EXHIBIT 10.37
SYNC RESEARCH, INC.
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND XXXXXXX X.
XXXXXX DATED NOVEMBER 6, 1998
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of November 6,
1998, by and between Sync Research, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxxx ("Employee").
WHEREAS, Employee has been serving as Chief Executive Officer of the
Company; and
WHEREAS, in recognition of such services, the Company desires to compensate
Employee in the event of a Sale of the Company (as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. SALE OF THE COMPANY.
(a) In the event of the closing on or before the earlier of (i)
November 30, 1999 or (ii) the Employee's termination as Chief Executive
Officer of the Company, of any of the following events (any of such events
being referred to herein as a "Sale of the Company"):
(i) the acquisition by a single person, entity or group of
affiliated entities of more than 50% of the Common Stock of the Company
(assuming for this purpose conversion of all outstanding securities
convertible into Common Stock) issued and outstanding immediately prior to
such acquisition; or
(ii) any merger of the Company if the shareholders of the
Company immediately before such transaction own immediately after
consummation of such transaction equity securities (other than options and
other rights to acquire equity securities) possessing less than 50% of the
voting power of the surviving or acquired corporation; or
(iii) the sale or other disposition in one transaction or a
series of transactions of all or substantially all of the Company's assets;
then Employee shall receive from the Company, cash compensation (the
"Payments") in an amount equal to $500,000 less the Aggregate Gross Profit
received by Employee in connection with the sale, transfer or termination of
securities in such Sale of the Company. For purposes of this Agreement, such
"Aggregate Gross Profit" shall mean the aggregate gross proceeds received by
Employee for the sale, transfer or termination of securities in the Sale of
the Company, less amounts paid by Employee for such securities. In the event
the Employee's options for stock of the Company are assumed by the acquiring
company or substituted for options to purchase stock of the acquiring
company, the "Aggregate Gross Profit" shall mean the aggregate gross proceeds
receivable upon exercise of such options immediately following the closing of
the Sale of the
Company, less the aggregate exercise price of such options. To the extent
that proceeds from the Sale of the Company are to be held in escrow or
otherwise paid in installments, a Payment shall be made to Employee each time
proceeds from the Sale are paid to other stockholders of the Company. Each
such Payment shall be made in an amount calculated based on the assumption
that Employee will receive the maximum remaining amount that might ultimately
be paid to Employee from escrow or other remaining installments.
(b) Any non-cash proceeds received in a Sale of the Company shall
be valued at fair market value. In the case of publicly traded securities,
such fair market value shall be based on the closing price of such securities
as reported on the exchange or quotation system on which the securities trade
on the day immediately preceding the closing involving a Sale of the Company.
In the case of non-publicly traded securities or other property, fair market
value shall be determined by the Board of Directors of the Company at the
time of receipt of such proceeds by the Company or its shareholders.
2. LIMITATION ON PAYMENTS. Notwithstanding the provisions of Section
1, in the event that the Payments provided for in this Agreement or otherwise
payable to Employee (i) constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) but for this Section 2, would be subject to the excise tax imposed
by Section 4999 of the Code (or any corresponding provisions of state income
tax law), then Employee's Payments shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such Payments being subject to excise tax under Section 4999 of
the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed
by Section 4999, results in the receipt by Employee on an after-tax-basis, of
the greater amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and Employee otherwise agree in writing, any
determination required under this Section 5 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 2, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order
to make a determination under this Section. The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 2. In the event that subsection (a) above
applies, then Employee shall be responsible for any excise taxes imposed with
respect to such severance and other benefits. In the event that subsection
(b) above applies, then each Payment hereunder shall be reduced to the extent
necessary to avoid imposition of such excise taxes.
-2-
3. TERM. This Agreement shall terminate on the earlier of (i)
November 30, 1999 or (ii) the Employee's termination as Chief Executive
Officer of the Company; provided, however, that any previously accrued
payment obligations hereunder shall survive such termination.
4. ENTIRE AGREEMENT. This Agreement and the Employment Agreement
between the Company and Employee dated May 26, 1998 contain the entire
agreement and understanding between the Company and Employee with respect to
the subject matter hereof and supersede all prior oral and written
agreements, understandings, commitments and practices between the parties.
5. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
6. SEVERABILITY. If any of this Agreement or any other agreement
entered into pursuant hereto is contrary to, prohibited by or deemed invalid
under applicable law or regulation, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full
force and effect so far as possible.
7. ASSIGNMENT. This Agreement is not assignable without the express
written consent of all parties to this Agreement.
8. ATTORNEYS' FEES. In the event of any litigation in a court of
competent jurisdiction arising in connection with this Agreement, the
prevailing party in judgment shall be entitled to recover reasonable legal
fees and costs in connection with such action from the other party.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
10. GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of California.
-3-
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
"THE COMPANY"
SYNC RESEARCH, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Its: VP Finance and Administration, CFO
"EMPLOYEE"
/s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx
-4-
