EXHIBIT 10.13
FORM OF EXECUTIVE SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT ("Agreement"), dated as of November 14, 2000,
is made and entered into between MOCON, Inc., a Minnesota corporation
("Company") and _______________________, an individual resident of the State of
Minnesota ("Employee").
WHEREAS, The Employee has been employed by the Company since _________,
most recently as its ___________________; and
WHEREAS, The Board of Directors of the Company has determined that it
is in the best interests of the Company and its stockholders to provide
competitive severance benefits to the Employee that include additional
protections designed to assure that the Company will have the continued
dedication of the Employee despite the possibility, threat or occurrence of a
change in the ownership or control of the Company; and
WHEREAS, This Agreement is intended to specify the severance benefits
that the Company will provide to the Employee upon Employee's separation from
service with the Company under certain circumstances as described herein;
NOW, THEREFORE, In consideration of the mutual covenants and agreements
stated herein, and other good and valuation consideration, the receipt and
adequacy of which are hereby acknowledged, the Employee and Company agree as
follows:
ARTICLE I
CERTAIN DEFINED TERMS
Section 1.1. Annual Base Salary -- shall mean the Employee's annualized
base salary at the time of the determination, excluding any special compensation
such as incentives, commissions, bonuses, stock options and all other
stock-based forms of compensation, and any type of fringe benefit.
Section 1.2. Cause -- shall mean any of the following:
(a) Employee's total disability which results in Employee's
inability to perform the essential functions of Employee's
position, with or without reasonable accommodation, provided
Employee has exhausted Employee's entitlement to any
applicable leave, if Employee desires to take and satisfies
all eligibility requirements for such leave;
(b) the continued failure by the Employee to substantially perform
the Employee's duties after a demand for substantial
performance is made that identifies the manner in which the
Company believes that the Employee has not substantially
performed the
Employee's duties, and the Employee has failed to resume
substantial performance within thirty (30) days; or
(c) Employee's conviction, or the entry of a pleading of guilty or
nolo contendere by Employee, of any crime involving theft,
embezzlement, fraud, or other dishonesty, or any felony; or
(d) the willful engaging by the Employee in conduct that is
demonstrably and materially injurious to the Company.
Section 1.3. Change in Control -- shall mean any of the following
events:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company
(in one transaction or in a series of related transactions) to
a person or entity that is not controlled by the Company;
(b) the approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;
(c) any person becomes after the effective date of this Agreement
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of (i) 25% or more, but
not 50% or more, of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at
elections of directors, unless the transaction resulting in
such ownership has been approved in advance by the Continuity
Directors (as defined in Section 1.4 below), or (ii) 50% or
more of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of
directors (regardless of approval by the Continuity
Directors);
(d) a merger or consolidation to which the Company is a party if
the shareholders of the Company immediately prior to effective
date of such merger or consolidation have "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act),
immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation
representing (i) more than 50%, but less than 75%, of the
combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation
has been approved in advance by the Continuity Directors, or
(ii) 50% or less of the combined voting power of the surviving
corporation's then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any
approval by the Continuity Directors);
(e) the Continuity Directors cease for any reason to constitute at
least a majority of the Board; or
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(f) any other change in control of the Company of a nature that
would be required to be reported pursuant to Section 13 or
15(d) of the Exchange Act, whether or not the Company is then
subject to such reporting requirement.
Section 1.4 Continuity Directors -- shall mean any individuals who are
members of the Board of Directors of the Company on the date of this Agreement
and any individual who subsequently becomes a member of the Board of Directors
of the Company whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Continuity
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).
Section 1.5. Exchange Act -- shall mean the Securities Exchange Act of
1934, as amended.
Section 1.6. Good Reason -- shall mean the occurrence of any one or
more of the following events within twenty-four (24) months following a Change
in Control:
(a) a substantial adverse change in the nature or scope of the
Employee's duties, powers, responsibilities, authorities or
title from the Employee's duties, powers, responsibilities,
authorities or title immediately prior to the Change in
Control;
(b) any reduction in the Employee's Annual Base Salary, or target
level of annual incentive compensation, as in effect
immediately prior to the Change in Control;
(c) the Company's requiring the Employee to be based at a location
that is both outside the same metropolitan area of, and in
excess of 50 miles from, the location of the Employee's
principal office immediately prior to the Change in Control;
and
(d) the failure of the Resulting Corporation or any other
successor to the Company to assume and agree to perform under
this Agreement, as contemplated in section 4.2 of this
Agreement.
Section 1.7. Resulting Corporation -- shall mean the surviving
corporation in any consolidation, merger or other reorganization to which the
Company is a party; provided, however, that if the surviving corporation in any
such transaction is a subsidiary of another corporation, then the Resulting
Corporation is the ultimate parent corporation of such surviving corporation.
Section 1.8. Termination Date -- shall mean the effective date of any
notice of Termination of Employment delivered by one party to the other
thereunder.
Section 1.9. Termination of Employment -- shall mean actual termination
of the Employee's employment with the Company and its subsidiaries:
(a) by the Company for any reason other than Cause; or
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(b) after a Change in Control has occurred, by the Employee for
Good Reason.
Termination of Employment shall not include termination by reason of the
Employee's death.
ARTICLE II
SEVERANCE BENEFITS
Section 2.1. Termination of Employment Following a Change in Control.
If the Employee has a Termination of Employment at any time within twenty-four
months after a Change in Control, or prior to and in connection with a Change in
Control, and the Employee executes a general release of all claims against the
Company in the form and manner prescribed by the Company, the Company shall make
a severance payment to the Employee in an amount equal to two (2) times the
Employee's highest Annual Base Salary in effect at any time prior to such
Termination of Employment; provided, however, the amount of the severance
payment will be reduced by any amount paid to the Employee for employment
following the Change in Control, but not below an amount equal to such Annual
Base Salary.
Section 2.2. Other Termination of Employment. If the Employee has a
Termination of Employment other than a Termination of Employment within
twenty-four (24) months after a Change in Control or prior to and in connection
with a Change in Control, and the Employee executes a general release of all
claims against the Company in the form and manner prescribed by the Company, the
Company shall make a severance payment to the Employee in an amount equal to the
Employee's highest Annual Base Salary in effect at any time prior to such
Termination of Employment.
Section 2.3. Failure to Work Up to Termination Date. Notwithstanding
any provision of this Agreement that provides for the payment of severance to
the Employee, the Employee will forfeit all rights to any severance payment
under this Agreement and no severance payment will be made to the Employee if
the Employee terminates his employment with the Company and its subsidiaries
prior to the Termination Date.
Section 2.4. Effect of Reemployment. If the Employee is reemployed by
the Company or any of its subsidiaries before the date the final severance
payment would have been made if payment had been made at regular payroll
intervals instead of in a lump sum, the Employee will be required to refund to
the Company that portion of the lump sum payment representing severance payments
the Employee would have received after the date of reemployment.
Section 2.5. Time and Form of Payment. Any severance payment due under
this Agreement will be made to the Employee in a single lump sum cash payment as
soon as administratively possible after the Termination Date and execution by
the Employee of the general release described in Section 2.1 or 2.2 (whichever
applies); provided, however, that no payment will be made until the expiration
of any revocation or rescission period for the aforementioned required release
of claims and in no event will payment be made if the Employee attempts to
revoke or rescind the aforementioned required release of claims. If the Employee
should die after becoming
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fully entitled to severance but before the Employee actually receives payment,
payment will be made first to the Employee's surviving spouse, if any, and if
there is no surviving spouse, to the Employee's estate.
Section 2.6 Acceleration of Exercisability of Options.
(a) If a Change in Control occurs, all outstanding stock options
then held by the Employee under the Company's 1998 Stock
Option Plan (the "Options") will become immediately
exercisable in full and will remain exercisable for the
remainder of their terms, regardless of whether the Employee
remains in the employ or service of the Company or any of its
subsidiaries.
(b) Notwithstanding subsection (a) above, if, with respect to the
Employee, acceleration of the exercisability of the Options
(which acceleration could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended (the "Code")), together with any other
payments which the Employee has the right to receive from the
Company or any corporation which is a member of an "affiliated
group" (as defined in Section 1504(a) of the Code without
regard to Section 1504(b) of the Code) of which the Company is
a member, would constitute a "parachute payment" (as defined
in Section 280G(b)(2) of the Code), such acceleration of
exercisability will be reduced to the largest amount as will
result in no portion of such deemed "payments" being subject
to the excise tax imposed by Section 4999 of the Code;
provided, however, that, such acceleration of exercisability
shall only be reduced if such reduction would result in the
Employee receiving a greater net benefit, on an after-tax
basis (including after payment of any excise tax imposed by
Section 4999 of the Code), than the Employee would have
received had such reduction not occurred.
Section 2.7. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes
that the Company is required to withhold pursuant to any law or government
regulation or ruling.
Section 2.8. Source of Severance Payments. This Agreement is unfunded.
No fund is being set aside or allocated specifically for the purpose of this
Agreement. All severance payments shall be paid out of the general assets of the
Company. An Employee shall not have any secured or preferred interest by way of
a trust, escrow, lien or otherwise in any specific asset of the Company for
unpaid severance payments.
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ARTICLE III
TERM & TERMINATION OF AGREEMENT
Section 3.1. Term. This Agreement shall commence as of the date first
written above and shall continue in effect until terminated as provided for in
section 3.2 of this Agreement.
Section 3.2. Termination. This Agreement shall terminate upon the
earliest of the following:
(a) the date of the Employee's death; provided, however, that if
the Employee should die after becoming fully entitled to
severance but before the Employee actually receives payment,
payment will be made pursuant to section 2.5 of this
Agreement;
(b) the date the Employee is no longer employed by the Company
(other than a Termination of Employment that results in a
qualifying severance event described in section 2.1 or 2.2 of
this Agreement); or
(c) the Employee receives all severance payments due under this
Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.1. Nonexclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive, retirement or other plan or program provided by the
Company and for which the Employee may qualify, nor shall anything in this
Agreement limit or reduce such rights as the Employee may have under any other
agreement with, or plan, program, policy or practice of, the Company.
Notwithstanding the foregoing, if the Employees becomes entitled to benefits
under this Agreement, the Employee shall not be entitled to receive payments
under any other severance pay plan or program sponsored or maintained by the
Company.
Section 4.2. Successors. The Company will require the Resulting
Corporation or any other successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or consolidated assets of the Company and its subsidiaries to expressly
assume and agree to perform under the terms of this Agreement in the same manner
and to the same extent that the Company would be required to perform if no such
succession had taken place.
Section 4.3. Employment. This Agreement does not constitute a contract
of employment or impose on the Company any obligation to retain the Employee as
an employee, to continue the Employee's current employment status or to change
any employment policies of the Company.
Section 4.4. Severability. The invalidity of any one or more provisions
hereof or of any other agreement or instrument given pursuant to or in
connection with this Agreement shall not
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affect the remaining portions of this Agreement or any such other agreement or
instrument or any part thereof; and in the event that one or more of the
provisions contained herein or therein should be invalid, or should operate to
render this Agreement or any such other agreement or instrument invalid, this
Agreement and such other agreements and instruments shall be construed as if
such invalid provisions had not been inserted.
Section 4.5. Waiver. The failure of either party, on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise any
right, privilege or remedy hereunder shall not be construed as a waiver of any
such provisions, rights, remedies or privileges hereunder.
Section 4.6. Limitation on Benefits. It is the explicit intention of
the parties that no person or entity other than the parties is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any party, and that the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties (or their respective heirs, legal representatives, successors and
assigns as permitted hereunder).
Section 4.7. Spendthrift Provisions. The Employee shall not have any
transmissible interest under this Agreement nor shall the Employee have any
power to anticipate, alienate, dispose of, pledge or encumber benefits under
this Agreement, nor shall the Company recognize any assignment thereof, either
in whole or in part, nor shall this Agreement be subject to attachment,
garnishment, execution following judgment or other legal process.
Section 4.8. Company. Functions generally assigned to the Company shall
be discharged by their respective officers or delegated and allocated as
provided herein. The Company may delegate or redelegate and allocate and
reallocate to one or more persons or to a committee of persons jointly or
severally, whether or not such persons are officers or employees, such functions
assigned to them hereunder as they may from time to time deem advisable.
Section 4.9. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the matters contained herein and
supersedes all prior written or oral agreements, commitments or understandings
with respect to the matters provided for herein.
Section 4.10. Headings. Article and Section headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
Section 4.11. Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of Minnesota
(but not including the choice of law rules thereof).
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Section 4.12. Modification. This Agreement shall not be altered,
amended or modified except by a written instrument signed by each of the
parties.
MOCON INC.
By
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Date Its
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EMPLOYEE
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Date
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