1
EXHIBIT 10.14
NON-COMPETITION AGREEMENT
AGREEMENT by and between Cannondale Corporation, a Delaware
corporation (the "Company"), and ____________ (the "Executive"), dated as of the
5th day of February, 1998.
WHEREAS, the Executive has served as a member of the Board of
Directors (the "Board") and executive officer of the Company, and in such
capacities has acquired and possesses confidential information and unique
knowledge regarding the businesses and operations of the Company; and
WHEREAS, the Company has requested, and Executive has agreed, that
the Executive shall enter into this Non-Competition Agreement upon the terms and
conditions of this Agreement, all as more fully described herein.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Annual Base Salary" shall mean that amount equal to 12
times the highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs.
(b) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (b)(i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B) any acquisition by
the Company, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (b)(iii) of this
Section 1; or
2
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination would
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be;
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination; and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) "Change of Control Period" shall mean the period commencing
on February 5, 2000 and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after February 5, 2000, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Change of Control Period shall be automatically
extended so as to
-2-
3
terminate three years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the Change
of Control Period shall not be so extended.
(d) "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
(e) "Effective Date" shall mean the date during the Change of
Control Period on which the Executive's employment with the Company is
terminated (other than for death or Disability) after a Change of Control has
occurred. Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this Agreement the
"Effective Date" shall mean the date immediately prior to the date of such
termination of employment.
(f) "Highest Annual Bonus" shall mean the higher of (i) the
Executive's highest profit sharing bonus under the Company's profit sharing plan
for the last three consecutive full fiscal years prior to the Effective Date
(annualized in the event that the Executive was not employed by the Company for
the whole of such fiscal year), or (ii) the annual bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred, for
the most recently completed fiscal year (annualized in the event that the
Executive was not employed by the Company for the whole of such fiscal year).
2. Non-Competition. (a) The Executive agrees that he shall
not, for a period of two years following the Effective Date (the
"Non-Competition Period"), without the prior written consent of the Company,
directly or indirectly (whether as a sole proprietor, partner, venturer,
stockholder, director, officer, consultant, member, employee or in any other
capacity as principal or agent or through any person, corporation, partnership,
entity or employee acting as nominee or agent) conduct or engage in or be
interested in or associated with any firm, association, syndicate, partnership,
company, corporation or other entity which conducts or engages in the bicycle or
motorcycle manufacturing, marketing or distribution business, or any other
business engaged in by the Company on the Effective Date, in any geographic
areas in which the Company is then so engaged in business, nor shall Executive
interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company, on the one hand, and any customer, supplier,
lessor or lessee of the Company, on the other hand, nor shall the Executive
directly or indirectly solicit or induce any Company employee to leave the
employ of the Company or hire or attempt to hire any such employee to provide
any services to any person or entity that competes with the Company or is
preparing to compete with the Company, or with which the Company is preparing to
compete; provided, however, that this Section 2 shall not prohibit the Executive
from
-3-
4
owning beneficially or of record not more than 1% of the outstanding equity
securities of any entity whose equity securities are registered under the
Exchange Act or are listed for trading on any United States or foreign stock
exchange or quotation system.
(b) It is the desire and intent of the parties that the
provisions of this Section 2 shall be enforced in the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
employment is sought. Accordingly, if any particular portion of this Section 2
shall be adjudged to be invalid or unenforceable, the court shall have the power
to amend the duration or geographic scope of this Section 2 or delete therefrom
the portion determined to be invalid or unenforceable, such amendment or
deletion to apply only with respect to the operation of this paragraph in the
particular jurisdiction in which such adjudication is made.
3. Consideration for Covenant Not To Compete. In consideration
of the Executive's covenant set forth in Section 2 hereof, the Company shall pay
to the Executive in a lump sum in cash within 30 days after the commencement of
the Non-Competition Period an amount equal to the product of (i) two and (ii)
the sum of (x) the Executive's Annual Base Salary at the time of a Change of
Control and (y) the Highest Annual Bonus. In event of the death or Disability of
the Executive during the Non-Competition Period, no repayment to the Company of
any amount already paid to the Executive hereunder shall be required.
4. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
5. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Connecticut, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
-4-
5
If to the Company:
Cannondale Corporation
00 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceablility of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and may be terminated by either the Executive or the Company at any time,
in which case the Executive shall have no further rights under this Agreement.
(g) The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any setoff, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive may incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable federal rate
provided for in Section 7872 (f)(2)(A) of the Internal Revenue Code of 1986, as
amended.
-5-
6
(h) Each party acknowledges that money damages are an
inadequate remedy for a breach of this Agreement because of the difficulty of
ascertaining the amount of damage that will be suffered by the non-breaching
party in the event that this Agreement is breached. Therefore, the parties agree
that the non-breaching party may obtain specific performance of this Agreement
and injunctive relief against any breach hereof without the posting of a bond or
other security and without proof of actual damages. Each party shall be liable
for any breach of this Agreement.
(i) This Agreement may be signed in counterparts, each of which
together shall constitute one and the same instrument. This Agreement supersedes
all prior agreements and constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to authorization from its Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the date first
above written.
------------------------
CANNONDALE CORPORATION
By:
------------------------
Name:
Title:
-6-
