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 Xxxxx X. Xxxxxxx (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 350
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:
150 Class B Units will be forfeited upon the occurrence
of any such event on or before April 1, 1997;
75 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 150 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
By: /s/ Xxxxxx X. Xxxxxx
President and
Chief Operating Officer
Address:
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxx
Address:
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
