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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between EBB
Holdings, Inc., a Georgia corporation (the "Company"), and XXXX X. XXXXXXX, an
individual resident of Georgia (the "Executive"), as of this 15th day of
October, 1995.
The Company presently employs the Executive as its Chairman and Chief
Executive Officer. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the employment of the
Executive which the Board has determined will reinforce and encourage the
dedication of the Executive to the Company and will promote the best interests
of the Company and its stockholders. The Executive is willing to serve the
Company on the terms and conditions herein provided.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree that on the Effective Date:
1. Employment. The Company shall employ the Executive,
and the Executive shall serve the Company, as Chairman and Chief Executive
Officer upon the terms and conditions set forth herein. The Executive shall have
such authority and responsibilities consistent with his position and which may
be set forth in the Company's bylaws or assigned by the Board from time to time.
The Executive shall devote his full business time, attention, skill and efforts
to the performance of his duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with Company policy. The
Executive may devote reasonable periods of time to serve as a director or
advisor to other organizations, to perform charitable and other community
activities, and to manage his personal investments; provided, however, that such
activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive) each day for an additional day
so that the remaining term shall continue to be three years; provided, however,
that either party (in the case of the Company, by the Required Vote if the
Initial Public Offering has not yet occurred) may at any time, by written notice
to the other, fix the Term to a finite term of three years, without further
automatic extension, commencing with the date of such notice.
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $62,000 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually (on October 15, 1996, for
the first review) and may increase the Executive's base salary if it
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determines in its sole discretion that an increase is appropriate. The Company
shall also pay to the Executive same amount of directors' fees, if any, that are
paid to any of the directors.
b. The Executive shall participate in a management
incentive program and shall be eligible to receive quarterly bonus payments
based upon achievement of targeted levels of performance and such other criteria
as the Board (or an appropriate committee of the Board) shall establish from
time to time pursuant to that program. Within twelve months of the date hereof,
the Board shall establish such targeted goals. Prior to that time, the
determination of any bonus amount shall be within the Board's discretion, except
that if no targeted goals and bonus amount have been set within this twelve
month period, the annual bonus shall be designated as 100% of the Executive's
annual base salary then in effect, and this amount shall apply for all purposes
of this Agreement until the Board sets such target goals and a bonus amount. In
addition, the Board shall annually consider the Executive's performance and
determine if any additional bonus is appropriate.
c. The Company anticipates adopting a stock option plan
and, when it does, the Executive shall participate in the plan and be eligible
for the grant of stock options, restricted stock and other awards thereunder.
d. The Executive shall participate in all retirement,
welfare, deferred compensation, life and health insurance, and other benefit
plans or programs of the Company now or hereafter applicable to the Executive or
applicable generally to employees of the Company or to a class of employees that
includes senior executives of the Company; provided, however, that during any
period during the Term that the Executive is subject to a Disability, and during
the 365-day period of physical or mental infirmity leading up to the Executive's
Disability, the amount of the Executive's compensation provided under this
Section 3 shall be reduced by the sum of the amounts, if any, paid to the
Executive for the same period under any disability benefit or pension plan of
the Company or any of its subsidiaries.
e. The Executive currently leases a 1996 Jeep Grand
Cherokee pursuant to a twenty-four month lease with World Omni Limited (a copy
of which is attached). The Company shall pay all costs and expenses incurred
pursuant to this lease, including the monthly lease payment (which shall not
exceed $375.00) and all excess mileage penalties. After the termination of the
lease, the Company shall provide to the Executive an automobile owned or leased
by the Company of a make and model appropriate to the Executive's status. The
Company shall also reimburse all reasonable expenses incurred by the Executive
in connection with the operation and maintenance of the automobile, including
for gasoline, insurance, tires and similar items.
f. The Company shall reimburse the Executive's
reasonable expenses for dues and capital assessments for country and dining club
memberships currently held by the Executive; provided, however, that if the
Executive during the term of his employment with the Company ceases his
membership in any such clubs and any bonds or other capital payments made by the
Company are repaid to the Executive, the Executive shall pay over such payments
to the Company.
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g. The Company shall reimburse the Executive for travel,
seminar, and other expenses related to the Executive's duties which are incurred
and accounted for in accordance with the historic practices of the Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) by the Company (pursuant to the Required
Vote if the Initial Public Offering has not yet occurred) due
to the Disability of the Executive upon delivery of a Notice
of Termination to the Executive;
(iii) by the Company (pursuant to the Required
Vote if the Initial Public Offering has not yet occurred) for
Cause upon delivery of a Notice of Termination to the
Executive; and
(iv) by the Executive for any reason upon
delivery of a Notice of Termination to the Company.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii) by
the Company for Disability or Cause, the Company shall pay to the Executive (or
in the case of his death, the Executive's estate) within fifteen days after the
Termination Date a lump sum cash payment equal to the Accrued Compensation and,
if such termination is other than by the Company for Cause, the Pro Rata Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Company shall pay the Executive in cash
within fifteen days of the Termination Date an amount equal to
all Accrued Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in
cash at the end of each of the thirty-six consecutive 30-day
periods following the Termination Date an amount equal to
one-twelfth of the sum of the Base Amount and the Bonus
Amount.
(iii) for the period from the Termination Date
through the date of the Executive's death (the "Continuation
Period"), the Company shall at its expense on behalf of the
Executive and his dependents and beneficiaries pay the life
insurance,
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disability, medical, dental and hospitalization benefits
provided (x) to the Executive at any time during the 90-day
period prior to the Change in Control or at any time
thereafter or (y) to other similarly situated executives who
are in the employ of the Company during the Continuation
Period. The coverage and benefits (including deductibles and
costs) provided in this Section 4(c)(iii) during the
Continuation Period shall be no less favorable to the
Executive and his dependents and beneficiaries than the most
favorable of such coverages and benefits during any of the
periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the
Executive hereunder as long as the aggregate coverages and
benefits of the combined benefit plans is no less favorable to
the Executive than the coverages and benefits required to be
provided hereunder. This subsection (iii) shall not be
interpreted so as to limit any benefits to which the Executive
or his dependents or beneficiaries may be entitled under any
of the Company's employee benefit plans, programs or practices
following the Executive's termination of employment, including
without limitation, retiree medical and life insurance
benefits; and
(iv) the restrictions on any outstanding
incentive awards (including stock options) granted to the
Executive under any stock option or other incentive plan or
arrangement shall lapse and such incentive award shall become
100% vested, all stock options and stock appreciation rights
granted to the Executive shall become immediately exercisable
and shall become 100% vested, and all stock options granted to
the Executive shall become 100% vested.
d. If the Executive's employment with the Company is
terminated by the Executive within 12 months of the date hereof for any reason
other than as a result of a Change in Control or the Company's breach of this
Agreement, the Executive will forfeit 100% of his stock in the Company.
e. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 4(c)(iii).
f. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his employment with the Company or a change
in ownership or effective control of the Company or of a substantial portion of
its assets (a "Payment" or "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive will be entitled to receive an additional
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payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties, other than interest
and penalties imposed by reason of the Executive's failure to file timely a tax
return or pay taxes shown due on his return, imposed with respect to such taxes
and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
g. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
5. Trade Secrets. The Executive shall not, at any time,
either during the Term of his employment or after the Termination Date, if such
Termination is for Cause or at the Executive's election for any reason prior to
a Change in Control, use or disclose any Trade Secrets of the Company, except in
fulfillment of his duties as the Executive during his employment, for so long as
the pertinent information or data remain Trade Secrets, whether or not the Trade
Secrets are in written or tangible form.
6. Successors; Binding Agreement
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns 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 or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the Executive's termination of employment (including all such fees
and expenses, if any, incurred in contesting or disputing any such termination
of employment) and (b) the Executive seeking to obtain or enforce any right or
benefit provided by this Agreement; provided, however, that the total cost of
the Executive's representation shall not exceed $30,000.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the Notice
of Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last
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given by each party to the other; provided, however, that all notices to the
Company shall be directed to the attention of the Board with a copy to the
Secretary of the Company. All notices and communications shall be deemed to have
been received on the date of delivery thereof.
9. Settlement of Claims. 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 circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others. The Company
may, however, withhold from any benefits payable under this Agreement all
federal, state, city, or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and the
Company. No waiver by any party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law; Arbitration. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia without giving effect to the conflict of laws principles thereof. Any
controversy, claim or dispute arising out of or relating to this Agreement, or
any breach thereof, including without limitation any dispute concerning the
scope of this arbitration clause, shall be settled by arbitration.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior agreements,
if any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Demand Registration Rights.
a. Rights. Subject to the provisions of this Section
16(a), upon the Executive's termination of employment, for any reason, and after
the Company completes its Initial Public Offering the Executive may request
registration for sale under the Act of all or part
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of the Common Stock then held by him (excluding, for purposes of this Section
16(a), shares subject to the stock options held by the Executive as to which the
vesting provisions shall not have lapsed). Any such request shall specify the
number of shares proposed to be registered and sold and the name of the managing
underwriter of the proposed offering (who must be acceptable to the Company in
its reasonable discretion).
b. Exceptions. The Company shall not be required to
effect a demand registration under the Act pursuant to Section 16(a) above if
(i) the aggregate market value of the shares of Common Stock proposed to be
registered does not equal or exceed $1,000,000; (ii) within twelve months prior
to any such request for registration, a registration of securities of the
Company has been effected in which the Executive had the right to participate
pursuant to this Section 16 or Section 17 hereof; (iii) the Company receives
such request for registration within 180 days preceding the anticipated
effective date of a proposed underwritten public offering of securities of the
Company approved by the Board prior to the Company's receipt of such request; or
(iv) the Board reasonably determines in good faith that effecting such a demand
registration at such time would have a material adverse effect upon a proposed
sale of all (or substantially all) of the assets of the Company, or a merger,
reorganization, recapitalization, or similar transaction materially affecting
the capital structure or equity ownership of the Company which is actively being
negotiated with another party whose identity is disclosed to the Executive;
provided, however, that the Company may only delay a demand registration
pursuant to this Section 16(b)(iv) for a period not exceeding 6 months (or until
such earlier time as such transaction is consummated or no longer proposed). The
Company shall promptly notify in writing the Executive of any decision not to
effect any such request for registration pursuant to this Section 16(b), which
notice shall set forth in reasonable detail the reason for such decision and
shall include an undertaking by the Company promptly to notify the Executive as
soon as a demand registration may be effected.
c. Reduction. If the managing underwriters advise the
Company and the Executive participating in the demand registration in writing
that in their opinion the number of shares of Common Stock held by the Executive
which they requested to be included in such registration exceeds the number
which can be sold in such offering, then the amount of such shares that may be
included in such registration shall be reduced to the number of shares that the
managing underwriters determine is marketable.
d. Withdrawal. The Executive may withdraw at any time
before a registration statement filed pursuant to this section is declared
effective, in which event the Company may withdraw such registration statement.
If the Company withdraws a registration statement under this Section 16 (d) in
respect of a registration for which the Company would otherwise be required to
pay some expenses under Section 18(c),(d) and (e) hereof, then the Executive
shall be liable to the Company for all expenses of such registration specified
in Section 18 (c), (d) and (e) hereof.
17. Piggyback Registration Rights.
a. Rights. Subject to the provision of this Section 17,
after the Company completes its Initial Public Offering, if the Company proposes
to make a registered public
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offering of any of its securities under the Act (whether to be sold by it or by
one or more third parties), other than an offering pursuant to a demand
registration under Section 16 hereof or an offering registered on Form X-0, Xxxx
X-0, or comparable forms, the Company shall, not less than 45 days prior to the
proposed filing date of the registration form, give written notice of the
proposed registration to the Executive, and at the written request of the
Executive delivered to the Company within 15 days after the receipt of such
notice, shall include in such registration and offering, and in any underwriting
of such offering, all shares of Common Stock as may have been designated in the
Executive's request.
b. Primary Offering Reduction. If a registration in
which the Executive has the right to participate pursuant to this Section 17 is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration (i) first, the securities of the Company proposed to be sold, and
(ii) second, the Common Stock owned by the Executive.
c. Secondary Offering Reduction. If a registration in
which the Executive has the right to participate pursuant to this Section 17 is
an underwritten secondary registration, and the managing underwriters advise the
Company in writing that in their opinion the number of shares requested to be
included in such registration exceeds the number of shares which can be sold in
such offering, then the Company shall include in such offering the number of
shares of Common Stock owned and proposed to be sold by the Company and by any
other participants (including other Executive) proposing (and entitled) to sell
shares pursuant to such registration which the underwriters advise the Company
can be sold in the offering, in proportion to the number of shares of Common
Stock so requested by each of them to be included.
18. Other Registration Issues.
a. The Company shall have no obligation to file a
registration statement pursuant to Section 16 hereof, or to include shares of
Common Stock owned by the Executive in a registration statement pursuant to
Section 17 hereof, unless and until the Executive has furnished the Company with
all information and statements about or pertaining to the Executive in such
reasonable detail as is reasonably deemed by the Company to be necessary or
appropriate with respect to the preparation of the registration statement.
Whenever any Executive has requested that any shares of Common Stock be
registered pursuant to Sections 16 or 17 hereof, subject to the provisions of
those Sections, the Company shall, as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration
statement with respect to such shares and use its best efforts to cause
such registration statement to become effective as soon as reasonably
practicable thereafter (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company shall furnish counsel (who is acceptable to the Executive in
his reasonable discretion) for the Executive with copies of all such
documents proposed to be filed);
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(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than nine months or until
the underwriters have completed the distribution described in such
registration statement, whichever occurs first;
(iii) furnish to the Executive such number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as the Executive may
reasonably request;
(iv) use its best efforts to register or qualify such
shares under such other securities or Blue Sky Laws of such
jurisdictions as the Executive reasonably requests (and to maintain
such registrations and qualifications effective for a period of nine
months or until the underwriters have completed the distribution of
such shares, whichever occurs first), and to do any and all other acts
and things which may be necessary or advisable to enable the Executive
or underwriters to consummate the disposition in such jurisdictions of
such shares; provided, however, that the Company will not be required
to (a) qualify generally to do business in any jurisdiction where it
would not be required but for this Section 18(a)(iv), or (b) subject
itself to taxation in any such jurisdiction; provided, further,
however, that, notwithstanding anything to the contrary in this
Agreement with respect to the bearing of expenses, if any such
jurisdiction shall require that expenses incurred in connection with
the qualification of such shares in that jurisdiction be borne in part
or full by the Executive, then the Executive shall pay such expenses to
the extent required by such jurisdiction;
(v) cause all such shares to be listed on securities
exchanges, if any, on which similar securities issued by the Company
are then listed;
(vi) provide a transfer agent and registrar for all such
shares not later than the effective date of such registration
statements;
(vii) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the Executive and underwriters reasonably request (and
subject to approval by the Company's counsel) in order to expedite or
facilitate the disposition of such shares; and
(viii) make available for inspection by the Executive, by
any underwriter participating in any distribution pursuant to such
registration statement, and by any attorney, accountant or other agent
retained by the Executive or underwriter, or by any such underwriter,
all financial and other records, pertinent corporate documents, and
properties (other than confidential intellectual property) of the
Company; provided, however, that the Company can condition delivery of
any information, records or corporate documents upon the receipt from
the Executive and the underwriter and their counsel, accountants,
advisors and agents, of a
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confidentiality agreement in form and substance acceptable to the
Company and its counsel in the exercise of their exclusive discretion.
b. Holdback Agreement. In the event that the Company
effects an underwritten public offering of any of the Company's equity
securities, the Executive agrees, if requested by the managing underwriters, not
to effect any sale or distribution, including any sale pursuant to Rule 144
under the Act, of any equity securities (except as part of such underwritten
offering) during the 180-day period commencing with the effective date of the
registration statement for such offering.
c. Stockholder Expenses. If, pursuant to Section 16 or
17 hereof, shares of Common Stock owned by the Executive is included in a
registration statement, then the Executive shall pay all transfer taxes, if any,
relating to the sale of its shares, the fees and expenses of his own counsel,
and its pro rata portion of any underwriting discounts, fees or commissions or
the equivalent thereof.
d. The Company's Expenses. Except for the fees and
expenses specified in Section 18(c) hereof and except as provided below in this
Section 18(d), the Company shall pay all expenses incident to the registration
and to the Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or Blue Sky Laws, underwriting discounts,
fees and commissions (other than the Executive's pro rata portion of any
underwriting discounts or commissions or the equivalent thereof), printing
expenses, messenger and delivery expenses, and fees and expenses of counsel for
the Company and all independent certified public accountants and other persons
retained by the Company. If the Company shall previously have paid, pursuant to
this Section 18(d), the expenses of a registration, then the Executive shall pay
all expenses described in this Section 18 (d) (but not expenses described in
Section 18 (e) hereof).
e. Other. With respect to any registration pursuant to
Section 16 or 17 hereof, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties) and the expenses and fees for listing the
securities to be registered on exchanges on which similar securities issued by
the Company are then listed.
f. Indemnity. In the event that any shares of Common
Stock owned by the Executive is offered or sold by means of a registration
statement pursuant to Section 16 or 17 hereof, the Company agrees to indemnify
and hold harmless the Executive and each person, if any, who controls or may
control the Executive within the meaning of the Act (the Executive and any such
other persons being hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs, and expenses, including, without limitation, interest, penalties, and
reasonable attorneys fees and disbursements, asserted against, resulting to,
imposed upon or incurred by such Indemnified Person, jointly or severally,
directly or indirectly (hereinafter referred to in this Section 18 (f) in the
singular as a "claim" and in the plural as "claims"), based upon, arising out
of, or resulting from any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, any preliminary or final
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prospectus contained therein, or any amendment or supplement thereto, or any
document incident to registration or qualification of any such shares, or any
omission or alleged omission to state therein a material fact necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading, or any violation by the Company of the Act of any
state securities or Blue Sky Laws, except insofar as such claim is based upon,
arises out of or results from information developed or certified by the
Executive for use in connection with the registration statement or arises out of
or results from the omission of information known to the Executive prior to the
violation or alleged violation; provided, however, that the maximum amount of
liability in respect of such indemnification shall be limited, in the case of
the Company, to an amount equal to the net proceeds actually received by the
Company from the sale of such shares effected pursuant to such registration. The
Executive agrees to indemnify and hold harmless the Company, its officers and
directors, and each person, if any, who controls or may control the Company
within the mean of the Act (the Company, its officers and directors, and any
such persons also being hereinafter referred to individually in this context as
an "Indemnified Person" and collectively as "Indemnified Persons") from and
against all claims based upon, arising out of, or resulting from any untrue
statement of a material fact contained in the registration statement, or any
omission to state therein a material fact necessary in order to make the
statement made therein, in the light of the circumstances under which they were
made, not misleading, to the extent that such claim is based upon, arises out
of, or results from information developed or certified by the Executive for use
in connection with the registration statement or arises out of, or results from
an omission of information known to the Executive prior to the violation or
alleged violation. The indemnifications set forth herein shall be in addition to
any liability the Company or the Executive may otherwise have to the Indemnified
Persons. Promptly after actually receiving definitive notice of any claim in
respect of which an Indemnified Person may seek indemnification under this
Section 18(f), such Indemnified Person shall submit written notice thereof to
either the Company or the Executive, as the case may be (sometimes being
hereinafter referred to as an "Indemnifying Person"). The omission of the
Indemnified Person so to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have hereunder
except to the extent that (a) such liability was caused or increased by such
omission, or (b) the ability of the Indemnifying Person to reduce such liability
was materially adversely affected by such omission. In addition, the omission of
the Indemnified Person to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have otherwise
than hereunder. The Indemnifying Person shall have the right to undertake, by
counsel or representatives of its own choosing, the defense, compromise or
settlement (without admitting liability of the Indemnified Person) of any such
claim asserted, such defense, compromise or settlement to be undertaken at the
expense and risk of the Indemnifying Person, and the Indemnified Person shall
have the right to engage separate counsel, at its own expense, whom counsel for
the Indemnifying Person shall keep informed and consult with in a reasonable
manner. In the event the Indemnifying Person shall elect not to undertake such
defense by its own representatives, the Indemnifying Person shall give prompt
written notice of such election to the Indemnified Person, and the Indemnified
Person shall undertake the defense, compromise or settlement (without admitting
liability of the Indemnified Person) thereof on behalf of and for the account
and risk of the Indemnifying Person by counsel or other representatives designed
by the Indemnified Person. In the event that any claim shall arise out of a
transaction or cover any period or periods wherein the Company and the Executive
shall each be liable hereunder for part of the liability or obligation arising
therefrom,
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then the parties shall, each choosing its own counsel and bearing its own
expenses, defend such claim, and no settlement or compromise of such claim may
be made without the joint consent or approval of the Company and the Executive.
Notwithstanding the foregoing, no Indemnifying Person shall be obligated
hereunder with respect to amounts paid in settlement or any claim if such
settlement is effected without the consent of such Indemnifying Person (which
consent shall not be unreasonably withheld).
19. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but not
paid as of the Termination Date including (i) base salary, (ii) reimbursement
for reasonable and necessary expenses incurred by the Executive on behalf of the
Company during the period ending on the Termination Date, and (iii) bonuses and
incentive compensation (other than the Pro Rata Bonus).
b. "Act" shall mean the Securities Act of 1933, as
amended.
c. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination Date
or (ii) at the highest rate in effect at any time during the 90-day period prior
to the Change in Control, and shall include all amounts of his base salary that
are deferred under the qualified and non-qualified employee benefit plans of the
Company or any other agreement or arrangement.
d. "Board" shall have the meaning set forth in the
recitals.
e. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the annual
bonus paid or payable for the full fiscal year ended prior to the fiscal year
during which a Change in Control occurred or (ii) the average of the annual
bonuses paid or payable during the three full fiscal years ended prior to the
Termination Date or, if greater, the three full fiscal years ended prior to the
Change in Control (or, in each case, such lesser period for which annual bonuses
were paid or payable to the Executive).
f. The termination of the Executive's employment shall
be for "Cause" if it is a result of:
(i) any act that (A) constitutes, on the part of
the Executive, fraud, dishonesty, gross malfeasance of duty,
or conduct grossly inappropriate to the Executive's office,
and (B) is demonstrably likely to lead to material injury to
the Company or resulted or was intended to result in direct or
indirect gain to or personal enrichment of the Executive; or
(ii) the conviction (from which no appeal may be
or is timely taken) of the Executive of a felony;
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provided, however, that in the case of clause (i) above, such conduct shall not
constitute Cause:
(x) unless (A) there shall have been delivered
to the Executive a written notice setting forth with
specificity the reasons that the Board believes the
Executive's conduct constitutes the criteria set forth in
clause (i), (B) the Executive shall have been provided the
opportunity to be heard in person by the Board (with the
assistance of the Executive's counsel if the Executive so
desires), and (C) after such hearing, the termination is
evidenced by a resolution adopted in good faith by either
two-thirds of the members of the Board (other than the
Executive), or, if the Initial Public Offering has not yet
occurred, then by all the members of the Board of Directors
(other than the Executive); or
(y) if such conduct (A) was believed by the
Executive in good faith to have been in or not opposed to the
interests of the Company, and (B) was not intended to and did
not result in the direct or indirect gain to or personal
enrichment of the Executive.
g. A "Change in Control" shall mean the occurrence
during the Term of any of the following events:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 0000 Xxx) of 20% or more of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is
owned directly or indirectly by the Company (a "Subsidiary"),
(2) the Company or any Subsidiary, or (3) any Person in
connection with a "Non-Control Transaction" (as hereinafter
defined).
(ii) The individuals who, as of the date of this
Agreement, are members of the Board (the "Incumbent Board")
cease for any reason to constitute at least two-thirds of the
Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new
director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an
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actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 0000 Xxx) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) (1) After the Initial Public Offering,
a merger, consolidation or
reorganization involving the
Company, unless
(x) the stockholders of the Company,
immediately before such merger,
consolidation or reorganization,
own, directly or indirectly,
immediately following such merger,
consolidation or reorganization, at
least two-thirds of the combined
voting power of the outstanding
voting securities of the
corporation resulting from such
merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the
same proportion as their ownership
of the Voting Securities
immediately before such merger,
consolidation or reorganization,
and
(y) the individuals who were members of
the Incumbent Board immediately
prior to the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at least
two-thirds of the members of the
board of directors of the Surviving
Corporation;
(A transaction described in clauses (x)
and (y) shall herein be referred to as a
"Non-Control Transaction"); or
(2) Prior to the Initial Public
Offering, a merger, consolidation
or reorganization involving the
Company, unless the transaction is
approved by the Required Vote.
(B) A complete liquidation or dissolution of
the Company; or
(C) An agreement for the sale or other
disposition of all or substantially all
of the assets of the Company to any
Person (other than a transfer to a
Subsidiary), unless such sale or
disposition occurs prior to the Initial
Public Offering and is approved by the
Required Vote.
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(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is
terminated prior to a Change in Control and the Executive
reasonably demonstrates that such termination (A) was at the
request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in
Control and who effectuates a Change in Control (a "Third
Party") or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs,
then for all purposes of this Agreement, the date of a Change
in Control with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
h. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
i. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
j. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
k. "Initial Directors" shall mean Xxxxxx X. Xxxxx, G.
Xxxx Xxxxx, and Xxxx X. Xxxxxxx.
l. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's Common Stock registered under the Act
in which aggregate proceeds to the Company, net of all underwriting discounts
and commissions and other expenses of issuance and distribution as stated in the
prospectus relating to such offering, are equal to at least $10,000,000.
m. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
n. Any action under this Agreement which requires a
"Required Vote" shall require approval of at least two-thirds of the Initial
Directors and all other members of the Board of Directors.
o. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
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p. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date specified
in the Notice of Termination.
q. "Trade Secrets" shall mean any information, including
but not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
EBB HOLDINGS, INC.
ATTEST:
By: /s/ Xxxx X. Xxxxxxx By: /s/Xxx X. Xxxxx
-------------------------- ----------------------------
Name: Xxxx Xxxxxxx Name: Xxx X. Xxxxx
Title: Board Member Title: Secretary
(CORPORATE SEAL)
EXECUTIVE
/s/ Xxxx X. Xxxxxxx
------------------------------------
XXXX X. XXXXXXX
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