EXHIBIT 10.14
AMENDED AND RESTATED
INDEMNITY AGREEMENT
AMENDED AND RESTATED INDEMNITY AGREEMENT (this "Agreement"), made and
entered into as of this the 26th day of June, 1998, by F. XXXX XXXXXX, an
individual residing in Durham County, North Carolina ("Hunter"), and CREE
RESEARCH, INC., a North Carolina corporation ("Cree").
W I T N E S S E T H:
WHEREAS, Hunter serves as Cree's President and Chief Executive Officer,
and as a member and Chairman of its Board of Directors, and holds a substantial
number of shares of Cree's common stock: and
WHEREAS, Cree owns 24,601 shares of the common stock of C3, Inc., a North
Carolina corporation ("C3"), issued pursuant to an Assignment Agreement between
Cree and C3 dated June 28, 1995 which gave Cree the right to acquire one percent
of the outstanding common stock of C3 for $500 but permitted C3 to waive the
consideration and issue the stock at any time, which C3 elected to do in January
1997; and
WHEREAS, C3 conducted an initial public offering of its common stock in
November 1997 and, pursuant to Hunter's direction after consultation with its
Board of Directors, Cree purchased 100,000 shares in the offering, at the
offering price of $15 per share, based upon the judgment that the market price
of the shares would likely increase and that the purchase would thus enhance
Cree's value; and
WHEREAS, the market price of C3's common stock thereafter declined and, in
order to avoid having Cree record a loss as a result of its C3 holdings, Hunter
entered into an agreement with Cree on December 28, 1997 under which he promised
to indemnify Cree against any losses that might result from the sale of its C3
stock, up to a maximum of $300,000 (such agreement is referred to herein as the
"Original Agreement"); and
WHEREAS, Cree subsequently sold 45,000 of its C3 shares, realizing a loss
for which Hunter is obligated under the Original Agreement and leaving a balance
of 79,601 shares of C3 stock owned by Cree at the date of this Agreement;
WHEREAS, based on the market price of C3's common stock at the date of
this Agreement, Hunter's $300,000 maximum indemnity under the Original Agreement
would be insufficient to avoid realizing further losses if Cree were to
liquidate its remaining C3 stock; and
WHEREAS, Hunter believes it is in Cree's interest to continue holding its
remaining C3 stock and, in order to avoid having Cree record a further loss as a
result of its C3 holdings, Hunter has reached an agreement with Cree to increase
the maximum amount of his indemnity on the terms and conditions set forth below;
and
WHEREAS, Hunter and Cree desire to memorialize their understanding and
agreement by amending and restating the provisions of the Original Agreement as
set forth below;
NOW, THEREFORE, for and in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, Hunter and Cree
agree that the Original Agreement is hereby amended and restated to read as
follows:
1. For all shares of C3 common stock sold by Cree at a price less than $15
per share, Hunter will pay Cree the difference between the per share selling
price and $15 per share, subject to and in accordance with the terms and
conditions of this Agreement. Commissions and other trading expenses shall be
disregarded for purposes of this Agreement.
2. This Agreement shall apply to all sales of C3 common stock from time to
time made by Cree after November 14, 1997, whether the shares sold are held of
record or in a nominee account for the benefit of Cree, until Cree has sold an
aggregate of 100,000 shares.
3. Payment of amounts due under this Agreement shall be made within ten
(10) days after receipt by Hunter of Cree's written demand therefor setting out
the number of shares sold, the date sold and the per share selling price. The
demand must be made pursuant to the vote of a majority of the members of the
Board of Directors of Cree other than Hunter.
4. Hunter's maximum liability under this Agreement shall in no event
exceed:
(a) $300,000; plus
(b) the lesser of
(i) $100,000 and
(ii) the difference between the per share selling price and
$9.375 per share for all shares of C3 common stock sold
by Cree, at a price less than $9.375 per share, after
June 26, 1998
and prior to the date of the demand under
paragraph 3 of this Agreement;
minus
(c) the difference between the per share selling price and $9.375
per share for all shares of C3 common stock sold by Cree, at a
price greater than $9.375 per share, after June 26, 1998 and
prior to the date of the demand under paragraph 3 of this
Agreement.
5. Hunter's obligations under this Agreement shall terminate in the event
Cree purchases any additional shares of C3 common stock.
6. In the event of any stock split or stock dividend with respect to the
C3 common stock, the numbers of shares and per share prices provided for in this
Agreement shall be appropriately adjusted.
7. This Agreement shall be binding upon and inure to the benefit of Hunter
and his heirs, personal representatives, successors and assigns and upon Cree
and its successors and assigns. This Agreement shall be governed by the laws of
the State of North Carolina. This Agreement shall not be amended except in a
document executed on behalf of both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement and affixed
their respective seals hereto as of the date first stated in the preamble above.
/s/ F. Xxxx Xxxxxx (SEAL)
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F. Xxxx Xxxxxx
CREE RESEARCH, INC.
(CORPORATE SEAL)
Attest: By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Vice President
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, Secretary
