AMENDED AND RESTATED
AGREEMENT REGARDING AWARD OF CLASS B UNITS
This Agreement is dated as of the 11th day of November,
1996, by and between Xxxxxx X. Xxxxxx (the "Executive") 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 (the "Operating Agreement"). This Agreement
amends, restates, and supersedes that certain Agreement Regarding
Award of Class B Units dated April 1, 1996, by and between
Executive and the Company.
1. Award of Class B Units. In consideration for the
services rendered or to be rendered by the Executive to the
Company or for other consideration, the Executive is the holder
of 250 Class B Units in the Company (the "Units"), subject to the
terms and conditions of this Agreement and the Operating
Agreement.
1.1. Forfeiture. Notwithstanding anything contained
in this Agreement to the contrary, if (i) the Executive's
employment with the Company, or with an assignee (an
"Assignee") of the Company's rights with respect to
Executive's Employment Agreement with Sattel Communications
Company as currently in effect or as contained in a
subsequent employment agreement with the Company or an
Assignee, is terminated upon the occurrence of any of the
events specified in Section 2.2 of such Employment Agreement
(referred to below as a termination for "Cause"), (ii) the
Executive violates the disclosure and assignment,
confidentiality or non-compete provisions contained in
Sections 8, 9 or 10, hereof, or (iii) the Executive
voluntarily leaves the employ of the Company or of an
Assignee other than for Good Reason as defined herein, then
the Executive will forfeit a portion of the Units on the
following basis:
90 Class B Units will be forfeited upon the
occurrence of any such event on or before April 1,
1997;
45 Class B Units will be forfeited upon the
occurrence of any such event after April 1, 1997, and
on or before April 1, 1998;
provided, however, that if the Executive's employment is
terminated for Cause based solely on performance, then the
number of Units forfeited will equal 90 multiplied by a
fraction, the numerator of which is the number of full
months remaining as of the date of termination until April
1, 1998, and the denominator of which is 24. Upon the
forfeiture of any Units, such Units will be treated as no
longer outstanding for any purpose. "Good
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Reason" means a material reduction in either the Executive's
duties with the Company or an Assignee or his cash
compensation from the Company or an Assignee.
1.2. Termination of Forfeiture Provisions. If (i) the
Class B Units are converted into common stock of The Xxxxx
Corporation ("Xxxxx") in accordance with Section 6 hereof,
(ii) 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 financial
accounting purposes, (iii) the Company sells or transfers
all or substantially all of its assets other than to an
Affiliate of Xxxxx, or (iv) Xxxxx is a party to a
consummated merger, consolidation or share exchange and as a
result of such merger, consolidation or share exchange (A)
stockholders of Xxxxx no longer hold equity securities
registered under the Securities Exchange Act of 1934, as
amended or (B) less than 50% of the outstanding voting
securities of the surviving or resulting entity shall be
owned in the aggregate by the former stockholders of Xxxxx,
in each case as the same shall have existed immediately
prior to such merger, consolidation or share exchange
(individually, a "Triggering Event" and jointly, the
"Triggering Events") then from and after the date of the
Triggering Event, Section 1.1 will no longer apply.
1.3 Cooperation If a Triggering Event Occurs. In the
event of a Triggering Event, the Executive (and his
Permitted Transferees) will be entitled, and required, 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, except as otherwise
specifically modified by this Agreement.
2. Consent to Terms of Operating Agreement. The Executive
acknowledges receipt of a copy of the Operating Agreement. By
his execution of this Agreement, the Executive agrees to be bound
by all of the terms and provisions of the Operating Agreement.
3. Transferability. The transferability of Class B 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 Transfers. The Executive may transfer
any Class B Units which are not subject to forfeiture to (i)
the Company, (ii) Sattel or (iii) a group consisting of
Executive'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 the Executive may not transfer
pursuant to this Section 4.1 more than fifty
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percent (50%) of the number of Units awarded to him and not
subject to forfeiture from time to time; and provided,
further, 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 B
Units. Thus, the Executive still retains the right to vote
and to exercise all rights and decisions under this
Agreement and the Operating Agreement as regards the Class B
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.
4.2. Subsequent Transfers. A Permitted Transferee may
transfer all or any portion of the Class B Units transferred
to such Permitted Transferee only to the Company, Sattel,
the Executive or another Permitted Transferee of the
Executive in accordance with Section 4.1.
5. Purchase of Interest on Termination of Employment. If
the Executive's employment with the Company terminates, the
provisions of this Section 5 shall govern the Company's option to
purchase any Class B Units then held by the Executive or a
Permitted Transferee.
5.1. Option to Purchase. Upon and following the
Executive's termination of employment with the Company, the
Company will have the continuing right, but not the
obligation, to purchase all, but not less than all, of the
Class B Units held by the Executive and all Permitted
Transferees for their Fair Market Value as determined below.
Such right shall be exercised by written notice given by the
Company to the Executive and shall apply to all Units held
at the time the notice is given. Prior to any such
purchase, the Class B Units shall remain subject in all
respects to this Agreement and the Operating Agreement.
Notwithstanding the foregoing, if the Executive's employment
terminates because of death or disability, the Company's
option to purchase the Class B Units will not become
effective until one year after the termination of
employment.
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 B Units to be
purchased pursuant to Section 5.1 hereof shall be determined
as of the close of the fiscal quarter immediately preceding
the date the Company's notice is given. The Fair Market
Value shall be determined pursuant to the following
procedure:
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(a) The holders of a majority of the Class B Units
which are to be purchased may reach agreement with the
Company as to the Fair Market Value of the Class B Units
(the "Agreed Fair Market Value"). All selling Class B 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 B Units within thirty (30)
days after the date the Company's notice is given under
Section 5.1, any selling party or the Company may request
that the Fair Market Value of the Class B Units to be
purchased be determined by appraisal 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 B Units shall be performed if there
are multiple sellers of the Class B Units that request an
appraisal.
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
the holders of a majority of the Class B 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 holders of a majority of
the Class B 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 B 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 B
Units by first taking into account the terms of the
Operating Agreement.
5.4. Closing for Purchase. The closing of any
purchase of Class B 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 Company's notice is given under
Section 5.1. At the closing, the seller or sellers shall
deliver to the Company the Class B 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 B Units.
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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 within six
months after the date as of which the Fair Market Value is
determined, the Executive will receive an additional payment
equal to the excess, if any, of the amount that would have
been paid based as a result of the Triggering Event
transaction (net of expenses reasonably appropriate thereto)
over the initial Appraised or Agreed Fair Market Value.
Payment will be made in the form of consideration given in
the transaction. In addition, the deferred payments shall
be accelerated and paid upon the occurrence of a Triggering
Event.
6. Right to Convert Class B Units Into Common Stock of
Xxxxx. If the cumulative pre-tax profits of the Company for four
consecutive quarters shall have been at least $15 million, then
the Company and all the holders of Class B Units shall have the
right, and shall be obligated to convert their Class B Units into
common stock of Xxxxx on the basis of 500 shares of common stock
of Xxxxx for each Class B Unit. If there are changes in the
number of outstanding shares of common stock of Xxxxx through the
declaration of stock dividends, stock splits or the like, the
number of shares of common stock into which the Class B Units are
converted shall be automatically and proportionately adjusted.
In the event of a merger, consolidation or stock exchange, or the
like, as a result of which common stock of Xxxxx is changed into
securities of another person, cash or other property, the
consideration to be received upon conversion of the Class B Units
shall be adjusted as deemed equitable by the Company in its sole
discretion.
7. Definitions. As used in this Agreement, the following
words have the meanings specified:
(a) "Proprietary Ideas" means ideas, suggestions,
Inventions and work relating in any way to the business and
activities of the Company which may be subjects of
protection under applicable laws, including common law,
respecting patents, copyrights, trade secrets, trademarks,
service marks or other intellectual property rights.
(b) "Inventions" means inventions, designs,
discoveries, improvements and ideas, whether or not
patentable, including without limitation upon the generality
of the foregoing, novel or improved products, processes,
machines, software, promotional and advertising materials,
business data processing programs and systems, and other
manufacturing and sales techniques, which either (a) relate
to (i) the business of the Company as conducted from time to
time or (ii) the Company's actual or demonstrably
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anticipated research or development, or (b) result from any
work performed by Executive for the Company.
(c) "Confidential Information" means Proprietary Ideas
and also information related to the Company's business,
whether or not in written or printed form, not generally
known in the trade or industry of which Executive has or
will become informed during the period of employment by the
Company or its predecessors, which may include but is not
limited to product specifications, manufacturing procedures,
methods, equipment, compositions, technology, formulas,
trade secrets, know-how, research and development programs,
sales methods, customer lists, mailing lists, customer
usages and requirements, software and other confidential
technical or business information and data; provided,
however, that Confidential Information shall not include any
information which is in the public domain by means other
than disclosure by Executive.
(d) In the event of a transfer of the assets and
business of the Company to another entity, "Company"
thereafter will refer to that entity.
8. Disclosure and Assignment of Inventions. Executive
agrees to disclose to the Company, and hereby assigns to Company
all of Executive's rights in and, if requested to do so, provide
a written description of, any Inventions conceived or reduced to
practice at any time during Executive's employment by the Company
or a predecessor of the Company, either solely or jointly with
others and whether or not developed on Executive's own time or
with Company's resources. Executive agrees that Inventions first
reduced to practice within one (1) year after termination of
Executive's employment by Company shall be treated as if
conceived during such employment unless Executive can establish
specific events giving rise to the conception which occurred
after such employment. Further, Executive disclaims and will not
assert any rights in Inventions as having been made, conceived or
acquired prior to employment by the Company. Executive shall
cooperate with the Company and shall execute and deliver such
documents and do such other acts and things as the Company may
request, at the Company's expense, to obtain and maintain letters
patent or registrations covering any Inventions and to vest in
the Company all rights therein free of all encumbrances and
adverse claims.
9. Confidential Information. Executive shall not disclose
to the Company or induce the Company to use any secret or
confidential information belonging to persons not affiliated with
the Company, including any former employer of Executive. In
addition to all duties of loyalty imposed on Executive by law,
Executive shall maintain Confidential Information in strict
confidence and secrecy and shall not at any time, during or at
any time after termination of employment with the Company,
directly or indirectly, use or disclose to others any
Confidential Information, or use it for the benefit of any person
or entity (including Executive) other than the Company, without
the prior written consent of any authorized officer of the
Company (except for
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disclosures to persons acting on the Company's behalf with a need
to know such information). Executive shall carefully preserve
any documents, records, tangible data relating to Inventions or
Confidential Information coming into the Executive's possession
and shall deliver the same and any copies thereof to the Company
upon request and, in any event, upon termination of Executive's
employment by Company.
10. Non-Competition; Non-Solicitation of Employees.
(a) Non-Competition.
(1) At all times during Executive's employment
with the Company and for a period of one (1) year
following the termination of such employment, Executive
shall not within the counties of Alameda, Alpine,
Xxxxxx, Butte, Calaveras, Colusa, Contra Costa, Del
Norte, El Dorado, Fresno, Xxxxx, Humboldt, Imperial,
Inyo, Xxxx, Kings, Lake, Lassen, Los Angeles, Madera,
Marin, Mariposa, Mendocino, Merced, Modoc, Mono,
Monterey, Napa, Nevada, Orange, Placer, Plumas,
Riverside, Sacramento, San Xxxxxx, San Bernardino, San
Diego, San Francisco, San Xxxxxxx, San Xxxx Obispo, San
Mateo, Santa Xxxxxxx, Santa Xxxxx, Santa Xxxx, Xxxxxx,
Sierra, Siskiyou, Xxxxxx, Sonoma, Stanislaus, Sutter,
Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, Yuba,
or any other county in the State of California, or in
any other state within the United States, or in any
other geographical area covered by the operations of
the Company, whether within or outside of the
boundaries of the United States of America, directly or
indirectly, participate in or assist in, the ownership,
management, operation or control, or have any
beneficial interest in, or provide employment,
consulting or other services for, any corporation,
partnership, association or other person or entity
("Competitive Business") which is engaged in the
development, manufacture, marketing, distribution,
service and/or sale of products incorporating
technology by which fax, voice and data traffic can be
transmitted by means of T1 and other similar
transmission cables, and which directly competes or is
planning to directly compete with the Company's
products or services (including products and services
under development). If the Competitive Business is
multi-faceted, this restriction shall apply only to
that part of the business which is competitive with the
Company. The Company and the Executive intend that the
covenant contained in the preceding portion of this
paragraph shall be construed as a series of separate
covenants, one for each of the separate Counties and
states listed above, and each other geographical area
specified in this paragraph. Except for the
geographical coverage, each separate covenant shall be
deemed identical to the terms of the covenants set
forth above. If in any proceeding any court or other
judicial or administrative body shall refuse to enforce
any of the separate
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covenants deemed included in this paragraph, each such
unenforceable covenant shall be eliminated from these
provisions for the purpose of those proceedings and to
the extent necessary to permit the remaining separate
covenants to be enforced against the Executive to the
fullest extent possible.
(2) In furtherance of the foregoing, but as an
independent obligation of Executive, Executive agrees
that he will not, during the one (1) year period
following termination of his employment with Company,
be connected in any way with the solicitation of any
then current or potential customers or suppliers of
Company if such solicitation is likely to result in a
loss of business to the Company.
(3) In the event the covenants set forth in this
Section 10(a) are found to be unenforceable or invalid
by reason of being overly broad, the parties hereto
intend that such covenants shall be limited to such
scope, geographic area and duration as shall make such
covenants valid and enforceable.
(b) Non-Solicitation of Employees. Executive further
agrees that he will not, for a period of two (2) years
following his termination of employment with the Company,
directly or indirectly, on his own behalf or on behalf of
any other person or entity, solicit for employment, employ
or be involved in the employment by another person or
entity, or engage as a consultant or be involved in any such
engagement by another person or entity, any person who is an
employee of the Company or has been an employee of the
Company within the preceding one-year period.
11. Enforcement of Sections 8, 9 and 10. Recognizing that
compliance with the provisions of Sections 8, 9 and 10 of this
Agreement is necessary to protect the goodwill and other
proprietary interests of the Company, and that breach of
Executive's agreements thereunder will result in irreparable and
continuing damages to the Company for which there will be no
adequate remedy at law, Executive hereby agrees that in the event
of any breach of such agreements, the Company shall be entitled
to injunctive relief and such other and further relief, including
damages, as may be proper.
12. Government Laws, Regulations and Contracts. Executive
agrees to comply, and to do all things necessary for the Company
to comply, with all federal, state, local and foreign laws and
regulations which may be applicable to the business and
operations of the Company, and with any contractual obligations,
including, without limitation, confidentiality obligations, which
may be applicable to the Company or Executive under any contracts
between the Company and its customers, suppliers or third
parties.
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13. Miscellaneous. Any amendment to this agreement must be
in a writing signed by the Company and the Executive. 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
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.
14. 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.
15. Assignment of Employment Agreement. The Executive
acknowledges that the Employment Agreement between the Executive
and Sattel Communications Company has been assigned to the
Company and agrees that references in such agreement to Sattel
Communications Company shall be deemed to refer to the Company
and that references to the Committee in such agreement shall be
deemed to refer to the Board of Directors of the Company.
16. 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. In the event the controversy or claim arises out of
Sections 7, 8, 9, 10, or 11 hereof, such arbitration shall be
conducted in accordance with the Expedited Procedures under such
rules.
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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, XX 00000
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
Address:
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
