EXHIBIT 10.13
Form of Executive Separation Agreement
The Company has entered into Executive Separation Agreements
in the following form with each of the following officers:
Xxxxx X. Xxxxxxxxxxxx, Xx.
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxxx
EXECUTIVE SEPARATION AGREEMENT
THIS AGREEMENT, dated and effective as of the ____ day
of__________________, ____, is made and entered into by and between
EXCEL INDUSTRIES, INC., an Indiana corporation ("Excel"),
and_________________________________ (the "Executive").
RECITALS
A. The Executive has made and is expected to make a major
contribution to the profitability, growth and financial strength of
Excel.
B. Excel considers the continued services of the Executive
to be in the best interests of Excel and its shareholders and
desires to assure the continued services of the Executive on behalf
of Excel on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt to
change control of Excel.
C. The Executive is willing to remain in the employ of Excel
upon the understanding that Excel will provide him with income
security upon the terms and subject to the conditions reflected
herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
Section 1. Payment of Amounts to Executive. Excel will pay
to the Executive the benefits described in Section 2 hereof in the
event that: (a) a Change in Control (as defined in Section 3
hereof) of Excel occurs and (b) the Executive's employment with
Excel is terminated within two years after the Change in Control
occurs either (i) by Excel for any reason other than Serious
Executive Misconduct (as defined in Section 4 hereof), death,
normal retirement or total and permanent disability within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), or (ii) by the Executive for Good Reason
(as defined in Section 5 hereof).
Section 2. Benefits to be Paid to Executive. If required
pursuant to the terms of Section 1 of this Agreement, Excel will
pay to the Executive the benefits in the time and manner described
as follows:
Section 2.01. Salary and Bonus. Excel will pay to the
Executive within ten days of the termination of his employment any
amount of salary and bonus or incentive compensation due, and any
portions thereof earned or accrued but not yet due, to the
Executive at the time of the termination of his employment. In
addition, with respect to any bonus or incentive compensation based
upon performance goals for a fiscal year or another period of time
which has not then expired, Excel shall, within sixty (60) days
following the expiration of such fiscal year or other period of
time, pay to the Executive the pro rata portion of any such bonus
or incentive compensation applicable to the portion of such fiscal
year or the period of time prior to the termination of employment.
Excel will also pay to the Executive as severance compensation
in a lump-sum payment within thirty (30) days of the termination of
his employment an amount equal to 2.95 times the Executive's
average annual compensation paid by Excel which was includible in
the gross income of the Executive for federal income tax purposes
for the most recent five taxable years of the Executive ending
before the date on which the Change in Control occurred or if the
Executive did not perform personal services for Excel for all of
such five-year period, such portion of such five-year period during
which the Executive performed personal services for Excel.
Section 2.02. Retirement Plans. Until the earlier of the date
which is three years after the termination of the Executive's
employment or the date of death of the Executive, Excel will
maintain in full force and effect for the continued benefit of the
Executive each employee pension benefit plan (as such term is
defined in Section 1002 ofTitle 29 of the United States Code, as
amended) in which the Executive is entitled to participate
immediately prior to the date of his termination; provided,
however, that if the Executive is a participant in Excel's 1989
Deferred Compensation Plan (as amended, the "Deferred Compensation
Plan") at the time the Executive receives a lump-sum payment
pursuant to the second paragraph of Section 2.01 of this Agreement,
the Executive may not elect early retirement under the Deferred
Compensation Plan prior to the date which is three years after the
date of the Executive's termination of employment. If the terms of
any such plan of Excel do not permit continued participation by the
Executive, Excel will arrange to provide the Executive a benefit
substantially similar to and at least as favorable as the
incremental benefit which the Executive would have been entitled to
receive under such Excel plan had the participation by the
Executive in such plan continued from the date of the Executive's
termination of employment until a date three years thereafter,
calculated by assuming that the Executive's annual earnings during
such three-year period are equal to Executive's annual earnings for
the last full calendar year ending before the date of the
Executive's termination of employment. Benefits under the
preceding sentence may not be paid prior to the earlier of (i) the
date which is three years after the date of the Executive's
termination of employment or (ii) the date the Executive attains
normal retirement age under such plan.
Section 2.03. Disability and Medical Insurance Benefits.
Until the earlier of the date which is three years after the
termination of the Executive's employment or the date of death of
the Executive, Excel will maintain in full force and effect all
disability and medical insurance policy, plan or program coverage
benefits for the Executive which the Executive was entitled to
immediately prior to the date of his termination. If the terms of
any disability or medical insurance policy, plan or program
maintained by Excel do not permit the continued coverage of and
participation by the Executive, then Excel will arrange to provide
to the Executive a benefit substantially similar to and at least as
favorable as, the incremental benefit which the Executive would
have been entitled to receive under any such Excel policy, plan or
program had the coverage and participation by the Executive in such
policy, plan or program continued from the date of the Executive's
termination of employment until a date three years thereafter.
The Executive shall also have the option, in lieu of the
continuation of benefits for a three year period as described
above, to have assigned to him at no cost and with no apportionment
of prepaid premiums any assignable disability or medical insurance
policy specifically relating to the Executive which is owned by
Excel.
Section 3. Definition of Change in Control. For purposes of
this Agreement, the term "Change in Control" shall mean the
occurrence of any of the following: (a) the consummation of a
merger or consolidation of Excel with any other entity
("Reorganization"); (b) the sale, lease, exchange or transfer of
all or substantially all of Excel's assets ("Asset Transfer"); (c)
the approval by the shareholders of Excel of any plan or proposal
for the liquidation or dissolution of Excel; (d) the acquisition
(whether in one transaction or a series of transactions) by any
person, other than a trustee of any employee benefit plan of Excel,
of thirty percent (30%) or more of the outstanding voting power of
Excel's securities unless such acquisition was approved by the
Board of Directors before the acquiring person became the
beneficial owner of ten percent (10%) or more of the outstanding
voting power of Excel securities; or (e) individuals who are
members of the Board of Directors of Excel on the date hereof
("Incumbent Directors") cease for any reason to constitute a
majority of the members of the Board of Directors, provided that
any new director whose election to the Board of Directors is
approved by at least two-thirds (2/3) of the Incumbent Directors
then in office shall thereafter be considered an Incumbent
Director. The foregoing notwithstanding, the following events
shall not constitute a Change in Control:
(x) any acquisition of securities by any person directly
from Excel;
(y) any acquisition of securities by Excel; and
(z) any Reorganization or Asset Transfer if, following
such Reorganization or Asset Transfer (i) more than
fifty percent (50%) of the voting power of the
resulting corporation (whether Excel or
another corporation) or transferee is beneficially
owned by the beneficial owners of the voting shares
of Excel immediately prior to such transaction,
excluding shares received by such Excel
shareholders as a result of their interests in other
entities party to such transaction; (ii) no person
beneficially owning less than thirty
percent (30%) of the outstanding voting shares of
Excel immediately prior to such transaction,
beneficially owns more than thirty percent (30%) of
the voting power of the resulting
corporation or the transferee; and (iii) at least
a majority of the members of the board of directors
of the resulting corporation or the transferee were
Incumbent Directors at the time of the execution
of the agreement providing for such transaction.
Section 4. Definition of Serious Executive Misconduct. For
purposes of this Agreement, the term "Serious Executive Misconduct"
shall mean an act or acts by the Executive which: (a) would
constitute a felony under Indiana law; or (b) were dishonest and
which resulted or were intended by the Executive to result directly
or indirectly in the personal enrichment of the Executive at
Excel's expense.
Section 5. Definition of Good Reason. For purposes of this
Agreement, the Executive shall have "Good Reason" to terminate his
employment with Excel if:
(a) the Executive is assigned any duties or responsibilities
which are inconsistent with his position, authority,
duties, responsibilities or status on the date of this
Agreement, or his reporting responsibilities or titles in
effect at such time are changed, in either case resulting
in a diminution of the Executive's position, authority,
duties, responsibilities or status;
(b) the Executive's base compensation is reduced or he
experiences in any year a reduction in the ratio of his
incentive and bonus compensation to his base
compensation in excess of the reduction which would have
occurred under the incentive and bonus formula in effect
immediately prior to the Change in Control; or
(c) the Executive is transferred to a principal work location
which would reasonably require a change in the
Executive's residence.
Section 6. Term. The term of this Agreement (the "Term")
shall begin on the date of this Agreement and shall continue until
December 31, 1998, and thereafter, this Agreement shall be
automatically renewed for successive one-year terms unless
terminated by either party giving the other written notice of
termination at least ninety (90) days prior to the expiration of
such original term or any such renewal term; provided, however,
that if a Change in Control occurs on or before December 31, 1998
or on or before the expiration of any renewal term, the Term of
this Agreement shall continue until the date which is three years
after the anniversary date of this Agreement immediately following
the date on which a Change in Control occurs.
Section 7. Enforcement of Agreement. Excel is aware that
upon the occurrence of a Change in Control the Board of Directors
or a shareholder of Excel may then cause or attempt to cause Excel
to refuse to comply with its obligations under this Agreement, or
make, cause or attempt to cause Excel to institute, or may
institute litigation seeking to have this Agreement declared
unenforceable, or may take or attempt to take other action to deny
the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated.
It is the intent of Excel that the Executive not be required to
incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be
bound to negotiate any settlement of his rights hereunder under
threat of incurring such expenses.
Accordingly, if following a Change in Control it should appear
to the Executive that Excel has failed to comply with any of its
obligations under this Agreement or in the event that Excel or any
other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from the Executive the
benefits entitled to be provided to the Executive hereunder, and
provided that Executive has complied with all of his obligations
under this Agreement, then: (a) Excel irrevocably authorizes the
Executive from time to time to retain counsel of his choice at the
expense of Excel as provided in this Section 7 to represent the
Executive in connection with the initiation or defense of any
litigation or other legal action whether by or against Excel or any
Director, officer, shareholder, or other person affiliated with
Excel, in any jurisdiction notwithstanding any existing or prior
attorney-client relationship between Excel and such counsel; and
(b) Excel irrevocably consents to the Executive entering into an
attorney-client relationship with such counsel.
The reasonable fees and expenses of counsel selected from time
to time by the Executive as hereinabove provided, and all other
costs and expenses (including court costs) incurred by the
Executive as a result of any claim, action or proceeding arising
out of, or challenging the validity, admissibility or
enforceability of this Agreement or any provision hereof, shall be
paid or reimbursed to the Executive by Excel on a regular, periodic
basis upon presentation by the Executive of a statement or
statements prepared by his counsel in accordance with such
counsel's customary practices, up to a maximum aggregate amount of
$400,000.
Section 8. Severance Pay; No Duty to Mitigate. All amounts
payable to the Executive under this Agreement shall not be treated
as damages but as severance compensation to which the Executive is
entitled by reason of termination of his employment in the
circumstances contemplated by this Agreement. The Executive shall
not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or
otherwise. Excel shall not be entitled to set off against the
amounts payable to the Executive any amounts earned by the
Executive in other employment after termination of his employment
with Excel, or any amounts which might have been earned by the
Executive in other employment had he sought such other employment.
Section 9. Continued Employment of Executive After Potential
Change in Control. The Executive agrees that, unless a Change in
Control has occurred and the Executive has Good Reason to terminate
his employment, the Executive will remain in the employ of Excel
for a period of at least one (1) year following the occurrence of
a Potential Change in Control. For purposes of this Agreement, a
"Potential Change in Control" shall be deemed to have occurred if:
(a) Excel enters into an Agreement the consummation of which would
result in the occurrence of a Change in Control within the meaning
of Section 3 of this Agreement; (b) if any person, including Excel,
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control
within the meaning of Section 3 of this Agreement; (c) if any
person becomes the beneficial owner, directly or indirectly, of
securities representing twenty percent (20%) or more of the voting
power of Excel's then outstanding voting shares; or (d) the Board
of Directors of Excel adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
Section 10. Reduction in Benefits Under Certain
Circumstances.
Section 10.01. General. Notwithstanding anything in
this Agreement to the contrary, in the event that the accounting
firm which was serving as the independent auditors for Excel
immediately prior to the Change in Control (the "Auditors")
determines that any payment or distribution by Excel to or for the
benefit of the Executive, whether paid or payable (or distributed
or distributable) pursuant to the terms of this Agreement or
otherwise (a "Payment"), would not be deductible by Excel for
federal income tax purposes because of Section 280G of the Code,
then the aggregate present value of the amounts payable or
distributable to or for the benefit of the Executive pursuant to
this Agreement (the "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section
10.01, the "Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be non-deductible by Excel
because of Section 280G of the Code.
Section 10.02. Reduction of Payments. If the Auditors
determine that any Payment would not be deductible by Excel because
of Section 280G of the Code, then Excel shall promptly give the
Executive both notice to that effect and a detailed calculation
thereof and of the Reduced Amount. The Executive may then elect,
in his sole discretion, which and how much of the Agreement
Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Agreement Payments
equals the Reduced Amount) and shall advise Excel in writing of his
election within ten days of his receipt of notice. If no such
election is made by the Executive within such ten-day period, then
Excel may elect which and how much of the Agreement Payments shall
be eliminated or reduced (as long as after such election the
aggregate present value of the Agreement Payments equals the
Reduced Amount) and shall notify the Executive promptly of such
election. For purposes of this Section 10, present value shall be
determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Section 10 shall be
binding upon Excel and the Executive and shall be made within
thirty (30) days of the Executive's termination of employment.
As promptly as practicable following such determination and the
elections hereunder, Excel shall pay or distribute to or for the
benefit of the Executive such amounts as are then due to him under
this Agreement and shall promptly pay to or distribute for the
benefit of the Executive in the future such amounts as may become
due to him under this Agreement.
Section 10.03. Underpayment. As a result of the uncertainty
in the application of Section 280G of the Code at the time of the
initial determination by the Auditors hereunder, it is possible
that additional Agreement Payments which will not have been made by
Excel should have been made (an "Underpayment"), consistent with
the calculation of the Reduced Amount hereunder. In the event that
the Auditors, based upon controlling precedent, determine that any
Underpayment has occurred, such Underpayment shall promptly be paid
by Excel to or for the benefit of the Executive, together with
interest at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code.
Section 10.04. Overpayment.
(a) In the event it shall be determined that any Agreement
Payment made is subject to the excise tax imposed by
Section 4999 of the Code, or any interest or
penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with
any such interest and penalties are collectively
referred to herein as the "Excise Tax"), Excel will pay
the Executive an amount (a "Gross-Up Payment") such that
after payment by the Executive of all
taxes (including, without limitation, income taxes
and Excise Tax) imposed on the Gross-Up Payment, the
Executive retains a portion of the Gross-Up Payment equal
to the Excise Tax imposed on such
Agreement Payment.
(b) The Executive shall notify Excel in writing of any claim
by the Internal Revenue Service that, if successful,
would require the payment by Excel of a Gross-Up Payment.
Such notification shall be given as soon as practicable
but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise
Excel of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice
to Excel (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due).
If Excel notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give Excel any information reasonably requested by
Excel relating to such claim,
(ii) take such action, at the expense of Excel, in
connection with contesting such claim as Excel shall
reasonably request in writing from time to time,
including, without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by Excel,
(iii)cooperate with Excel in good faith in order
effectively to contest such claim, and
(iv) permit Excel to participate in any proceedings
relating to such claim; provided, however, that
Excel shall bear and pay directly all costs and
expenses (including additional interest and
penalties) incurred in connection with such contest
and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect
thereto) imposed as a result of such representation
and payment of costs and expense. Without
limitation on the foregoing, Excel shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings
and conferences with the taxing authority in
respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before
any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate
courts, as Excel shall determine; provided, however,
that if Excel directs the Executive to pay
such claim and xxx for a refund, Excel shall advance
the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any
imputed income with respect to such advance; and
further provided that any extension of the
statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect
to which such contested amount is claimed to be
due is limited solely to such contested amount.
Furthermore, Excel's control of the contest shall be
limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by
the Internal Revenue Service or any other taxing
authority.
(c) If, after the receipt by the Executive of an amount
advanced by Excel pursuant to Section 10.04(b), the
Executive receives any refund of Excise Tax paid with the
amount advanced, the Executive shall (subject to Excel's
complying with the requirements of Section 10.04(b))
promptly pay to Excel the amount of such refund (with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of any
amount advanced by Excel pursuant to Section 10.04(b), a
final determination is made that the Executive shall not
be entitled to any refund with respect to such claim,
then such advance shall be forgiven and shall
not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
(d) Notwithstanding the foregoing, if it is determined by the
Auditors, based upon controlling precedent, that no
Excise Tax will be due if a portion of an Agreement
Payment is treated for all purposes as a loan to the
Executive, the smallest portion of the Agreement Payment
necessary to eliminate the Excise Tax (the "Loan Amount")
shall be so treated, and the Executive shall promptly
repay to Excel the Loan Amount, together with
interest thereon from the date the Agreement Payment was
received by the Executive at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code, and no
Gross-Up Payment will be made.
Section 11. Other provisions.
Section 11.01. Assignment. No right, benefit or interest
hereunder shall be subject to assignment, anticipation, alienation,
sale, encumbrance, charge, pledge, hypothecation or set off in
respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process; provided, however, that the
Executive may assign any right, benefit or interest hereunder if
such assignment is permitted under the terms of any plan or policy
of insurance or annuity contract governing such right, benefit or
interest.
Section 11.02. Modification. This Agreement may not be
amended, modified, supplemented or canceled except by written
agreement of the parties.
Section 11.03. Waiver. No provision of this agreement may be
waived except by a writing signed by the party to be bound thereby.
Section 11.04. Severability. In the event that any provision
or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
Section 11.05. Binding on Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
Executive (and his personal representatives, heirs and assigns).
This Agreement shall also be binding upon and inure to the benefit
of Excel and any successor organization or organizations which
shall succeed to substantially all of the business and property of
Excel, whether by means of merger, consolidation, acquisition of
substantially all of the assets of Excel or otherwise, including by
operation of law.
Section 11.06. References to Law. References in this
Agreement to statutes or regulations shall include any amendment
thereto and any successor statute or regulation.
Section 11.07. Notices.
(a) Except as otherwise specifically set forth in this
Agreement, all notices and other communications shall be
delivered or mailed addressed as follows:
If to Excel: Excel Industries, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Secretary/Treasurer
If to Executive:________________________________
________________________________
________________________________
(b) Any communication provided for herein shall be deemed to
have been duly given, made and received (i) when hand
delivered or (ii) on the date noted upon the receipt for
registered or certified mail.
Section 11.08. Entire Agreement. This Agreement sets forth
the entire agreement and understanding of the parties hereto with
respect to the matters covered hereby. All representations,
promises and prior or contemporaneous understandings between the
parties are merged into and expressed in this Agreement.
Section 11.09. Governing Law. This Agreement has been made
pursuant to, and shall be governed and construed in accordance
with, the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
EXCEL INDUSTRIES, INC.
By __________________________________
___________________________________
Printed Name and Title
EXECUTIVE
_____________________________________
_____________________________________
Printed Name
