**Exhibit 10.3**

** **

**EMPLOYMENT AGREEMENT**

 

THIS AGREEMENTis made as of the 1st day of April, 2002, between NetBank, Inc. (the“Company”), a Georgia corporation, and **StevenF. Herbert** (the “Executive”), a resident of the State of **South Carolina**, to be effective as of thedate described in Section 1.10 hereof.

 

RECITALS:

 

The Company desires to employ the Executive and the Executive desiresto accept such employment.

 

In consideration of theabove premises and the mutual agreements hereinafter set forth, the partieshereby agree as follows:

 

**1.**     **Definitions.**Whenever used in this Agreement, the following terms and theirvariant forms shall have the meaning set forth below:

 

1.1           “Agreement” shall mean thisAgreement and any Annexes and Exhibits incorporated herein together with anyamendments hereto made in the manner described in this Agreement.

 

1.2           “Affiliate” shall mean anybusiness entity that controls, is controlled by, or is under common controlwith, the Company.

 

1.3           “Average MonthlyCompensation” shall mean the quotient determined by dividing (A) the sum of(i) the Executive’s Base Salary and (ii) Executive maximum IncentiveCompensation (as defined in Section 4.2(a)) for the year of termination by (B)twelve (12).

 

1.4           “Base Salary”shall have the meaning set forth in Annex A. 

 

1.5           “Business of the Company” shall mean the businessconducted by the Company and its Affiliates, which is currently banking,residential mortgage lending, commercial lending and leasing and provision ofother financial services.

 

1.6           “Cause” shall mean:

 

1.6.1        With respect to****termination by the Company,

 

(a) a materialbreach of the terms of this Agreement by the Executive (including, withoutlimitation, failure by the Executive to perform his duties and responsibilitiesin the manner and to the extent required under this Agreement, or a breach ofany representation or warranty of the Executive set forth herein); which breachremains uncured after the expiration of thirty (30) days following the deliveryof written notice of such breach to the Executive by the Company; or

 

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(b)conduct by the Executive that amounts to personal dishonesty, willfulmisconduct, breach of fiduciary duty involving personal profit, intentionalfailure to perform stated duties, willful violation of any law, rule orregulation (other than traffic violations or similar offenses), or willfulviolation of any final cease and desist order applicable to the Executive.

 

1.6.2        With respect totermination by the Executive,

 

(a) a material diminution in the powers, responsibilities or duties ofExecutive;

 

(b)  a material breach of theterms of this Agreement by the Company that remains uncured after theexpiration of thirty (30) days following the delivery of written notice of suchbreach to the Company by the Executive; or

 

(c)  any requirement by theCompany that the Executive’s services be rendered primarily at a location orlocations other than the Business Location set forth in Annex A.

 

1.7           “Change in Control” has themeaning set forth in Annex B attached hereto.

 

1.8           “Permanent Disability” shallmean the total inability of the Executive to perform his duties under thisAgreement for a period of ninety (90) consecutive days as certified by aphysician chosen by the Company and reasonably acceptable to the Executive;provided, however, if the Executive is****coveredby a disability insurance policy, the term “Permanent Disability” shall havethe meaning set forth in such policy.

 

1.9           “Proprietary Information” shall mean:

 

(a)           Informationrelated to the Company or any Affiliate,

 

(i)which derives economic value, actual or potential, from not being generallyknown to or readily ascertainable by other persons who can obtain economicvalue from its disclosure or use; and

 

(ii) which is the subject of efforts that are reasonable under thecircumstances to****maintain itssecrecy; and

 

(b) All tangible reproductions or embodiments of such information.

 

Assuming the criteria in (a)(i) and (a)(ii) above are satisfied,Proprietary Information includes, but is not limited to, technical andnon-technical data related to the compilations, programs, methods, techniques,finances, actual or potential customers and suppliers, existing and futureproducts, and employees of the Company or its Affiliates. ProprietaryInformation also includes information which has been disclosed to the Companyor its Affiliates by a third party and which the Company or any Affiliate isobligated to treat as confidential.

 

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1.10         “Term” means the period commencing on the date onwhich the Merger (as defined in the Agreement and Plan of Merger dated as ofNovember 18, 2001 by and between the Company, Resource Bancshares MortgageGroup, Inc. and Palmetto Acquisition Corp.) is consummated and ending on thesecond anniversary of such date. Notwithstanding the foregoing, in the event the Merger does not occur,this Agreement shall be void.

 

**2.  Duties**.

 

2.1           TheExecutive is employed in the position set forth in Annex A and, subject to thedirection of the Chief Executive Officer of the Company, shall perform anddischarge well and faithfully the duties which may be assigned to him from timeto time by the Company in connection with the conduct of its business. Theduties and responsibilities of the Executive are include those set forth onAnnex A attached hereto as well as such other duties from time to timeestablished by the Chief Executive Officer.

 

2.2           In addition to the duties and responsibilitiesspecifically assigned to the Executive pursuant to Section 2.1 hereof, theExecutive shall: (a) devote substantially all of his time, energy and skillduring regular business hours to the performance of the duties of hisemployment (reasonable vacations and reasonable absences due to illnessexcepted), and faithfully and industriously perform such duties; (b) diligentlyfollow and implement all management policies and decisions communicated to himby the Chief Executive Officer of the Company; and (c) timely prepare andforward to the Chief Executive Officer of the Company all reports andaccounting as may be requested of the Executive.

 

2.3           The Executive shall devote substantially his entirebusiness time, attention and energies to the Business of the Company and shallnot during the term of this Agreement be engaged (whether or not during normalbusiness hours) in any other business or professional activity which iscompetitive in nature; or interferes with his ability to perform his dutiesfully; or which promotes an activity inconsistent with the nature or status ofthe Company, whether or not such activity is pursued for gain, profit or otherpecuniary advantage; but this shall not be construed as preventing theExecutive from (a) investing his personal assets in businesses which (subjectto item (b) below) are not in competition with the Business of the Company andwhich will not require any services on the part of the Executive in theiroperation or affairs and in which his participation is solely that of aninvestor, (b) purchasing securities in any corporation whose securities areregularly traded provided that such purchase shall not result in hiscollectively owning beneficially at any time five percent (5%) or more of theequity securities of any business in competition with the Business of theCompany, and (c) participating in civic and professional affairs andorganizations and conferences, preparing or publishing papers or books orteaching so long as such activity does not materially interfere with theperformance of his duties hereunder.

 

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**3.  Term and Termination**.

 

3.1           Term. This Agreement shallremain in effect for the Term.  However,notwithstanding the provisions of Section 1.10, this Agreement shall terminateupon the death or Permanent Disability of Executive.

 

3.2           Termination. During the Term, the employment of the Executive under this Agreementmay****be terminated only as follows:

 

3.2.1By the Company:

 

(a)  For Cause, with no prior notice except asprovided in Section 1.6.1; or

 

(b) Without Cause at any time, provided thatthe Company shall give the Executive thirty (30) days prior written notice ofits intent to terminate.

 

3.2.2 By the Executive:

 

(a)  For Cause, with no prior notice except asprovided in Section 1.6.2; or

 

(b) Without Cause, provided that the Executive shall give the Companythirty (30) days prior written notice of his intent to terminate.

 

3.2.3        By the Executive following a Change in Control of the Company,provided that the Executive shall give written notice to the Company of his****intention to terminate this Agreement andterminates employment prior to the expiration of the Term.

 

3.2.4        Atany time upon mutual, written agreement of the parties.

 

3.3           Effect of Termination. The effect of termination ofthe employment of the****Executivepursuant to Section 3.2 shall be as set forth in this Section 3.3:

 

3.3.1       In the event of termination by theCompany:

 

(a)  For Cause, pursuant to Section 3.2.1(a), theCompany shall have no further obligation to the Executive except for the paymentof any amounts due and owing under Section 4 on the effective date oftermination;

 

(b) Without Cause, pursuant to Section 3.2.1(b), the Company shall berequired to meet its obligations to the Executive under Section 3.4 below.

 

3.3.2       In the event of termination by theExecutive:

 

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(a)  For Cause, pursuant toSection 3.2.2(a), the Company shall be required to meet its obligations to theExecutive under Section 3.4 below.

 

(b) Without Cause, pursuant to****Section3.2.2(b), the Company shall have****nofurther obligation to the Executive, except for the payment of any amounts dueand owing under Section 4 on the effective date of termination.

 

3.3.3        In the event oftermination by the Executive in connection with a Change in Control pursuant toSection 3.2.3, the Company shall be required to meet its obligations to theExecutive under Section 3.4 below.

 

3.3.4        In the event of termination upon mutualagreement of the parties pursuant to Section 3.2.4, the Company shall have nofurther obligation to the Executive except for the payment of any amounts dueand owing under Section 4.1 on the effective date of termination unlessotherwise set forth in the written agreement.

 

3.3.5        Notwithstanding anything in this Section 3.3 to the contrary,following any termination of the Executive’s employment, the Executive shall beentitled to receive benefits pursuant to the employee benefit plans in whichthe Executive participated during his employment with Company in accordancewith the terms of such plans.

 

3.4           Termination Payments. In the event Executive’semployment is terminated under this Agreement prior to the expiration of theTerm pursuant to Section 3.3.1(b), Section 3.3.2(a), or Section 3.3.3, theCompany shall pay to the Executive as severance pay and liquidated damages alump sum amount equal to the product of the (a) Average Monthly Compensationmultiplied by (b) Twenty-Four (24), which amount shall be in lieu of any otherseverance benefits that the Executive might otherwise have been entitled tounder any other plan, practice, arrangement or agreement of the Company.  In addition, for a period of twenty-fourmonths following the effective date of the termination (the “SeverancePeriod”), the Company may continue to provide to the Executive, to the extentpracticable, the benefits described in Section 4.3; provided, however, that inlieu of providing health benefits, the Company shall pay the Executive anamount equal to the difference between (x) the cost of COBRA healthcontinuation coverage that would be charged by the Company to a former employeeand eligible dependents for the greater of the Severance Period or the periodduring which the Executive and his eligible dependents are entitled to COBRAhealth continuation coverage from the Company and (y) the amount for which theExecutive would have been responsible to pay under the health benefit plans ineffect for the Executive immediately prior to his termination.  To the extent the Company determines thatthe continuation of any other benefits by the Company is not practicable, theCompany shall pay the Executive an amount equal to what would have been theCompany’s cost of providing the coverage for such benefits during the SeverancePeriod to the Executive and his eligible dependents as if the coverage hadcontinued.  Notwithstanding the aboveprovisions of this Section 3.4, the Company may elect to retain the Executiveon the payroll of the Company or an Affiliate (with existing benefitscontinuing through standard payroll deduction) for all or any part of theSeverance Period in lieu of the payment of a lump sum; provided that suchelection by the Company shall not reduce the total amount due to Executive bythe Company pursuant to this Section 3.4.

 

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Notwithstanding any otherprovision of this Agreement to the contrary, if the aggregate of the paymentsprovided for in this Agreement and the other payments and benefits which theExecutive has the right to receive from the Company (the “Total Payments”)would constitute a  “parachute payment,” as defined inSection 28OG(b)(2) of the Internal Revenue Code, as amended (the “Code”), theExecutive shall receive the Total Payments unless the (a) after-tax amount thatwould be retained by the Executive (after taking into account all federal,state and local income taxes payable by the Executive and the amount of anyexcise taxes payable by the Executive pursuant to Section 4999 of the Code (the“Excise Taxes”)) if the Executive were to receive the Total Payments has alesser aggregate value than (b) the after-tax amount that would be retained bythe Executive (after taking into account all federal, state and local incometaxes and Excise Taxes payable by the Executive) if the Executive were toreceive the maximum amount of the Total Payments that the Executive couldreceive without being subject to the Excise Tax (the “Reduced Payments”), inwhich case the Executive shall be entitled only to the Reduced Payments. If theExecutive is to receive the Reduced Payments, the Executive shall be entitledto determine which of the Total Payments, and the relative portions of each,are to be reduced.

 

3.5           Vesting in Executive Benefits.  In the event the Executive’s employment is terminated under thisAgreement prior to the expiration of the Term pursuant to Section 3.2.1(b),Section 3.2.2(a), or Section 3.2.3, all benefits and entitlements of Executiveunder any plan established for executives of the Company shall fully vest atthe end of the Severance Period, unless otherwise prohibited by law.

 

**4.  Compensation.** TheExecutive shall receive the following salary and benefits:

 

4.1           Base Salary. During the Term, the Executive shallbe compensated at an annual rate equal to the Base Salary set forth in Annex A.The Base Salary and performance shall be reviewed by the Chief ExecutiveOfficer annually, and the Executive shall be entitled to receive annually anincrease in such amount, if any, as may be determined by the Chief Executive Officer.Such salary shall be payable in accordance with the Company’s normal payrollpractices.

 

4.2           Incentive Compensation.

 

(a)           The Executive shall be eligible foran annual incentive bonus determined in accordance with the provisions of AnnexA attached hereto (the “Incentive Compensation”).

 

(b)           The Executive shallbe entitled to participate in such stock option programs as are made availableto senior management of the Company from time to time. Any options granted willcomply in all respects with the terms of the NetBank, Inc. Stock Option Plan.

 

4.3           Benefits.

 

(a)           In addition to the Base Salary andIncentive Compensation, the Executive shall be entitled to such other benefitsas may be available from time to time for 

 

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employees of theCompany.  All such benefits shall beawarded and administered in accordance with the Company’s standard policies andpractices. Such benefits may include, by way of example only, profit sharingplans, retirement or investment funds, dental, health, life and disabilityinsurance benefits, and such other benefits as the Company deems appropriate.

 

(b)           The Companyspecifically agrees to reimburse the Executive for reasonable business expensesincurred by him in performance of his duties hereunder, as approved from timeto time by the Chief Executive Officer; provided that the Executive shall, as acondition of reimbursement, submit verification of the nature and amount ofsuch expenses in accordance with reimbursement policies from time to timeadopted by the Company and in sufficient detail to comply with Internal RevenueService regulations.

 

(c)           On a non-cumulative basis theExecutive shall be entitled to four weeks of vacation each year, during whichhis compensation shall be paid in full, and which shall be taken as approved inadvance by the Company, taking into account the requirements of the Company.

 

4.4           Withholding. The Company may deduct from eachpayment of compensation hereunder all amounts required to be deducted andwithheld in accordance with applicable federal and state income, FICA and otherwithholding requirements.

 

**5.  Proprietary Information**.

 

5.1           Treatment of ProprietaryInformation.  As a managementofficial of the Company, the Executive has access to Proprietary Information.The Executive agrees to maintain the confidentiality of all ProprietaryInformation throughout the Term and after the termination of this Agreement.

 

5.2           Obligations of Executive.  During the period described in Section 5.1, the Executive willhold the Proprietary Information in trust and strictest confidence, and willnot use, reproduce, distribute, disclose or otherwise disseminate theProprietary Information except to the extent necessary to perform the dutiesassigned to him by the Company.

 

5.3           Delivery upon Termination.Upon termination of his employment with the Company, the Executive willpromptly deliver to the Company all property belonging to the Company,including, without limitation, all Proprietary Information then in his possessionor control.

 

**6.  Non-Solicitation. **The Executive agrees that during hisemployment by the Company and, in the event of his termination, other thanpursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) monthsthereafter, he will not (except on behalf of or with the prior written consentof the Company) on his own behalf or in the service or on behalf of others, doany of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or****attempt to solicit, divert or appropriate,directly or by assisting others, any business from any of the Company’scustomers, 

 

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including actively-soughtprospective customers, with whom the Executive has or had material contactduring the last two (2) years of his employment, for purposes of providingproducts or services that are competitive with those provided by the Company orits Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or****attempt to solicit, divert or appropriate,directly or by assisting others, any products any products or servicesbeing provided to the Company from any of its vendors with whom the Executivehas or had material contact during the last two (2) years of his employment tothe extent such solicitation, diversion or appropriation would interfere withany such vendor’s ability to continue to provide the products or services tothe Company or its Affiliates in the same manner and to the same extent asthose provided to the Company or its Affiliates immediately prior to theExecutive’s actions.

 

6.2           Employees.  Solicit, recruit or hire away, orattempt to solicit, recruit or hire away, directly or by assisting others, anyemployee of the Company or its Affiliates, whether or not such employee is afull-time employee or a temporary employee of the Company or its Affiliates,and whether or not such employment is pursuant to written agreement and whetheror not such employment is for a determined period or is at will.

 

**7. Non-Competition**.  The Executive agrees that during his employment by the Companyand, in the event of his termination, other than pursuant to Sections 3.2.1(b)or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the priorwritten consent of the Company), within the Non-Competition Area (as defined inAnnex A), either directly or indirectly, on his own behalf or in the service oron behalf of others, in any capacity which involves duties and responsibilitiessimilar to those undertaken for the Company, engage in any business which isthe same as or essentially the same as the Business of the Company.

 

**6.  Non-Solicitation. **The Executive agrees that during hisemployment by the Company and, in the event of his termination, other thanpursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) monthsthereafter, he will not (except on behalf of or with the prior written consentof the Company) on his own behalf or in the service or on behalf of others, doany of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or****attempt to solicit, divert or appropriate,directly or by assisting others, any business from any of the Company’scustomers, including actively-sought prospective customers, with whom theExecutive has or had material contact during the last two (2) years of hisemployment, for purposes of providing products or services that are competitivewith those provided by the Company or its Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or****attempt to solicit, divert or appropriate,directly or by assisting others, any products any products or servicesbeing provided to the Company from any of its vendors with whom the Executivehas or had material contact during the last two (2) years of his employment tothe extent such solicitation, diversion or appropriation would interfere withany such vendor’s ability to continue to provide the products or services tothe Company or its Affiliates in the same manner and to the same extent asthose provided to the Company or its Affiliates immediately prior to theExecutive’s actions.

 

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6.2           Employees.  Solicit, recruit or hire away, orattempt to solicit, recruit or hire away, directly or by assisting others, anyemployee of the Company or its Affiliates, whether or not such employee is afull-time employee or a temporary employee of the Company or its Affiliates,and whether or not such employment is pursuant to written agreement and whetheror not such employment is for a determined period or is at will.

 

**7. Non-Competition**.  The Executive agrees that during his employment by the Companyand, in the event of his termination, other than pursuant to Sections 3.2.1(b)or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the priorwritten consent of the Company), within the Non-Competition Area (as defined inAnnex A), either directly or indirectly, on his own behalf or in the service oron behalf of others, in any capacity which involves duties and responsibilitiessimilar to those undertaken for the Company, engage in any business which isthe same as or essentially the same as the Business of the Company.

 

**8.  Remedies. **The Executive agrees that the covenantscontained in Sections 5 through 7 of this Agreement are of the essence of thisAgreement; that each of the covenants is reasonable and necessary to protectthe business, interests and properties of the Company; and that irreparableloss and damage will be suffered by the Company should he breach any of thecovenants. Therefore, the Executive agrees and consents that, in addition toall the remedies provided by law or in equity, the Company shall be entitled toa temporary restraining order and temporary and permanent injunctions to preventa breach or contemplated breach of any of the covenants. The Company and theExecutive agree that all remedies available to the Company or the Executive, asapplicable, shall be cumulative.

 

**9.  Severability. **The parties agree that each of theprovisions included in this Agreement is separate, distinct, and severable fromthe other provisions of this Agreement, and that the invalidity orunenforceability of any Agreement provision shall not affect the validity orenforceability of any other provision of this Agreement. Further, if anyprovision of this Agreement is ruled invalid or unenforceable by a court ofcompetent jurisdiction because of a conflict between the provision and anyapplicable law or public policy, the provision shall be redrawn to make theprovision consistent with and valid and enforceable under the law or publicpolicy.

 

**10.  Notice. **All notices and other communications requiredor permitted under this Agreement shall be in writing and, if mailed by prepaidfirst-class mail****or certified mail,return receipt requested, shall be deemed to have been received on the earlierof the date shown on the receipt or three (3) business days after thepostmarked date thereof.  In addition,notices hereunder may be delivered by hand, facsimile transmission or overnightcourier, in which event the notice shall be deemed effective when delivered ortransmitted.  All notices and othercommunications under this Agreement shall be given to the parties hereto at thefollowing addresses:

 

(i)

If to the Company, to it at:

NetBank, Inc.

Royal Centre Three

Suite 100

Alpharetta, Georgia 30022

Attn:  Chief Human ResourcesExecutive

 

(ii)

If to the Executive, to****himat:

 

______________________________

______________________________

______________________________

 

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**11.  Assignment. **Neither partyhereto may assign or delegate this Agreement or any of its rights andobligations hereunder without the written consent of the other party hereto.

 

**12.  Waiver. **A waiver by the Company of any breach of thisAgreement by the Executive shall not be effective unless in writing, and nowaiver shall operate or be construed as a waiver of the same or another breachon a subsequent occasion.

 

**13.  Attorneys’ Fees.**   In the event of litigation between theparties concerning this Agreement, the party prevailing in such litigationshall be entitled to receive from the other party all reasonable costs andexpenses, including without limitation attorneys’ fees, incurred by theprevailing party in connection with such litigation, and the other party shallpay such costs and expenses to the prevailing party promptly upon demand by theprevailing party.

 

**14.  Applicable Law.**  This Agreement shall be construed andenforced under and in accordance with Federal law, where applicable, and thenwith the laws of the State of Georgia.

 

**15.  Entire Agreement; No AdditionalBenefit. **This Agreementembodies the entire and final****agreementof the parties on the subject matter stated in the Agreement.  No amendment or modification of thisAgreement shall be valid or binding upon the Company or the Executive unlessmade in writing and signed by both parties. All prior understandings andagreements relating to the subject matter of this Agreement are hereby expresslyterminated.   The Executive and theCompany acknowledge that, as of the date on which the Term commences, thisAgreement supersedes any employment agreement between the Executive andResource Bancshares Mortgage Group, Inc. and/or any Affiliate thereof(collectively, “RBMG”) and any other agreement between them concerning thesubject matter hereof, including any change in control agreement between theExecutive and RBMG.  The Executive andthe Company also acknowledge that even though the Executive may be paid fromthe payroll of a direct or indirect subsidiary of the Company, the Executive isentitled to no additional employment benefits than those from the Company asset forth herein.

 

**16.  Rights of Third Parties. **Nothing hereinexpressed is intended to or shall be construed to confer upon or give to anyperson, firm or other entity, other than the parties hereto and their permittedassigns, any rights or remedies under or by reason of this Agreement.

 

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**17.  Survival.**Theobligations of the Executive pursuant to Sections 5, 6 and 7 shall survive thetermination of the employment of the Executive hereunder.

 

**IN WITNESS WHEREOF,**theCompany and the Executive have executed and delivered this Agreement as of thedate first****shown above.

 
|   | THE COMPANY:                         |
|--------|--------------------------------------|
|   |                                 |
|   | NETBANK, INC.                        |
|   |                                 |
|   | By:                                  | /s/ Douglas K. Freeman |
|   | Name:  Douglas K. Freeman            |
|   | Title:  Chief Executive Officer |
|   |                                 |
|   |                                 |
|   | THE  EXECUTIVE:                      |
|   |                                 |
|   |                                 | /s/ Steven  F. Herbert |
|   |                                 | Steven F. Herbert |
|        |                                      |  |  |

 

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# Annex A

 

Position:                                                                                                                                                                                                 Treasurer

 

Duties andResponsibilities:                                                                                           Reportsdirectly to the Chief Executive Officer and has primarily responsibility for the measurement, monitoring and managingof the asset-liability, interest rate and liquidity risks of the Company.

 

Base Salary:                                                                                                                                                                               $220,500.00

 

IncentiveCompensation:                                                                                                           Potentialof $275,625.00

 

Business Location:                                                                                                                                          Otherthan for periods spent traveling in connection with the performance of theExecutive’s duties hereunder, the Executive shall be based in Columbia, SouthCarolina.

 

Non-Competition Area:                                                                                                                    Withina radius of one hundred (100) milesfrom the location of the Business Location.

 

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Annex B

 

“Change in Control” means anyone of the following events:

 

(1)           the acquisition by any individual,entity or “group”, within the meaning of Section 13(d) (3) or Section 14(d) (2)of the Securities Exchange Act of 1934, as amended, (a “Person”) of beneficialownership (within the meaning of Rule 13d-3 promulgated under the SecuritiesExchange Act of 1934) of voting securities of the Company where suchacquisition causes any such Person to own twenty-five percent (25%) or more ofthe combined voting power of the then outstanding voting securities thenentitled to vote generally in the election of directors (the “OutstandingVoting Securities”); provided, however, that for purposes of this paragraph (1)of this definition, the following shall not be deemed to result in a Change inControl, (i) any acquisition directly from the Company, unless such a Personsubsequently acquires additional shares of Outstanding Voting Securities otherthan from the Company, in which case any such subsequent acquisition shall bedeemed to be a Change in Control; (ii) any acquisition by any employee benefitplan (or related trust) sponsored or maintained by the Company or anycorporation controlled by the Company; or (iii) any acquisition by merger,consolidation, share exchange, combination, reorganization, sale or transfer orlike transaction that is NOT otherwise described in paragraph (2) or (4) belowas long as no Person (other than an employee benefit plan or related trustsponsored or maintained by the Company, any corporation controlled by theCompany or any company resulting from such business combination) obtainsbeneficial ownership of twenty-five percent (25%) or more of the thenOutstanding Voting Securities;

 

(2)           a merger, consolidation, shareexchange, combination, reorganization or like transaction involving the Companyin which the stockholders of the Company immediately prior to such transactiondo not own at least fifty percent (50%) of the value or voting power of theissued and outstanding capital stock of the Company or its successorimmediately after such transaction;

 

(3)           the sale or transfer (other than assecurity for the Company’s obligations) of more than fifty percent (50%) of theassets of the Company in any one transaction, a series of related transactionsor a series of transactions occurring within a one (1) year period in which theCompany, any corporation controlled by the Company or the stockholders of theCompany immediately prior to the transaction do not own at least fifty percent(50%) of the value or voting power of the issued and outstanding equitysecurities of the acquiror immediately after the transaction;

 

(4)           the sale or transfer of more thanfifty percent (50%) of the value or voting power of the issued and outstandingcapital stock of the Company by the holders thereof in any one transaction, aseries of related transactions or a series of transactions occurring within aone (1) year period in which the Company, any corporation controlled by theCompany or the stockholders of the Company immediately prior to the transactiondo not own at least fifty percent (50%) of the value or voting power of theissued and outstanding equity securities of the acquiror immediately after thetransaction; or

 

(5)           the dissolution or liquidation of theCompany.

 

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