GSI GROUP INC
SEPARATION AGREEMENT WITH HOWARD BUFFETT
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>3
<FILENAME>dex106.txt
<DESCRIPTION>SEPARATION AGREEMENT WITH HOWARD BUFFETT
<TEXT>
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                                                                    Exhibit 10.6

                                BUFFETT AGREEMENT
                                -----------------

         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 HOWARD G. BUFFETT ("Buffett").

                                    RECITALS:

         WHEREAS,  the  Company  is  a  manufacturer  and  provider  of
agricultural  equipment  and  services,  both  nationally  and internationally;

         WHEREAS, Buffett has been an executive officer of the Company since
September of 1995;

         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 Buffett 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
setforth below, it is hereby covenanted and agreed by the Company and Buffett as
follows:

         1.    RESIGNATION.  It is agreed and understood that Buffett will
               -----------
tender his written  resignation to the Company  effective August 31, 2001.  The
form of Buffett's resignation is attached hereto and made a part hereof as
Exhibit A.

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        2.  DUTIES PENDING RESIGNATION. It is agreed and understood that between
            --------------------------
the date of this Agreement and November 15, 2001, Buffett shall continue his
employment with the Company as an employee but not as an executive officer or
chairman. Even though Buffett will continue his employment until November 15,
2001, it is agreed that his responsibilities and duties will significantly
change from the duties that Buffett provided in the past. It is agreed and
understood that Buffett 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 Buffett shall provide such services as may be reasonably agreed
upon by Buffett 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 Buffett resigns as an employee of the Company on
November 15, 2001. These services shall be provided by Buffett 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 Buffett. It is specifically agreed and understood that the Company shall
not require Buffett to be at the Company's offices on a full-time basis and, in
fact, it is contemplated that Buffett will be absent from the Company's offices
for substantial periods in September and October.

        It is further agreed and understood that Buffett shall be entitled to
continue to receive his compensation and all benefits which were heretofore
provided by practice and/or pursuant to Buffett's employment agreement between
the date this Agreement is executed and November 15, 2001. It is further agreed
that the Company will reimburse Buffett for any and all reasonable

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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, Buffett shall no
            ------------------------
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, Buffett shall only be entitled
to the consideration which is specially set forth in this Agreement.

         Effective November 15, 2001, Buffett shall be entitled to severance
payments for eighteen (18) months which shall be computed at Buffett's 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 Buffett an IRS form 1099
each year.

         Buffet 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
Buffett as the result of any future employment or services as a director,
consultant or otherwise.

         4. OFFICE SPACE AND SECRETARY.
            --------------------------

     A. It is agreed and understood that Buffett shall continue to use and
occupy his current office space at the Company which consists of four (4)
different offices for one (1) year commencing November 16, 2001, and terminating
at 11:59 p.m. on November 15, 2002. The Company shall

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provide the office space at no cost to Buffett and shall provide, at the
Company's expense, all utilities and services consumed by Buffett including
heat, air conditioning, use of rest room facilities, telephones, computers,
facsimile and other office equipment and office services the same as what has
been provided to Buffett in the past.

         The only service which Buffett will be required to pay for effective
November 16, 2001, is the expenses of an overnight courier, i.e., Federal
Express, UPS, etc. Other than the expenses of the courier, which will be paid by
Buffett, the Company shall continue to pay any and all other reasonable expenses
in order to provide Buffett and his secretary with their offices.

         B. It is agreed and understood that the Company will continue to
provide R. Jill Bauer as a secretary for Buffett for one (1) year, effective
November 16, 2001. The Company further agrees to continue Ms. Bauer's salary at
the same rate as she is currently being paid. If Ms. Bauer resigns or otherwise
leaves the Company prior to the end of the one-year period, the Company agrees
to provide Buffett with a suitable replacement secretary.

         5. PERSONAL PROPERTY LOCATED WITHIN BUFFETT'S OFFICES. It is agreed and
            --------------------------------------------------
understood that Buffett shall be entitled without any cost to him to remove any
and all items of personal property currently located within his offices at the
time Buffett vacates his offices, i.e., on or before November 15, 2002. It is
agreed and understood that Buffett 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 Buffett. In other words, it is agreed and
understood that at the time Buffett 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 Buffett
shall not be allowed to take

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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, Buffett shall be entitled to retain the cell phone equipment and
accessories which he is currently using without cost to him.

         6. PRIOR EMPLOYMENT AGREEMENT. As of November 15, 2001, it is agreed
            --------------------------
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., Buffett shall not be entitled to
any further salary or benefits from the Company except as expressly set forth
herein.

         7. COVENANT NOT TO COMPETE. As previously stated, the parties hereto
            -----------------------
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 Buffett shall
not 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 Buffett's 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
Buffett owns less than one (1) percent of the equity thereof; and provided
further, that the foregoing shall not limit or prevent Buffett from (i) serving
on the board of directors of any corporation on which Buffett is now serving, or
(ii) investing in any business in which Buffett 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

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least fifty percent (50%) of its revenue from the manufacture of grain storage
systems, poultry feeding equipment and/or swine producing equipment.

         8.  CONFIDENTIALITY.  Buffett agrees he will not divulge or appropriate
             ---------------
for his own use or for the use of a business incompetition 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 Buffett 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 Buffett.

         9.  PERSONAL GUARANTEES. The Company believes that Buffett has not
             -------------------
personally guaranteed any of the obligations of GSI, however, GSI will review
its records to attempt to identify any such personal undertakings by Buffett.
The Company agrees it shall request in writing to any person or entity to whom
Buffett may have provided a personal guarantee that Buffett be released from
such guarantee. It is agreed that other than the Company making this request in
writing it shall not be obligated to take any other action, however, it is also
agreed and understood that to the extent Buffett is required to satisfy any such
obligation that Buffett may obtain reimbursement from the Company regarding any
such personal guarantee.

         10. MUTUAL RELEASES.
             ---------------

         A. Buffett hereby releases and forever discharges the Company, John
Craig Sloan, 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,

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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 Buffett or anyone on Buffett's
behalf, arising out of or relating in any way to any relationship or transaction
(except as provided in 10.C. below) between Buffett 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 10.C. below)
between Buffett and any of the GSI Released Parties, including, but not limited
to, any rights Buffett might have or claim to have under the employment
agreement dated August 30, 2000.

     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 John Craig Sloan hereby release and forever discharge
Buffett, 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


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hereafter at any time be made or brought against Buffett 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 10.C. below) between the
Company and Buffett 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 Buffett, 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, John Craig Sloan, Buffett or any
other party from any claims arising directly under the terms of this Agreement,
including any breach of this Agreement by the Company, John Craig Sloan or
Buffett or to release the Company, John Craig Sloan, Buffett 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, Buffett does not release the Company
from any liability it may have to Buffett by reason of COBRA or Buffett's
interest, if any, in any Company pension or profit sharing plans including the
Company's 401(k) Plan. It is further agreed that the foregoing release shall not
affect Buffett's liability to the Company to reimburse it for a letter of credit
heretofore issued in Buffett's favor by the LaSalle Bank of Chicago in the
approximate sum of Fifty-nine Thousand Seven Hundred Sixty Dollars


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($59,760.00), more or less, which will become due and payable in October of
2001. (In any event Buffett agrees to pay said letter of credit in full on or
before October 31, 2001).

     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, John Craig Sloan,
Jorge Andrade and Buffett or the Indemnification Agreement dated July 1, 2001
between the Company and Buffett, 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 Buffett's life in the face amount of $2,000,000.00 (or
such lesser amount as may hereafter be agreed upon in writing by Buffett and the
Company), 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
Buffett continues to own any stock in the Company. The Company further agrees to
transfer said life insurance policies to Buffett, upon his request and at no
cost to Buffett, when he no longer owns any stock of the Company; provided that
Buffett shall be required to pay all premiums which become payable following any
transfer of the policies to him.

     11. INDEMNIFICATION. The parties hereto are familiar with the by-laws of
         ---------------
the Company, specifically including Article Five, Indemnification of Officers
and Directors. The 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 Buffett and Buffett agrees his reasonable consent will
not be withheld. The Company acknowledges that it is its intention for


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Buffett to be entitled to continuing indemnification for the Company as a prior
employee, officer 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 Buffett shall remain in effect.

     The Company further agrees to indemnify and hold harmless Buffett 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 Buffett "whole" with respect to all federal
and state income taxes.

     12. ATTORNEYS' FEES AND COSTS. In the event of any dispute arising out 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 Buffett's attorneys fees incurred in connection with entering into
this Agreement not to exceed $7,500.

     13. GOVERNING LAW. This Agreement shall be governed by and construed in
         -------------
accordance with the laws of the State of Illinois.

     14. RECITALS. The recitals and preparatory phrases in paragraphs set forth
         --------
above are fully incorporated herein.


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     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/ Howard G. Buffett                        BY  /s/ Craig Sloan
----------------------------                    -------------------------------
Howard G. Buffett                               Its Chief Executive Officer


     For valuable consideration the undersigned is executing this Agreement for
purposes of releasing Howard G. Buffett pursuant to paragraph 10.B.

                                                /s/ John Craig Sloan
                                              ----------------------------------
                                              John Craig Sloan

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