
and assigns. Notwithstanding the foregoing, neither this Agreement nor any
rights hereunder shall be assigned, pledged, hypothecated or otherwise
transferred by the Employee without the prior written consent of the Company's
Board of Directors in each instance.
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5.3 GOVERNING LAW. The validity, construction and
interpretation of this Agreement shall be governed in all respects by the laws
of the State of California applicable to contracts made and to be performed
within that State.
5.4 ARBITRATION. At the demand of either party any dispute
except under Section 4 arising out of this Agreement shall be resolved through
binding arbitration. The Company shall pay all arbitration costs. Unless the
parties agree on a different arbitration procedure, arbitration shall take place
under the Expedited Labor Arbitration Rules of the American Arbitration
Association of Los Angeles, California. The decision of the Arbitrator shall be
final and binding on both parties.
5.5 HEADINGS. Section and subsection headings are not to be
considered part of this Agreement and are included solely for convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.
5.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, relating to the subject matter of this
Agreement. No supplement, modification, waiver or termination of this Agreement
shall be valid unless executed by the party to be bound thereby. No waiver of
any of the provisions of this Agreement shall be deemed to or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
5.7 NOTICE. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
(i) if personally delivered, when so delivered, (ii) if mailed, one (1) week
after having been placed in the United States mail, registered or certified,
postage prepaid, addressed to the party to whom it is directed at the address
set forth below or (iii) if given by telex or telecopier, when such notice or
other communication is transmitted to the telex or telecopier number specified
below and the appropriate answerback or telephonic confirmation is received.
Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.
5.8 ATTORNEYS' FEES. In the event any party takes legal action
to enforce any of the terms of this Agreement, the unsuccessful party to such
action shall pay the successful party's expenses, including attorneys' fees,
incurred in such action.
5.9 THIRD PARTIES. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person other than the Company or the
Employee any rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date and year first set forth above.
NORTH STAR PLATING COMPANY
By
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Authorized Representative
2110 South 10th Street
Brainerd, Minnesota 56401
Telecopier Number: (218) 829-9664
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KIM D. WOOD
12415 44th Avenue North
Plymouth, Minnesota 55442
The undersigned hereby guarantees the prompt payment when due of any
and all amounts payable by the Company to the Employee under Sections 2.1 or 3.3
of this Agreement.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By
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Authorized Representative
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