AGREEMENT REGARDING CLASS A UNITS
This Agreement is dated as of the 2nd day of October, 1996, by
and between Sydney X. Xxxxx (the "Investor") and Sattel
Communications LLC, a California limited liability company (the
"Company"). All capitalized terms used herein and not otherwise
defined have the same meaning as set forth in the Operating
Agreement of Sattel Communications LLC dated as of April 1, 1996,
as amended (the "Operating Agreement").
1. Class A Units. For good and valuable consideration, the
Investor is the transferee of 100 Class A Units in the Company (the
"Units"), subject to the terms and conditions of this Agreement and
the Operating Agreement. The parties acknowledge that Investor
shall have a capital account of $42,000.
2. Consent to Terms of Operating Agreement. The Investor
acknowledges receipt of a copy of the Operating Agreement. By his
execution of this Agreement, the Investor agrees to be bound by all
of the terms and provisions of the Operating Agreement.
3. Transferability. The transferability of Class A Units is
restricted by Article VII of the Operating Agreement and Section 4
of this Agreement. Any transfer in violation of the Operating
Agreement or this Agreement shall be void and of no legal effect.
4. Permitted Transfers.
4.1. Permitted Transferees. The Investor may transfer
all or any part of his Class A Units to (i) the Company,
(ii) Sattel or (iii) a group consisting of Investor's
spouse, issue or a trust created for the benefit of his
spouse or issue (such spouse, issue or trust being
hereinafter referred to as a "Permitted Transferee");
provided, however, that (i) any such Permitted Transferee
shall agree in writing to be bound by the terms and
conditions of this Agreement, (ii) if the proposed transfer
is to a trust, prior to the transfer the Board of Directors
shall have approved the trustee thereof in writing and (iii)
any transfer to a Permitted Transferee shall only be of the
economic interest, as defined in Section 17001(n) of the
California Act, attributable to the transferred Class A Units.
Thus, the Investor still retains the right to vote and to
exercise all rights and decisions under this Agreement and the
Operating Agreement as regards the Class A Units transferred
to the Permitted Transferee unless said Permitted Transferee
is admitted to the Company as a Member as provided in
Article VII of the Operating Agreement.
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4.2. Subsequent Transfers. A Permitted Transferee may
transfer all or any portion of the Class A Units transferred
to such Permitted Transferee only to the Company, Sattel,
the Investor or another Permitted Transferee in accordance
with Section 4.1.
5. Put Right. The provisions of this Section 5 shall govern
the Company's obligation to purchase any Class A Units held by the
Investor or a Permitted Transferee at any time on or after April 1,
1999.
5.1. Obligation to Purchase. At any time on or after
April 1, 1999, Investor or his Permitted Transferees holding
a majority of the Class A Units held by Investor and his
Permitted Transferees will have the continuing right, but
not the obligation, to require the Company to purchase all,
but not less than all, of the Class A Units held by the
Investor and such Permitted Transferees for their Fair
Market Value as determined below. Such right shall be
exercised by written notice given to the Company and shall
apply to all Units held by Investor and his Permitted
Transferees at the time the notice is given. Prior to any
such purchase, the Class A Units shall remain subject in all
respects to this Agreement and the Operating Agreement.
5.2. Determination of Fair Market Value. For purposes
of this Agreement, the "Fair Market Value" (which shall mean
the "Agreed Fair Market Value" and the "Appraised Fair
Market Value," as applicable) of the Class A Units to be
purchased pursuant to Section 5.1 hereof shall be determined
as of the close of the fiscal year immediately preceding the
date the notice is given. The Fair Market Value shall be
determined pursuant to the following procedure:
(a) The holders of a majority of the Class A Units
which are to be purchased may reach agreement with the
Company as to the Fair Market Value of the Class A Units
(the "Agreed Fair Market Value"). All selling Class A Unit
holders are then bound to sell at such Agreed Fair Market
Value.
(b) If the parties cannot reach agreement as to the
Fair Market Value of the Class A Units within thirty (30)
days after the date the notice is given under Section 5.1,
any selling party or the Company may request that the Fair
Market Value of the Class A Units to be purchased be
determined by appraisal of the Class A Units according to
the procedure set forth in Section 5.3, below (the
"Appraised Fair Market Value"); provided, however, that only
one appraisal of the Class A Units shall be performed if
there are multiple sellers of the Class A Units that request
an appraisal.
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5.3. Appraisal. The Appraised Fair Market Value shall
be determined by an appraiser which (i) shall be an
investment banking firm which has a seat on the New York
Stock Exchange and (ii) shall be approved by the Company and
a representative of the holders of a majority of the Class A
Units to be sold. If the parties cannot agree upon an
appraiser within fifteen (15) days after the expiration of
the thirty (30) day period for determining the Agreed Fair
Market Value under Section 5.2(a), above, the Company and
the representative of the Class A Units to be sold shall
each select an appraiser which shall be an investment
banking firm which has a seat on the New York Stock
Exchange, and the two (2) appraisers so selected shall
select an appraiser meeting the same criteria who shall
determine the Appraised Fair Market Value for purposes of
this Section 5.3. The determination of such appraiser shall
be binding and conclusive on the parties concerned for
purposes hereof. Such appraisal shall be performed as soon
as practicable, and the Company will bear the cost of the
appraisal. In valuing the Class A Units, the appraiser
shall appraise the Company on the basis of the sale of all
of the equity interests in the Company to a single purchaser
and then determine a value for the Class A Units by first
taking into account the terms of the Operating Agreement.
5.4. Closing for Purchase. The closing of any
purchase of Class A Units pursuant hereto shall occur at the
Company's principal office on such day as the Company shall
select, but not more one hundred and twenty (120) days after
the date on which the notice is given under Section 5.1. At
the closing, the seller or sellers shall deliver to the
Company the Class A Units to be purchased, free and clear of
any liens, security interests, encumbrances, charges or
other restrictions, and all such instruments or documents of
conveyance as shall be reasonably required by the Company in
connection with the purchase of such Class A Units.
5.5. Payment for Purchase and Adjustment of Purchase
Price. The Company may pay the entire purchase price to the
selling parties at the closing. Alternatively, the Company
may pay one-third of the purchase price in cash at the
closing, with the remaining two-thirds of the payments to be
made on the first and second anniversaries of the closing
unless the Company chooses to accelerate said payments. The
deferred payments will bear interest at a rate of 10% per
annum until paid. If there is a Triggering Event (defined
below) within six months after the date as of which the Fair
Market Value is determined, the Investor will receive an
additional payment equal to the excess, if any, of the
amount that would have been paid based on the sales terms
(net of expenses reasonably appropriate to the sale) or
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exchange over the initial Appraised or Agreed Fair Market
Value. Payment will be made in the form of consideration
given in the sale or exchange. In addition, the deferred
payments shall be accelerated and paid upon the occurrence
of a Triggering Event.
6. Investor's Right to Have Units Redeemed. If The Xxxxx
Corporation ("Xxxxx") or a person controlling, controlled by or
under common control with Xxxxx (an "Affiliate") or the Company at
any time redeems or purchases in one or more transactions a
majority of the Class B Units presently outstanding, the Investor
may elect to have his Units (and those of his Permitted
Transferees) redeemed or purchased as well. The Company agrees to
provide Investor at least thirty (30) days prior written notice of
such redemptions. The price at which the Class A Units will be
redeemed is the redemption or purchase amount for the Class B Units
as adjusted upward to reflect the priority distribution associated
with the Class A Units. The other terms and conditions shall be
the same as for the Class B Units.
7. Cooperation If a Triggering Event Occurs. In the event
that in one or more transactions (i) Xxxxx or an Affiliate of Xxxxx
xxxxx or transfers, directly or indirectly, all or a portion of its
interest in the Company with the result that it reduces Diana's
interest to a level which would not allow it to consolidate with
the Company for federal income tax purposes, (ii) the Company sells
or transfers all or substantially all of its assets other than to
an Affiliate of Xxxxx, or (iii) a majority of the Class B Units
presently outstanding are exchanged for or converted or made
convertible into any securities registered under the Securities
Exchange Act of 1934, as amended (individually, "Triggering
Event"), the Investor (and his Permitted Transferees) will be
entitled to participate in such Triggering Event on the same terms
(in the event of a sale after sharing expenses reasonably
appropriate to the sale) as Xxxxx or its Affiliate owning the
equity interests in the Company or such holders of Class B Units,
except as otherwise specifically modified by this Agreement and
except as appropriate to reflect the higher value associated with
the priority distribution for Class A Units. The Company agrees to
provide Investor at least thirty (30) days prior written notice of
any such Triggering Event.
8. Miscellaneous. Any amendment to this agreement must be in
a writing signed by the Company and the Investor. This Agreement
shall be governed by the laws of the State of California without
application of choice of law principles. All pronouns and
variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the context may require.
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings (oral or
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written) of the parties in connection with any matter covered
hereby, including any prior commitments, whether oral or written,
for equity interests, real or phantom, in the business of the
Company.
9. Notices. All notices required or permitted to be given
pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if delivered personally or if
mailed by certified mail (return receipt requested), with proper
postage, to the addresses of the parties set forth beneath their
respective signature lines of this Agreement. All notices shall be
deemed effective on the date when delivered personally, or five
business days after having been mailed. Any party hereto may
change its address by like notice stating its new address to the
other party.
10. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
by arbitration conducted before a single arbitrator in accordance
with the Commercial Arbitration rules of the American Arbitration
Association, and judgment upon the award entered by the arbitrator
may be entered in any court having jurisdiction thereof.
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Executed as of the day and year first above written.
SATTEL COMMUNICATIONS LLC
/s/ Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
Address:
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
INVESTOR:
/s/ Sydney X. Xxxxx
Address:
0000 Xxxxx Xxxxx Xxx Xxxxxx,
Xxx. 000
Xxxxxxxx, Xxxxxxxxx 00000
