**EXHIBIT10.14**

 

**SEVERANCE AGREEMENT**

** **
| Parties:        |                   | Ciprico Inc.                          |   | (“Company”)   |
|-----------------|------------------------|---------------------------------------|--------|-------------------------|
|            |                   | 17400 Medina Road  Plymouth, MN 55447 |   |                    |
|            |                   |                                  |   |                    |
|            |                   | Thomas S. Wargolet                    |   | (“Executive”) |
|            |                   | 8981 Victoria Drive                   |   |                    |
|            |                   | Eden Prairie, MN 55347                |   |                    |
|            |                   |                                  |   |                    |
| Effective Date: | November 15, 2003 |                                  |   |
|                 |                        |                                       |        |                         |  |

 

**RECITALS:**

 

1.             Executive has been employed by Companysince October, 2000 as Vice President – Finance / Chief Financial Officer, hasextensive knowledge and expertise relating to Company’s business and hascontributed to Company’s success.

 

2.             The parties recognize that a “Change ofControl” may materially change or diminish Executive’s responsibilities andsubstantially frustrate Executive’s commitment to the Company.

 

3.             The parties further recognize that it isin the best interests of the Company and its stockholders to provide certainbenefits payable upon a “Severance Termination” to encourage Executive tocontinue in his position.

 

4.             The parties further desire to provide forcertain benefits payable upon certain involuntary terminations of Executive’s employment.

 

**AGREEMENTS:**

 

In consideration of the mutual covenants setforth herein and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             **Term ofAgreement**.  The term of thisAgreement shall commence on the Effective Date and shall continue in effectuntil termination of Executive’s employment which does not constitute aSeverance Termination; provided, however, that if a Change of Control of theCompany shall occur during the term of this Agreement, this Agreement shallinstead continue in effect for a period of twelve (12) months following thedate of such Change of Control.  Anyrights and obligations accruing before the termination or expiration of thisAgreement shall survive to the extent necessary to enforce such rights andobligations.

 

2.             **“Changeof Control.”**  For purposes ofthis Agreement, “Change of Control” shall mean any of the following eventsoccurring after the date of this Agreement:

 

(a)           Amerger or consolidation to which the Company is a party if the individuals andentities who were shareholders of the Company immediately prior to theeffective date of such merger or consolidation have, immediately following theeffective date of such merger or consolidation, beneficial ownership (asdefined in Rule 13d-3 under the Securities Exchange Act of 1934) of less thanfifty percent (50%) of the total combined voting power of all classes ofsecurities issued by the surviving corporation for the election of directors ofthe surviving corporation;

 

(b)           Theacquisition of direct or indirect beneficial ownership (as defined in Rule13d-3 under the Securities Exchange Act of 1934) of securities of the Companyby any person or entity or by a group of associated persons or entities actingin concert in one or a series of transactions, which causes the aggregatebeneficial ownership of such person, entity or group to equal or exceed twentypercent (20%) or more of the total combined voting power of all classes of theCompany’s then issued and outstanding securities;

 

(c)           Thesale of substantially all of the assets of the Company to any person or entitythat is not a wholly-owned subsidiary of the Company;

 

(d)           Theapproval by the stockholders of the Company of any plan or proposal for theliquidation of the Company;

 

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(e)           Achange in the composition of the Board of the Company at any time during anyconsecutive twenty-four (24) month period such that the “Continuity Directors”no longer constitute at least a seventy percent (70%) majority of theBoard.  For purposes of this event,“Continuity Directors” means those members of the Board who were directors atthe beginning of such consecutive twenty-four (24) month period or were electedby, or on the nomination or recommendation of, at least a two thirds (2/3)majority of the then-existing Board of Directors; or

 

(f)            Theexecution by the Company of an agreement in principle or a definitive agreementrelating to an event described in Section 2(a), 2(b), 2(c), 2(d) or 2(e)that ultimately results in such a Change of Control, or a tender or exchangeoffer or proxy contest is commenced that ultimately results in an eventdescribed in Section 2(b) or 2(e).

 

3.             **Termination**.  For purposes of this Agreement, “SeveranceTermination” shall mean any of the following events during the term of thisAgreement.

 

(a)           The termination ofExecutive’s employment by the Company, whether or not a Change in Control hasoccurred, for any reason except Good Cause. For purposes of this Agreement, “Good Cause” shall include, but not belimited to, the following:

 

(i)            Executive’s convictionof or plea of guilty or *nolo contendere*to a felony resulting from conduct occurring on or after the date of the Changeof Control;

 

(ii)           Executive’s incurablebreach of any material element of any proprietary or confidential informationagreement with the Company;

 

(iii)          Executive’s conduct thatis materially detrimental to Company’s business reputation or goodwill;

 

(iv)          Any dishonesty indealing between Executive and Company or between Executive and Company’svendors, advisors, other employees, or customers;

 

(v)           Executive’s active useof alcohol or controlled substances in a manner which impairs Executive’sability to perform his duties;

 

(vi)          Executive’s violation ofany material portion of this Agreement;

 

(vii)         Executive’s failure tosubstantially perform his material duties, which failure is not cured withinthirty (30) days after Executive’s receipt of written notice from Companyspecifying the non-performance.

 

In no event shall Executive’s death ordisability (as defined below) constitute Good Cause.  “Disability” shall mean Executive’s failure or inability, forreasons of health, to perform Executive’s usual and customary duties on behalfof the Company in the usual and customary manner for a total of more than 90consecutive business days (excluding Saturdays, Sundays and days during whichthe Company is closed due to a recognized holiday).

 

(b)           Thetermination of employment with the Company by Executive for Good Reason.  Such termination shall be accomplished by,and effective upon, Executive giving written notice to the Company of hisdecision to terminate.  “Good Reason”shall mean a good faith determination by Executive, in Executive’s sole andabsolute judgment that any one or more of the following events has occurred onor after the date of a Change of Control without the Executive’s expresswritten consent:

 

(i)            Achange in Executive’s reporting responsibilities, titles or offices as ineffect immediately prior to the date of the Change of Control, or any removalof Executive from or any failure to re-elect Executive to any of suchpositions, which has the effect of diminishing Executive’s responsibility orauthority;

 

(ii)           Areduction in Executive’s base salary in effect immediately prior to the date ofthe Change of Control;

 

(iii)          RequiringExecutive to move to or work from a location that is outside of a fifty (50)mile radius of Executive’s job location on the date of the Change of Control;

 

(iv)          Withoutthe adoption of a replacement plan, program or arrangement that providesbenefits to Executive that are equal to or greater than those benefits that arediscontinued or adversely affected:

 

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(A)          The Company’s failure tocontinue in effect, within its maximum stated term, any pension, bonus,incentive, stock ownership, stock purchase, stock option, life insurance,health, accident, disability, or any other employee compensation or benefitplan, program or arrangement, in which Executive is participating immediatelyprior to the date of the Change of Control; or

 

(B)           The Company taking anyaction that would adversely affect Executive’s participation or materiallyreduce Executive’s benefits under any of such plans, programs or arrangements;or

 

(v)           Any material breach bythe Company of this Agreement so long as Executive has given the Company thirty(30) days notice of such breach, and the Company has not cured the breachduring that thirty (30) day period.

 

Termination for “Good Reason” shall notinclude Executive’s death or a termination of employment by Executive for anyreason other than the events specified in clauses (1) through (5) above.

 

4.             **Compensationand Benefits**.  Subject to thelimitations contained in Section 5 below, upon a Severance Termination,Executive shall be entitled to the following compensation and benefits:

 

(a)           The Company shall pay to Executive:

 

Within five (5) days of the Severance Termination, all salary and othercompensation earned by Executive through the date of the Severance Terminationat the rate in effect immediately prior to such Severance Termination;

 

(ii)           Withinfifteen (15) days of the Severance Termination, all other amounts to which theBoard of Directors in its discretion determines Executive is entitled toreceive under any compensation plan maintained by the Company, subject to anydistribution requirements contained in such compensation plans and prorated asappropriate if termination occurs prior to the end of any Compensation planperiod; and

 

(iii)          Aseverance benefit in a single lump sum payment, an aggregate amount equal toone hundred percent (100%) of Executive’s then current annual base salary.

 

(b)           TheCompany shall provide, at no cost to Executive, continued coverage under theCompany’s group life, health or dental benefit plans, if any, at a levelcomparable to the benefits which Executive was receiving or entitled to receiveimmediately prior to the Severance Termination or, if greater, at a levelcomparable to the benefits which Executive was receiving immediately prior tothe event which constituted Good Reason. Executive shall be entitled to such continued coverage for the maximumperiod required by applicable federal and state law following such SeveranceTermination or, if earlier, until Executive is eligible to be covered for suchbenefits through his employment with another employer.  The Company may, in its sole discretion,provide such coverage through the purchase of individual insurance contractsfor Executive.

 

5.             **Non-Solicitation**.  During the term of this Agreement or anysuccessor employment relationship between Executive and the Company, and for aperiod of twelve (12) months following the termination of the employmentrelationship between Executive and the Company, Executive agrees that he willnot solicit or accept, either directly or indirectly, as an individual orthrough a partnership, corporation, or other entity, any employee of the Companyor consultant under contract with the Company for employment or any otherarrangement for compensation to perform services.

 

6.             **Paymentof Attorneys Fees and Other Costs**. If, after a Change in Control of the Company, a good faith disputearises with respect to the enforcement of Executive’s rights under thisAgreement or if any legal or arbitration proceeding shall be brought in goodfaith to enforce or interpret any provision contained herein or to recoverdamages for breach hereof, Executive shall recover from the Company (a)reasonable attorneys’ fees and necessary costs and disbursements incurred byExecutive as a result of such dispute or such legal or arbitration proceeding,and (b) prejudgment interest on any money judgment or arbitration awardobtained by Executive calculated at the prime rate announced from time to timeby Wells Fargo Bank Minnesota, N. A., or the maximum rate permitted underSection 280G(d)(4) of the Internal Revenue Code of 1986, as amended, orany successor provision, whichever rate is lower, such prejudgment interest tobe paid from the date that payments to Executive should have been made underthis Agreement.

 

7.             **WithholdingTaxes**. The Company shall be entitled to deduct from all payments orbenefits provided for under this Agreement any federal, state or local incomeand employment related taxes required by law to be withheld with respect tosuch payments or benefits.

 

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8.             **Successorsand Assigns**.  This Agreementshall inure to the benefit of and shall be enforceable by Executive, his heirsand the personal representative of his estate, and shall be binding upon andinure to the benefit of the Company and its successors and assigns.  The Company will require the transferee ofany sale of all or substantially all of the business and assets of the Companyor the survivor of any merger, consolidation or other transaction expressly toagree to honor this Agreement in the same manner and to the same extent thatthe Company would be required to perform this Agreement if no such event hadtaken place.  Failure of the Company toobtain such agreement before the effective date of such event shall be a breachof this Agreement and shall entitle Executive to the benefits provided in Section 4as if Executive had terminated employment for Good Reason following a Change inControl.

 

9.             **Notices**.  For the purpose of this Agreement, noticesand all other communications provided for in the Agreement shall be in writingand shall be deemed to have been duly given when delivered or mailed by UnitedStates certified or registered mail, return receipt requested, postage prepaid,addressed to the respective addresses set forth on the first page of thisAgreement or to such other address as either party may have furnished to theother in writing in accordance herewith, except that notice of change ofaddress shall be effective only upon receipt. All notices to the Company shall be directed to the attention of theBoard of Directors of the Company.

 
| For Ciprico:   |   | 17400 Medina Road  Plymouth, MN 55447       |
|----------------|--------|---------------------------------------------|
|           |   |                                        |
| For Executive: |   | 8981 Victoria Drive  Eden Prairie, MN 55347 |

 

10.           **Captions**.  The headings or captions set forth in thisAgreement are for convenience only and shall not affect the meaning orinterpretation of this Agreement.

 

11.           **GoverningLaw**.  The validity,interpretation, construction and performance of this Agreement shall begoverned by the laws of the State of Minnesota.

 

12.           **Construction**.  Wherever possible, each term and provisionof this Agreement shall be interpreted in such manner as to be effective andvalid under applicable law.  If any termor provision of this Agreement is invalid or unenforceable under applicablelaw, (a) the remaining terms and provisions shall be unimpaired, and (b) theinvalid or unenforceable term or provision shall be deemed replaced by a termor provision that is valid and enforceable and that comes closest to expressingthe intention of the unenforceable term or provision.

 

13.           **Amendment;Waivers**.  This Agreement maynot be modified, amended, waived or discharged in any manner except by aninstrument in writing signed by both parties hereto.  The waiver by either party of compliance with any provision ofthis Agreement by the other party shall not operate or be construed as a waiverof any other provision of this Agreement, or of any subsequent breach by suchparty of a provision of this Agreement.

 

14.           **EntireAgreement**.  This Agreementsupersedes all prior or contemporaneous negotiations, commitments, agreements(written or oral) and writings between the Company and Executive with respectto the subject matter hereof and constitutes the entire agreement andunderstanding between the parties hereto. All such other negotiations, commitments, agreements and writings willhave no further force or effect, and the parties to any such other negotiation,commitment, agreement or writing will have no further rights or obligationsthereunder.

 

15.           **Counterparts**.  This Agreement may be executed in severalcounterparts, each of which shall be deemed to be an original but all of whichtogether shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be duly executed and delivered as of the day and yearfirst above written.

 
|   | CIPRICO INC.           |               |
|--------|------------------------|--------------------|
|   |                   |               |
|   | By:                    | /s/ Robert H. Kill |   |   |
|   |    Its: | President and CEO  |   |   |
|   |                   |               |
|   | /s/ Thomas S. Wargolet |               |   |
|   | Thomas S. Wargolet     |               |
|        |                        |                    |  |  |  |  |

 

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