SEVERANCE AGREEMENT
THIS
SEVERANCE AGREEMENT ("Agreement") is entered into by and between Xxxxx
X.
Xxxxxxxx ("Employee") and APA Enterprises, Inc. ("APA") and its wholly-owned
subsidiary,
APA Cables and Networks, Inc. ("APACN").
BACKGROUND
Employee
is currently an employee at will of APACN and serves as its
President.
AGREEMENT
1. Separation
from Employment as a Result of Change of Control of APACN.
If
there
is
a Change of Control (as defined below) of APA, or if APA sells all or
substantially all of the
assets or stock of APACN (a "Subsidiary Sale") and within six months after
the
Change of Control of APA or within six months after the closing of the
Subsidiary Sale Employee's employment
with APACN is involuntarily terminated for any reason other than Cause (as
defined
below) or Employee voluntarily terminates her employment for Good Reason (as
defined below),
she shall be entitled to payment of any bonus accrued at the time of termination
and to continuation
of her salary then in effect for the number of months set forth below, payable
on the payroll schedule then in effect at APA, provided that if the termination
follows a Subsidiary Sale "bonus"
and "salary then in effect" shall refer to such amounts as of the date
immediately preceding
the Subsidiary Sale:
|
Termination
After
|
Number
of Months of Pay
|
|
June
30, 2005
|
9
months
|
|
June
30, 2007
|
12
months
|
2. Salary
Continuation in the Event of Termination Without Cause. Inthe
event
that Employee's employment with APACN is involuntarily terminated for a reason
other than Cause in the absence of a Change of Control of APA or a Subsidiary
Sale, she shall receive any bonus accrued at the date of termination and
continuation of her salary then in effect for the number of months set forth
below, payable on the salary schedule as then in effect at APACN.
|
Termination
After
|
Number
of Months of Pay
|
|
June
30, 2005
|
3
months
|
|
June
30, 2007
|
6
months
|
|
June
30, 2009
|
12
months
|
3. Benefits.
In the
event of termination of Employee as described in Section 1 or Section
2
above, APA shall provide Employee the option to continue coverage under APA's
group
life, health and dental benefits, if any, at a level comparable to the benefits
which Employee
was receiving or entitled to receive immediately prior to termination, subject
to the terms
and
conditions of APA's insurance or other plan then in effect, but only if such
continuation
is at no cost to APA or APACN. Employee, at her sole expense, shall be entitled
to such continued coverage for the maximum period required by applicable federal
and state laws following termination of employment or, if earlier, until
Employee is eligible for medical coverage through her employment with another
employer.
4. No
Employment Agreement.
This
Agreement is not intended to create any agreement
of employment for any period of time or to alter the "at will" status of
Employee's employment with APACN in any manner.
5. Cause.
A
termination of employment shall be for "Cause" only if it is based in
whole
or
in part on:
(i) material
dishonesty by Employee involving APA or APACN;
(ii) willful
violation of any law, rule, or regulation;
(iii) failure
or refusal to perform a material requirement of Employee's duties, or
failure or refusal to comply with a reasonable, important general policy of
APA
or APACN
or
APA's Board of Directors after receipt by Employee of written notice
specifying
in detail the failure or refusal and a reasonable time in which to
perform;
(iv) breach
of
fiduciary duty to APA or APACN; or
(v) Employee's
(a) death or (b) disability (by reason of physical or mental disease,
defect, accident or illness) such that Employee is (or in the opinion of two
independent
physicians, one selected by APA and one by Employee or her representative,
for
purposes of making this determination) will be unable for an aggregate of 180
or
more days during any continuous 12-month period to render the services required
of her in Employee's then current position with APACN.
6. Change
of Control.
A Change
of Control has occurred if there has been:
(i) the
consummation of any consolidation or merger of APA in which APA is
not
the continuing or surviving corporation or pursuant to which shares of APA's
common
stock would be converted into cash, securities, or other property, other than
a
merger
of
APA in which the holders of APA's common stock immediately prior to the
merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; or
(ii) any
sale,
lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of APA;
or
(iii) approval
by the shareholders of APA of any plan or proposal for the liquidation
or dissolution of APA; or
(iv) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") shall become
the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or
more
of
APA's outstanding stock; or
2
(v) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors of APA shall cease for any
reason to constitute a majority thereof unless the election, or the nomination
for election by APA's shareholders, of each new director was approved by at
least two-thirds of the directors then still in office who were directors at
the
beginning of the two-year period.
7. Good
Reason.
"Good
Reason" shall mean any of the following (without Employee's
express written consent):
(i) Assignment
to Employee by the Company of duties inconsistent with Employee's
position, duties, responsibilities, and status with the Company immediately
prior to a Change in Control or a Subsidiary Sale, or a change in Employee's
titles or offices
as in effect immediately prior to a Change in Control or a Subsidiary Sale,
or
her removal from or any failure to reelect or reappoint her to any of such
positions, except in connection
with the termination of her employment for disability or Cause or as a result
of
her death or by her other than for Good Reason;
(ii) A
reduction by the Company of Employee's base salary and bonus as in effect on
the
date hereof or as the same may be increased from time to time during the term
of
this Agreement;
(iii) If
at the
time of a Change in Control or a Subsidiary Sale Employee is employed
at APACN's principal executive offices, a relocation of such principal
executive
offices to a location more than fifty miles outside of the Minneapolis-St.
Xxxx
Metropolitan
Area or, if Employee is not employed at APACN's principal executive offices,
Employee's relocation to any place other than the location at which the Employee
performed
Employee's duties prior to a Change in Control or a Subsidiary Sale, except
for
required travel by Employee on the Company's business to an extent substantially
consistent
with Employee's business travel obligations at the time of a Change in Control
or a Subsidiary Sale;
(iv) Any
material breach by the Company of any provision of this Agreement; or
(v) Any
failure by the Company to obtain the assumption of this Agreement by
any
successor or assign of the Company.
8. General
Release.
The
benefits set forth herein shall be payable to Employee only if Employee executes
prior to the first payment of the salary continuation, and in any event
within
45
days after termination of employment, a general release of all claims against
APA and APACN,
known and unknown, in form and substance satisfactory to APA.
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9. Governing
Law.
This
Agreement shall be governed by and construed and enforced
pursuant to the laws of the State of Minnesota applicable to contracts made
and
entirely to
be
performed in that state.
10. Forfeiture.
If after
termination of employment Employee violates any continuing obligation to APA
or
APACN, such as an obligation to not compete, to assign invention, or to
maintain
the confidentiality of information, then the benefits set forth herein shall
terminate upon the
date
of such violation and all unpaid benefits shall be irrevocably
forfeited.
11. Notice.
Employee
agrees that she shall provide APA and APACN with not less than
30
days' advance notice of voluntary termination of employment by her and that
she
will be available for consultation on transition matters for a period of 60
days
after the expiration of the 30-day
notice period. Employee acknowledges that she will not be entitled to any
severance payment or bonus upon voluntary termination. Employee acknowledges
that failure to provide the
required advance notice or to be available for consultation, as stated above,
could result in injury to APA and APACN not easily quantifiable in money damages
and that this covenant shall be specifically enforceable.
|
By:
|
/s/ Xxxx X. Xxxx | ||
|
Its:
|
President | ||
|
APA
CABLES AND NETWORKS, INC.
|
|||
|
By:
|
/s/ Xxxx X. Xxxx | ||
|
Its:
|
CEO | ||
| /s/ Xxxxx X. Xxxxxxxx | |||
|
Xxxxx
X. Xxxxxxxx
|
|||
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