EXHIBIT
10.14


 


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 Company
since October, 2000 as Vice President – Finance / Chief Financial Officer, has
extensive knowledge and expertise relating to Company’s business and has
contributed to Company’s success.


 


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


 


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


 


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


 


AGREEMENTS:


 


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


 


1.             Term of
Agreement.  The term of this
Agreement shall commence on the Effective Date and shall continue in effect
until termination of Executive’s employment which does not constitute a
Severance Termination; provided, however, that if a Change of Control of the
Company shall occur during the term of this Agreement, this Agreement shall
instead continue in effect for a period of twelve (12) months following the
date of such Change of Control.  Any
rights and obligations accruing before the termination or expiration of this
Agreement shall survive to the extent necessary to enforce such rights and
obligations.


 


2.             “Change
of Control.”  For purposes of
this Agreement, “Change of Control” shall mean any of the following events
occurring after the date of this Agreement:


 


(a)           A
merger or consolidation to which the Company is a party if the individuals and
entities who were shareholders of the Company immediately prior to the
effective date of such merger or consolidation have, immediately following the
effective date of such merger or consolidation, beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less than
fifty percent (50%) of the total combined voting power of all classes of
securities issued by the surviving corporation for the election of directors of
the surviving corporation;


 


(b)           The
acquisition of direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of securities of the Company
by any person or entity or by a group of associated persons or entities acting
in concert in one or a series of transactions, which causes the aggregate
beneficial ownership of such person, entity or group to equal or exceed twenty
percent (20%) or more of the total combined voting power of all classes of the
Company’s then issued and outstanding securities;


 


(c)           The
sale of substantially all of the assets of the Company to any person or entity
that is not a wholly-owned subsidiary of the Company;


 


(d)           The
approval by the stockholders of the Company of any plan or proposal for the
liquidation of the Company;


 


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


 


(f)            The
execution by the Company of an agreement in principle or a definitive agreement
relating 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 exchange
offer or proxy contest is commenced that ultimately results in an event
described in Section 2(b) or 2(e).


 


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


 


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


 


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


 


(ii)           Executive’s incurable
breach of any material element of any proprietary or confidential information
agreement with the Company;


 


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


 


(iv)          Any dishonesty in
dealing between Executive and Company or between Executive and Company’s
vendors, advisors, other employees, or customers;


 


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


 


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


 


(vii)         Executive’s failure to
substantially perform his material duties, which failure is not cured within
thirty (30) days after Executive’s receipt of written notice from Company
specifying the non-performance.


 


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


 


(b)           The
termination 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 his
decision to terminate.  “Good Reason”
shall mean a good faith determination by Executive, in Executive’s sole and
absolute judgment that any one or more of the following events has occurred on
or after the date of a Change of Control without the Executive’s express
written consent:


 


(i)            A
change in Executive’s reporting responsibilities, titles or offices as in
effect immediately prior to the date of the Change of Control, or any removal
of Executive from or any failure to re-elect Executive to any of such
positions, which has the effect of diminishing Executive’s responsibility or
authority;


 


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


 


(iii)          Requiring
Executive 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)          Without
the adoption of a replacement plan, program or arrangement that provides
benefits to Executive that are equal to or greater than those benefits that are
discontinued or adversely affected:


 


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(A)          The Company’s failure to
continue 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 benefit
plan, program or arrangement, in which Executive is participating immediately
prior to the date of the Change of Control; or


 


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


 


(v)           Any material breach by
the 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 breach
during that thirty (30) day period.


 


Termination for “Good Reason” shall not
include Executive’s death or a termination of employment by Executive for any
reason other than the events specified in clauses (1) through (5) above.


 


4.             Compensation
and Benefits.  Subject to the
limitations 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 other
compensation earned by Executive through the date of the Severance Termination
at the rate in effect immediately prior to such Severance Termination;


 


(ii)           Within
fifteen (15) days of the Severance Termination, all other amounts to which the
Board of Directors in its discretion determines Executive is entitled to
receive under any compensation plan maintained by the Company, subject to any
distribution requirements contained in such compensation plans and prorated as
appropriate if termination occurs prior to the end of any Compensation plan
period; and


 


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


 


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


 


5.             Non-Solicitation.  During the term of this Agreement or any
successor employment relationship between Executive and the Company, and for a
period of twelve (12) months following the termination of the employment
relationship between Executive and the Company, Executive agrees that he will
not solicit or accept, either directly or indirectly, as an individual or
through a partnership, corporation, or other entity, any employee of the Company
or consultant under contract with the Company for employment or any other
arrangement for compensation to perform services.


 


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


 


7.             Withholding
Taxes. The Company shall be entitled to deduct from all payments or
benefits provided for under this Agreement any federal, state or local income
and employment related taxes required by law to be withheld with respect to
such payments or benefits.


 


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8.             Successors
and Assigns.  This Agreement
shall inure to the benefit of and shall be enforceable by Executive, his heirs
and the personal representative of his estate, and shall be binding upon and
inure to the benefit of the Company and its successors and assigns.  The Company will require the transferee of
any sale of all or substantially all of the business and assets of the Company
or the survivor of any merger, consolidation or other transaction expressly to
agree to honor this Agreement in the same manner and to the same extent that
the Company would be required to perform this Agreement if no such event had
taken place.  Failure of the Company to
obtain such agreement before the effective date of such event shall be a breach
of this Agreement and shall entitle Executive to the benefits provided in Section 4
as if Executive had terminated employment for Good Reason following a Change in
Control.


 


9.             Notices.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt. 
All notices to the Company shall be directed to the attention of the
Board 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 this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.


 


11.           Governing
Law.  The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Minnesota.


 


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


 


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


 


14.           Entire
Agreement.  This Agreement
supersedes all prior or contemporaneous negotiations, commitments, agreements
(written or oral) and writings between the Company and Executive with respect
to the subject matter hereof and constitutes the entire agreement and
understanding between the parties hereto. 
All such other negotiations, commitments, agreements and writings will
have no further force or effect, and the parties to any such other negotiation,
commitment, agreement or writing will have no further rights or obligations
thereunder.


 


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


 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered as of the day and year
first above written.


 


	
   

  	
  CIPRICO INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert H. Kill

  	
   

  	
   

  
	
   

  	
     Its:

  	
  President and CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Thomas S. Wargolet

  	
   

  	
   

  
	
   

  	
  Thomas S. Wargolet

  	
   

  
							



 


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