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EXHIBIT 10.14
SEVERANCE AGREEMENT
THIS AGREEMENT made and entered into as of the 29th day of August,
1997 (the "Effective Date") by and among CONNECTIVITY PRODUCTS INCORPORATED, a
Delaware corporation, (hereinafter referred to as "CPI"), CONNECTIVITY
TECHNOLOGIES INC. (hereinafter referred to as "CTI") and XXXXX X. XXXXXX
(hereinafter referred to as "Xx. Xxxxxx").
WHEREAS, Xx. Xxxxxx and CPI entered into an employment agreement
dated as of May 17, 1996 (the "Employment Agreement");
WHEREAS, Xx. Xxxxxx serves as an officer and director of CPI and
of CTI, the owner of 85% of CPI's common stock;
WHEREAS, CPI and Xx. Xxxxxx desire to terminate the Employment
Agreement and Xx. Xxxxxx'x employment thereunder on the Effective Date and CPI
and CTI desire to terminate Xx. Xxxxxx'x service as a director and officer of
CPI and CTI on the Effective Date;
WHEREAS, CPI and CTI desire to provide Xx. Xxxxxx with certain
severance benefits in connection with the termination of the Employment
Agreement and his service as a director and officer of CPI and CTI; and
WHEREAS, Xx. Xxxxxx desires to accept such benefits under the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT. CPI and Xx. Xxxxxx hereby
agree that all of their respective rights and obligations under the Employment
Agreement are terminated as of the Effective Date.
2. RESIGNATION AS DIRECTOR AND OFFICER. Xx. Xxxxxx hereby agrees
to resign as a Director and officer of CPI and CTI as of the Effective Date.
3. SEVERANCE BENEFITS. CPI agrees to provide Xx. Xxxxxx with the
following severance benefits:
(a) Xx. Xxxxxx shall be paid the sum of three hundred fifty
thousand dollars ($350,000.00), in a lump sum payment within seven (7) days of
the termination of the waiting periods set forth in Section 11 hereof. All other
compensation
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shall cease as of the Effective Date, and Xx. Xxxxxx shall thereafter not be
entitled to the payment of any bonus (in respect of his employment under the
Employment Agreement or otherwise), car allowance or any other compensation,
reimbursement or benefits whatsoever.
(b) On the Effective Date, CPI shall cease to pay premiums to
CPI's insurance carrier for medical and dental insurance for the benefit of Xx.
Xxxxxx and his dependents. Xx. Xxxxxx shall have the option of continuing
medical and dental coverage under COBRA at his sole expense.
(c) Pursuant to the Stock Option Agreements dated March 8,
1996 (the "March Option Agreement") and July 26, 1996 (the "July Option
Agreement"), CTI granted to Xx. Xxxxxx options, effectively non-incentive stock
options, to purchase an aggregate of up to 86,043 shares (as adjusted for CTI's
December 1996 reverse stock split) of CTI's common stock. Sections 4 (a) of the
March Option Agreement and the July Option Agreement, respectively, are hereby
deleted in their entirety and replaced to read as follows:
"4 (a) Except as otherwise provided in the Plan and this Option
Agreement, the Option may be exercised from time to time from
July 8, 1999 (unless sooner exercisable in accordance with
Section 4(f) below) until August 18, 2002 (the "Option Period")
as to all or any lesser amount of the Option. In the event of
the death of the Grantee, this Option may be exercised by the
person or persons entitled to do so under the Grantee's will (a
"legatee"), or, if the Grantee shall fail to make a
testamentary disposition of this Option, or shall die
intestate, by the Grantee's legal representative (a "legal
representative").
Concurrent with the execution of this Severance Agreement, Xx. Xxxxxx shall
deliver to CTI the March Option Agreement and CTI shall deliver a replacement
for the March Option Agreement as well as the July Option Agreement.
4. CONFIDENTIALITY AND NON-COMPETITION. Xx. Xxxxxx hereby
acknowledges and agrees that the continued effectiveness of the confidentiality
and non-competition provisions set forth in the Employment Agreement is of
significance to CPI. Accordingly, Xx. Xxxxxx and CPI hereby agree that, although
all rights and obligations of Xx. Xxxxxx and CPI under the Employment Agreement
are terminated by this Severance Agreement, the confidentiality and
non-competition provisions of the Employment Agreement are amended and restated
in their entirety to remain in
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full force and effect as a part of this Severance Agreement as follows:
(a) Xx. Xxxxxx acknowledges that in and as a result of his
employment by CPI and its affiliates he made use of, acquired, and/or added to
confidential information of a special and unique nature and value relating to
such matters as CPI's patents, copyrights, proprietary information, trade
secrets, systems, procedures, manuals, confidential reports, pricing structures,
compensation structures, marketing strategies, and lists and identities of
customers, as well as the nature and type of services rendered by CPI, the
products, the equipment, and methods used and preferred by CPI's customers, and
the prices and fees paid by them (all of which are deemed for all purposes
confidential and proprietary information). Xx. Xxxxxx hereby agrees that it is
reasonable and necessary for the protection of CPI, that Xx. Xxxxxx agree, and
as a material inducement to CPI to enter into this Severance Agreement and to
pay to Xx. Xxxxxx the xxxxxxxxx benefits stated herein, Xx. Xxxxxx hereby
covenants and agrees, that he will not (nor will any member of his immediate
family that resides with him), directly or indirectly, except (x) with the prior
written consent of CPI, which consent may be granted or withheld at its sole
discretion, or (y) if Xx. Xxxxxx becomes an employee or consultant to Anicom,
Inc. or any of its affiliates:
(i) during the Noncompetition Period (as hereinafter
defined), become an officer, director, stockholder, partner,
associate, employee, owner, agent, creditor, independent
contractor, co-venturer, consultant or otherwise, or have a
financial interest in or be associated with any other person,
corporation, firm or business that is then a customer of or
supplier to CPI or was a customer or supplier to CPI during the
two years prior to the Effective Date or that is engaged in the
wire and cable product manufacturing, distributing or
assembling businesses anywhere in the United States or in any
business directly or indirectly competitive with that of CPI or
its affiliates, as then constituted, or himself engage in such
business; provided, however, that nothing herein shall be
construed to prohibit Xx. Xxxxxx from owning not more than 5%
of any class of securities (provided that Xx. Xxxxxx and the
other "Seller" parties to the Stock Redemption Agreement, dated
as of May 31, 1996, by and among CPI's stockholders as of that
date, CPI and CTI, do not own, in the aggregate, in excess of
10% of any such class of securities) issued by an entity which
is subject to the reporting requirements of the Securities
Exchange Act of 1934; or
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(ii) during the Nonsolicitation Period (as hereinafter
defined), solicit, cause or authorize, directly or indirectly,
to be solicited for or on behalf of Xx. Xxxxxx or third
parties, from parties who are customers of CPI, CTI, CTI's
affiliates that are directly or indirectly controlled by CTI
("CTI's Downstream Affiliates") during the Nonsolicitation
Period or that were customers of CPI during the two years prior
to the date of this Severance Agreement, any business similar
to the business transacted by or with such customer by CPI or
its affiliates; or
(iii) during the Nonsolicitation Period, accept or cause
or authorize, directly or indirectly, to be accepted for or on
behalf of Xx. Xxxxxx or for third parties, any such business
from any customers of the CPI, CTI or CTI's Downstream
Affiliates that are customers during the Nonsolicitation Period
or were customers during the two years prior to the date of
this Severance Agreement; or
(iv) from and after the date hereof, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used
by CPI, CTI, any of CTI's Downstream Affiliates, relating to
the present or former business of CPI, or the present or former
operations, employees or customers of CPI, which constitutes
proprietary or confidential information of CPI, CTI or CTI's
Downstream Affiliates ("Confidential Information"), including
without limitation any Confidential Information contained in
any customer lists, mailing lists and sources thereof,
statistical data and compilations, trademarks, patents,
inventions, formulae, methods, processes, agreements,
contracts, manuals or any other documents, but excluding any
information to the extent expressly set forth in the press
releases or in publicly available documents filed with the
Securities and Exchange Commission by CPI or CTI; provided,
however, that this clause (iv) shall not be applicable to the
extent that Xx. Xxxxxx is required to testify in a judicial or
regulatory proceeding pursuant to the order of a judge or
administrative law judge after Xx. Xxxxxx requests that the
confidentiality of such Confidential Information be preserved;
and provided further, that this clause (iv) shall not prohibit
Xx. Xxxxxx from disclosing Confidential Information to his
accounting and legal advisors to the extent such advisors have
agreed to preserve the confidentiality of such Confidential
Information; or
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(v) during the Nonsolicitation Period,
(A) solicit, entice, persuade or induce, directly
or indirectly, any employee (or person who within the
preceding 90 days was an employee) of CPI or its
affiliates or any other person who is under contract with
or rendering services to the CPI or its affiliates, to
terminate his or her employment by, or contractual
relationship with, CPI or such affiliate or to refrain
from extending or renewing the same (upon the same or new
terms) or to refrain from rendering services to or for
CPI or such affiliate or to become employed by or to
enter into contractual relations with any person or
entity other than CPI or such affiliate or to enter into
a relationship with a competitor of CPI or its
affiliates, or
(B) authorize or assist in the taking of any such
actions by any person other than CPI or its affiliates.
(b) All lists, records files, and documents of any type
whatsoever (including but not limited to computer disks, cards (including, but
not limited to, business cards, address cards and "rolodex" cards), magnetic
tapes, or film), relating to the business of CPI or the business of any of the
licensees or customers of CPI, which Xx. Xxxxxx has prepared, used, or come into
contact with, shall be and remain solely and exclusively the proprietary
property of CPI and shall be delivered to CPI on the Effective Date, and Xx.
Xxxxxx shall retain no excerpts, notes, photographs, photocopies, reproductions,
samples, prototype models or copies thereof. As used in this Paragraph 4,
"licensees" and "customers" shall include, in addition to those present
licensees and customers of CPI, those prospective licensees or customers which
CPI shall have solicited for the transaction of business or conducted business
during the two years prior to the Effective Date.
(c) For purposes of this Agreement, the term "Noncompetition
Period" shall mean the period commencing on the Effective Date and ending on May
17, 1999. For purposes of this Severance Agreement, the term "Nonsolicitation
Period" shall mean the period commencing on the Effective Date and ending on May
17, 2001.
(d) The invalidity or non-enforceability of this Section 4 in
any respect shall not affect the validity or enforceability of any other portion
of this Section 4. In the event that any provision of this Section 4 shall be
held invalid or unenforceable by a court of competent jurisdiction by reason
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of the geographic or business scope or the duration thereof, such invalidity or
unenforceability shall attach only to the scope or duration of such provision
and shall not affect or render invalid or unenforceable any other provision of
this Section 4, and, to the fullest extent permitted by law, this Section 4
shall be construed as if the geographic or business scope or the duration of
such provision had been more narrowly drafted so as not to be invalid or
unenforceable.
(e) Xx. Xxxxxx acknowledges that CPI would suffer irreparable
harm if Xx. Xxxxxx were to breach the provisions of this Section 4 and that the
remedy for CPI at law for any such breach is and will be insufficient and
inadequate and that in the event of such breach (or a threatened breach) of the
provisions of this Section 4, CPI shall be entitled to equitable relief,
including by way of temporary and permanent injunction, in addition to any
remedies that CPI may have at law.
5. RELEASE. Xx. Xxxxxx, for him and for his affiliates,
successors and assigns, does hereby fully and completely RELEASE, ACQUIT and
FOREVER DISCHARGE CPI and CTI, and their respective affiliates, subsidiaries or
other related entities as well as their shareholders, officers, directors,
employees or agents, from any and all claims, debts, demands, actions, causes of
action, suits, sums of money, contracts, agreements, judgements and liabilities,
including attorney's fees, whatsoever, both in law and in equity ("claims") of
any kind and any character that he ever had, might now or hereafter have, or
could have had, whether in contract, tort or otherwise, including specifically
any claims of discrimination that he may claim in connection with the Employment
Agreement, his employment or the termination thereof. This includes but is not
limited to, claims arising under the federal, state or local laws prohibiting
discrimination on the basis of one's sex, race, age, disability, national
origin, color or religion, or other reason forbidden by federal, state or local
laws or claims growing out of any legal restrictions on CPI's right to terminate
its employees. This also specifically includes the waiver of any rights or
claims arising under the Age Discrimination in Employment Act of 1967 (29 U.S.C.
621 et seq.). It is also understood that the execution of this Agreement shall
be construed as a release and covenant not to xxx, that Xx. Xxxxxx will not xxx
CPI or CTI or any subsidiary, affiliate, officer, director, employee or
committee thereof, or file any claims of any sort with any administrative agency
for anything arising out of his employment or the Employment Agreement and the
terms of this Agreement supersede any and all other agreements relating to his
employment whether written or oral.
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6. ADVICE OF COUNSEL. CPI and CTI encourage Xx. Xxxxxx to
carefully review the terms of this Severance Agreement and, if he wishes, to
seek advise and counsel from an attorney before signing this Severance
Agreement.
7. NOTICES. Any notices or other communications required or
permitted to be sent hereunder shall be in writing and shall be duly given if
personally delivered or sent postage pre-paid by certified or registered mail,
return receipt requested, or sent by electronic transmission and confirmed by
mail within two business days of such transmission, as follows:
(a) If to Xx. Xxxxxx:
Xx. Xxxxx X. Xxxxxx
0000 Xxxxxxxxx XX Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(b) If to CPI or CTI:
Connectivity Products Incorporated
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxxx,
Chief Executive Officer
With a copy to:
Zimet, Haines, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
8. ENTIRE AGREEMENT; AMENDMENT. This Severance Agreement
contains the entire agreement and understanding between the parties hereto in
respect of the subject matter hereof and supersedes, cancels and annuls any
prior or contemporaneous written or oral agreement, understandings, commitments
and practices between them respecting the subject matter hereof. The subject
matter hereof and, in particular, the provisions of Section 5 of this Agreement,
shall not be deemed to include the Redemption Note and the Contingent Note,
dated May 31, 1996,
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payable by CPI to Xx.Xxxxxx or the Stockholders' Agreement dated May 17, 1996 to
which Xx. Xxxxxx, certain other stockholders of CPI and CPI are parties which
remain in full force and effect. This Severance Agreement may not be altered or
amended except by a writing, duly executed by the party against whom such
alteration or amendment is sought to be enforced.
9. GOVERNING LAW. This Severance Agreement shall be governed
by and construed in accordance with the laws of the State of Florida with
respect to agreements made and to be performed wholly therein.
10. ASSIGNMENT. This Agreement is personal and non-assignable
by Xx. Xxxxxx. It shall inure to the benefit of, and be the valid and binding
obligation of, any corporation or other entity with which CPI shall merge or
consolidate or to which CPI shall lease or sell all or substantially all of its
assets and may be assigned by CTI to any affiliate of CTI or to any corporation
or entity with which such affiliate shall merge or consolidate or which shall
lease or acquire all or substantially all of the assets of such affiliate.
11. PERIOD TO REVIEW AND REVOKE. After Xx. Xxxxxx has had the
chance to review this Agreement and to consult with his attorney, if he wishes,
he should sign the Agreement and the Acknowledgement, attached hereto as Exhibit
B, and return them to CPI within 22 days.
After Xx. Xxxxxx has executed and delivered this Agreement, he
shall have seven (7) days following the date of execution during which time he
may revoke this Agreement, provided, however, that, if he elects to return an
executed copy of the document to CPI before the expiration of 22 days from the
date hereof, he may revoke this Agreement at any time before the later to occur
of seven (7) days following the date of execution or 22 days after the date
hereof. If CPI does not receive a written revocation from Xx. Xxxxxx, or his
attorney, prior to the expiration of the period in which he may revoke this
Agreement, this Agreement will become effective on the date after the expiration
of the applicable revocation period.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first above written.
/s/ Xxxxx X. Xxxxxx 8/29/97
---------------------------------------------
Xxxxx X. Xxxxxx
CONNECTIVITY PRODUCTS INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------------
Title: Chief Executive Officer
CONNECTIVITY TECHNOLOGIES INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------------
Title: Chief Executive Officer
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EXHIBIT A
I acknowledge that I have been given the opportunity to
consider this Severance Agreement for at least twenty-one (21) days, that I have
been advised to discuss this agreement with an attorney of my choice, that I
have carefully read and fully understand and agree to all of the provisions of
this agreement and that I am voluntarily entering into this Severance Agreement.
Finally, I also understand that I have seven (7) days after I
sign this Severance Agreement (or twenty-two days after the date hereof, if
later) to change my mind and that I may revoke this Severance Agreement by
providing written notice of revocation to you prior to the expiration of the
applicable period.
8/29/97 /s/ Xxxxx X. Xxxxxx
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Date of Execution Xxxxx X. Xxxxxx
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