EXHIBIT 10.14
CABLE DESIGN TECHNOLOGIES CORPORATION
FOSTER PLAZA 7
661 ANDERSEN DRIVE
PITTSBURGH, PA 15220
November 1, 1997
Charles B. Fromm
25 Central Park West, 14-S
New York, NY 10023
Dear Charlie:
The Board of Directors (the "Board") of Cable Design Technologies
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Corporation (the "Company") considers the maintenance of a sound management to
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be essential to protecting and enhancing the best interests of the Company and
its stockholders. In this connection, the Company recognizes that the
possibility of a change in control may exist from time to time, and that this
possibility, and the uncertainty and questions it may raise among management,
may result in the departure or distraction of management personnel to the
detriment of the Company and its stockholders. Accordingly, the Board has
determined that appropriate steps should be taken to encourage the continued
attention and dedication of members of the Company's management, including
yourself, to their assigned duties without the distraction which may arise from
the possibility of a change in control of the Company.
This is not an employment contract nor does it alter your status as an
at-will employee of the Company. Just as you remain free to leave the employ of
the Company at any time, so too does the Company retain its right to terminate
your employment without notice, at any time, for any reason. However, the
Company believes that, both prior to and at the time a change in control is
anticipated or occurring, it is necessary to have your continued attention and
dedication to your assigned duties without distraction, and this Agreement is
intended as an inducement for your willingness to become an employee of the
Company (subject, however, to either party's right to terminate such employment
at any time). Therefore, should you still be an employee of the Company at such
time, the Company agrees that you shall receive the severance benefits
hereinafter set forth in the event your employment with the Company terminates
in contemplation of or subsequent to a "change in control" (as defined in
Section 2 hereof) under the circumstances described below.
As consideration for the severance benefits that you receive pursuant
to this Agreement, you agree to be bound by all of the terms of this Agreement,
including, without limitation, Section 8 hereof, which includes covenants by you
not to compete with the Company, not to solicit the Company's employees and not
to use or disclose Confidential Information (as hereinafter defined) of the
Company, as described in more detail in Section 8.
1. Term of Agreement. This Agreement shall commence on the date
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hereof and shall continue in effect through November 1, 2002; provided, however,
that, if a change in control of the Company, as defined in Section 2 hereof,
shall have occurred during the term of this Agreement, then this Agreement shall
continue in effect until the later to occur of (i) the date twenty-four months
after the occurrence of change in control or (ii) the scheduled expiration of
this Agreement.
2. Change in Control. No benefits shall be payable hereunder unless
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there shall have been a change in control of the Company, as set forth below,
and your employment by the Company shall have been terminated in accordance with
Section 3 below. For purposes of this Agreement, a "change in control" shall be
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deemed to have occurred if (A) any "person" or "group" (as such terms are used
in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities (other than the Company, Golder, Thoma, Cressey, Rauner,
Inc. ("GTCR"), or an affiliate of GTCR, including, without limitation, Golder,
Thoma Cressey Fund II, or any employee benefit plan of the Company), (B) there
shall be consummated any consolidation, merger, reorganization or acquisition
involving the Company unless following such event (x) all or substantially all
of the individuals and entities who were the beneficial owners of the
outstanding voting securities of the Company immediately prior to such event
beneficially own, directly or indirectly, more than 80% of the combined voting
power of the then-outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from such event in
substantially the same proportions as their ownership immediately prior to such
event and (y) the provisions of clause (A) above are not met and (z) at least
two-thirds of the members of the board of directors of the corporation resulting
from such event were members of the board of directors at the time of the
initial consideration of, or any action of the board relating to such event, (C)
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 the
Company, (D) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company, or (E) as the result of, or in
connection with, any cash tender offer, exchange offer, merger or other business
combination, sale of assets, proxy or consent solicitation (other than by the
Board in connection with the election of directors at the Company's annual
shareholders' meeting), contested election or substantial stock accumulation (a
"Control Transaction"), the members of the Board immediately prior to the date
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the Company initiates, or is notified of, such Control Transaction (the
"Incumbent Board") shall thereafter cease to constitute at least a majority of
the Board; provided, however, that for purposes of this clause (D) 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.
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3. Termination of Employment Following Change in Control.
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(a) If at any time after the date hereof any of the events described
in Section 2 hereof constituting a change in control of the Company occurs and
in contemplation thereof, in connection therewith or within two years thereafter
(i) you involuntarily cease to be an employee of the Company for any reason
other than termination for good cause (as hereinafter defined), disability (as
hereinafter defined), or death or (ii) you terminate your employment with the
Company for good reason (as hereinafter defined), then (x) you shall be entitled
to the benefits provided in Section 4(a) hereof and (y) any unvested options
shall vest and you shall be entitled to exercise all vested options for a period
of 60 days following such termination. In the event of multiple changes of
control during the term of this Agreement, the foregoing two year period shall
re-start in the event of such subsequent change of control(s).
(b) For purposes of this Agreement: (i) "good cause" means (A) your
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conviction of any criminal violation involving dishonesty, fraud or breach of
trust with respect to the Company, or (B) your willful engagement in gross
misconduct in the performance of your duties that materially injures the
Company; (ii) you shall be "disabled" if, by reason of physical or mental
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disability, you become unable to perform your normal duties for more than 120
days in the aggregate (excluding infrequent and temporary absence due to
ordinary transitory illness) during any twelve-month period; and (iii) "good
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reason" shall exist if, without your express written consent, (A) you are
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assigned duties materially inconsistent with your position, duties,
responsibilities and status with the Company as of the time of the change in
control (excluding for purposes of establishing such "base" any adverse change
made in contemplation of such change of control), (B) the Company reduces your
annual base salary as in effect on the date hereof or as the same may be
increased from time to time, except pursuant to across-the-board salary
reductions similarly affecting all executives of the Company and its
subsidiaries and all executives of any person in control of the Company, (C) the
Company reduces your aggregate compensation and incentive and benefit package as
in effect at the time of the change in control (excluding for purposes of
establishing such "base" any adverse change made in contemplation of such change
of control), (D) the Company requires you regularly to perform your duties of
employment beyond a fifty-mile radius from the location of your employment as of
the time of the change in control (excluding for purposes of establishing such
"base" any adverse change made in contemplation of such change of control), (E)
the Company takes any other action which materially and adversely changes the
conditions or perquisites of your employment as in effect at the time of the
change in control, or (F) the Company fails to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated by Section 10(a) hereof.
(c) For purposes of this Agreement, any purported termination by the
Company or by you shall be communicated by written "Notice of Termination" to
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the other party hereto in accordance with Section 11 hereof. Such Notice of
Termination shall indicate the specific termination provision in this Agreement
(if any) relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment.
"Date of Termination" shall mean the effective date specified in the Notice of
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Termination as of which your employment terminates (which shall be not less than
thirty (30) days nor more than sixty (60) days after the date such Notice of
Termination is given).
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(d) The above provisions of this Section 3, and the provisions of
Section 4, shall be applicable after a change in control has occurred, but not
prior thereto (unless termination is in contemplation of or in connection with
such change of control).
4. Benefits Upon Termination.
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(a) If your employment with the Company is terminated under
circumstances which entitle you to benefits under this Section 4(a), then the
amount of such benefits (which benefits shall be in addition to any other
benefits to which you are entitled other than by reason of this Agreement) shall
be equal to the sum of (i) unpaid salary with respect to any vacation days
accrued but not taken as of the Date of Termination; (ii) accrued but unpaid
salary and bonus through the Date of Termination; and (iii) an amount equal to
your highest annual base salary in effect at any time during the period
commencing three years preceding the date the change in control occurs and
ending on the date the change in control occurs.
(b) Notwithstanding paragraph (a) of this Section 4, if all or any
portion of the payments or benefits provided under this Section 4 either alone
or together with other payments or benefits which you receive or are then
entitled to receive from the Company and any of its subsidiaries, would
constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), such payments or
benefits provided to you under this Section 4 shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction, your net
after tax benefit shall exceed the net after tax benefit if such reduction were
not made. "Net after tax benefit" for purposes of this Section 4 shall mean the
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sum of (i) the total amount payable to you under this Section 4, plus (ii) all
other payments and benefits which you receive or are then entitled to receive
from the Company and any of its subsidiaries that would constitute a "parachute
payment" within the meaning of Section 28O6 of the Code, less (iii) the amount
of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to you
(based upon the rate in effect for such year as set forth in the Code at the
time of the first payment of the foregoing), less (iv) the amount of excise
taxes imposed with respect to the payments and benefits described in (i) and
(ii) above by Section 4999 of the Code.
(c) The cash payment obligation of the Company under paragraph (a)
above shall be paid to you in a lump sum within ten days of the Date of
Termination.
(d) Following any termination, the Company will indemnify you to the
fullest extent permitted under applicable laws against any claim, proceeding,
lawsuit, investigation or other action (collectively, an "Action") involving you
in connection with, or relating to, your employment with the Company or its
subsidiaries, and the Company will, to the fullest extent permitted under
applicable laws, advance to you such expenses incurred by you in connection with
the investigation and defense of any such Action.
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5. Default in Payment. Any payment not made within ten days after it
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is due in accordance with this Agreement shall thereafter bear interest,
compounded annually, at the prime rate from time to time in effect at The First
National Bank of Boston.
6. No Assignment. No interest of you or your spouse or any other
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beneficiary under this Agreement, or any right to receive payment hereunder,
shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind, nor may
such interest or right to receive a payment or distribution be taken,
voluntarily or involuntarily, for the satisfaction of the obligations or debts
of, or other claims against, you or your spouse or other beneficiary, including
for alimony.
7. Unsecured Obligation. All rights of you and your spouse or their
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beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
the Company or payment of any amounts due hereunder. Neither you nor your
spouse or other beneficiary shall have any interest in or rights against any
specific assets of the Company, and you and your spouse or other beneficiary
shall have only the rights of a general unsecured creditor of the Company.
8. Covenant Not to Compete; Non-Solicitation; Confidential
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Information.
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(a) You hereby acknowledge that, in the course of your employment, you
will necessarily have access to become familiar with and, as an indispensable
part of your employment, use trade secrets, customer lists and detailed
customer-related information (some or all of which may constitute trade
secrets), business plans, financial and other proprietary and confidential
information (collectively "Confidential Information") concerning the Company and
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that such knowledge and familiarity was and will continue to be of special,
unique, and extraordinary value to the Company.
(b) You hereby agree that during the Noncompete Period (as defined
below), you will not directly or indirectly either for yourself or for any other
person or entity (whether as an owner, stockholder, consultant, agent, advisor,
partner (general or limited) or otherwise), individually or as part of a group,
own, operate, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with any part of the
business presently engaged in by the Company that generates at least 20% of the
Company's operating profits within any geographical area (within or without the
United States) in which the Company engages in such business (or solicit any
person to engage in any of the foregoing activities). "Noncompete Period" shall
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mean the term of your employment and (i) in the event your employment with the
Company is terminated under circumstances which entitle you to benefits under
Section 4(a), the twelve months after the occurrence of a Change in Control; and
(ii) in the event your employment is terminated after the occurrence of a change
in control, but under circumstances which do not entitle you to benefits under
Section 4(a), the period ending on the later of (a) the date twelve months after
the occurrence of the change in control, and (b) the date your employment with
the Company is terminated. Nothing herein shall prohibit you from being a
passive owner of not more than 5%, in the aggregate, of the outstanding stock of
any class of a corporation which is publicly traded and which competes with the
business of the Company so long as you have no direct or indirect participation
in the management of such corporation. You acknowledge that there is no general
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geographical restriction contained in this paragraph due to the Company-wide
nature of your job responsibilities and that no lesser scope of the restriction
would adequately protect the Company's assets and other legitimate business
interests.
(c) During the Noncompete Period, you agree not to directly or
indirectly on your own behalf or for any other person or entity (i) induce or
attempt to induce any employee of the Company to leave the employ of the
Company, (ii) hire any person who is an employee of the Company as of or
immediately prior to the time of such hiring, or (iii) induce or attempt to
induce any manufacturers' representative, customer, supplier, licensee, agent or
other business relation of the Company to cease doing business with the Company.
(d) You agree that you will not reveal or disclose to any unauthorized
person, or take and use for your own account any Confidential Information
concerning the Company unless and to the extent that (i) the information was or
becomes available to you on a nonconfidential basis from a source which is not,
to your knowledge, bound by a confidentiality obligation to the Company, (ii)
you are required by a court of competent jurisdiction or otherwise compelled by
law to disclose such Confidential Information or (iii) such disclosure is made
by you in good faith in connection with your responsibilities and duties to the
Company and its subsidiaries. In the event that you are so required or
compelled to make such disclosure, you agree to cooperate with the Company to
preserve in full the confidentiality of all Confidential Information whose
disclosure is not required or compelled. Upon termination of employment, you
agree to promptly return to the Company all materials and all copies of
materials involving any Confidential Information in your possession or control.
You also agree to represent to the Company in writing that you have complied
with the provisions of this paragraph (d) upon termination of employment.
9. Effect on Other Plans, Agreements and Benefits. Except to the
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extent expressly set forth herein, any benefit or compensation to which you are
entitled under any agreement between you and the Company or any of its
subsidiaries or under any plan maintained by the Company or any of its
subsidiaries in which you participate or participated shall not be modified or
lessened in any way, but shall be payable according to the terms of the
applicable plan or agreement. The terms of this Agreement shall supersede any
existing agreement between you and the Company executed prior to the date hereof
to the extent any such agreement is inconsistent with the terms hereof.
Notwithstanding the above, any benefits received by you pursuant to this
Agreement shall be in lieu of any severance benefits to which you would
otherwise be entitled under any general severance policy maintained by the
Company for its management personnel.
10. Successors; Binding Agreement.
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(a) 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 expressly
assume 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 Cable Design
Technologies Corporation 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.
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(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or if there
is no such designee, to your estate.
11. Notice. For the purposes of this Agreement, notices and all
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other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when actually delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary, or to such other address
for either party as it may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
12. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such modification, waiver or discharge is agreed to
in writing and signed by you and a duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach of or failure to comply
with any condition or provision of this Agreement by the other party hereto
shall be deemed to be a waiver of any similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
13. Choice of Law. All questions concerning the construction,
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validity and interpretation of this Agreement and any exhibits and schedules
hereto will be governed by the internal law, and not the law of conflicts of,
the State of Delaware.
14. Validity. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
15. Counterpart. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Survival. The obligations of the parties under this Agreement
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all survive the term of this Agreement.
17. Enforcement. The Company agrees to reimburse you for all
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expenses (including reasonable legal fees and expenses) incurred by you to
enforce any breach by the Company of the terms hereof.
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If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company this letter and the
enclosed copy of this letter which will then constitute our agreement on this
subject. We will return the copy of this letter to you.
Sincerely,
CABLE DESIGN TECHNOLOGIES
CORPORATION
By: /s/ Paul M. Olson
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President and Chief Executive Officer
Agreed to as of November 1, 1997.
/s/ Charles B. Fromm
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Charles B. Fromm
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