Exhibit 10.1
EMPLOYMENT AND EXECUTIVE
SEVERANCE AGREEMENT
This EMPLOYMENT
AND EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”),
effective as of September 14, 2007, is entered into by and between,
THOMAS W. STEIPP (“Executive”) and SYMMETRICOM, INC.
(the “Company”).
RECITALS
WHEREAS, Executive
is currently employed by the Company as President and Chief
Executive Officer;
WHEREAS, the
parties now desire to supersede and replace the Employment
Agreement dated July 1, 2001, and the Change of Control Retention
Agreement dated July 1, 2001, and any other agreement relating to
Executive’s employment with the Company or Executive’s
severance benefits in the event of his severance from employment
with the terms and provisions set forth herein;
WHEREAS, it is
expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of
control, and the Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a
distraction to the Executive and can cause the Executive to
consider alternative employment opportunities;
WHEREAS, the Board
has determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued
dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined below) of the Company;
WHEREAS, the Board
believes that it is in the best interests of the Company and its
stockholders to provide the Executive with an incentive to continue
his employment and to motivate the Executive to maximize the value
of the Company upon a Change of Control for the benefit of its
stockholders; and
WHEREAS, the Board
believes that it is imperative to provide the Executive with
retention/severance benefits following a Change of Control which
provides the Executive with enhanced financial security and
provides incentive and encouragement to the Executive to remain
with the Company notwithstanding the possibility of a Change of
Control.
AGREEMENT
The parties,
intending to be legally bound, agree as follows:
1.
EMPLOYMENT PERIOD .
1.1
Basic Term . The Company shall employ
Executive from the date of this Agreement through December 31, 2007
(the “Term Date”), or such later date through which
this Agreement may be extended under Section 1.2, unless Executive
is terminated sooner in accordance with Section 4.
1.2
Renewal . Unless terminated sooner in accordance
with Section 4, this Agreement shall be renewed for an additional
one (1) year period on the Term Date and on each anniversary
thereof, unless one party gives to the other advance written notice
of nonrenewal at least 60 days prior to such date. The
Company may elect not to renew this Agreement only for Cause,
within the meaning of Section 12.1.
2.
POSITION AND RESPONSIBILITIES.
2.1
Position . Executive accepts employment with the
Company as Chief Executive Officer and shall perform all services
appropriate to that position.
2.2
Outside Activity . Except upon the prior written
consent of the Company, Executive, during his employment with the
Company, shall not engage, directly or indirectly, in any other
business, commercial, or professional activity (whether or not
pursued for pecuniary advantage) that is or may be competitive with
the Company, create a conflict of interest with the Company, or
otherwise interfere with the business of the Company or any of its
affiliates.
3.
COMPENSATION AND BENEFITS.
3.1
Base Salary . Executive’s base salary shall
be at the annual rate of $475,000 for fiscal 2007 (the year ending
June 30, 2007). At or near each fiscal year thereafter,
Executive’s annual base salary shall be increased by an
amount mutually determined by Executive and the Board of Directors
or its Compensation Committee.
3.2
Incentive Compensation . Executive shall
participate in the Company’s Management Incentive Plan, the
terms of which shall be determined each fiscal year by the Board of
Directors or the Compensation Committee. For fiscal year 2007
Executive shall be eligible to earn up to 75% of Executive’s
Base Salary as Incentive Compensation (“Target Bonus”).
The maximum Target Bonus may be adjusted from time to time by
the Compensation Committee in their sole discretion. The
exact amount of the Target Bonus awarded the Executive in any given
year shall be determined by the Compensation Committee in their
sole discretion.
3.3
Equity Compensation . The parties acknowledge that
Executive has the same right to participate in the Company’s
current Stock Option Plan and in future Stock Option Plans as other
Company executives.
3.4
Relocation Assistance. The parties acknowledge
that the Company provided Executive certain assistance in
relocating to the San Francisco Bay Area from Atlanta, Georgia,
including the extension of two loans, the principal terms and
conditions of which are as follows:
(a)
Interest-Bearing Loan . In March 1998, the Company
loaned Executive the principal amount of $400,000, with an interest
rate of 6.0% (the “Interest-Bearing Loan”), and agreed
to forgive such principal and interest in four equal installments.
The four forgiveness installments were made on June 30, 1998, 1999,
2000 and 2001.
(b)
Interest-Free Loan . In March 1998, the Company
loaned Executive the principal amount of $500,000, free of interest
(the “Interest-Free Loan”). This loan is intended
to
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qualify as a relocation
loan under Section 7872 of the Internal Revenue Code. Except as
provided in Section 4 of this Agreement, the Interest-Free Loan
shall become: (y) due and payable in a single installment on the
tenth anniversary of its making (March 25, 2008); and (z)
interest-bearing in the event Executive ceases to be an employee of
the Company.
3.5
Benefits . Executive shall receive the following
benefits.
(a)
eligibility to participate in the SymmetriCom Executive Medical
Plan;
(b)
long-term disability insurance coverage;
(c)
life insurance coverage;
(d)
eligibility to participate in the Company’s retirement and
deferred compensation plans; and
(e)
four weeks’ annual paid vacation.
3.6
Business Equipment . The Company shall furnish
Executive with such computers, software, peripheral equipment and
Internet access as Executive shall reasonably require for his
business and home offices, and shall pay the associated monthly
maintenance and access costs therefor. The Company also shall
furnish Executive with a cellular telephone, and shall pay the
monthly telephone bill therefor.
4.
TERMINATION OF EMPLOYMENT.
4.1
By Death . Executive’s employment shall
terminate upon his death. In the event of such termination, the
Company shall: (a) pay to Executive’s estate each month
through the end of the second month following the month in which
Executive’s death occurred an amount equal to the monthly
salary to which Executive was entitled under Section 3.1 at the
time of his death; (b) promptly transfer to Executive’s
estate any accrued but unpaid incentive compensation to which
Executive may have been entitled under Section 3.2; and (c)
promptly reimburse Executive’s estate for any outstanding
reasonable business expenses incurred by Executive prior to his
death. Thereafter, the Company’s
obligations hereunder shall terminate. This Section shall not
affect entitlement of Executive’s estate or beneficiaries to
death benefits under any benefit provided to Executive by the
Company.
4.2
By Disability . This Agreement shall terminate as
of the end of the calendar month in which Executive: (a) is and has
been during each of the immediately preceding five (5) or more
consecutive whole calendar months unable to perform his duties
under this Agreement because of mental or physical illness or
injury; and (b) has been determined by the insurer that issued the
Company’s long-term disability policy in effect pursuant to
Section 3.5 to be eligible to commence receiving long-term
disability benefits. In the event of such termination, the Company
shall: (i) pay Executive the salary to which he is entitled
pursuant to Section 3.1 through the date of termination; (ii)
promptly transfer to Executive’s estate any accrued but
unpaid incentive compensation to which Executive may have been
entitled under Section 3.2; and (iii) promptly reimburse Executive
for any outstanding reasonable business expenses incurred by
Executive prior to his termination. Thereafter, the
obligations of the Company shall
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terminate. This Section
shall not in any way diminish Executive’s right to receive
disability insurance proceeds.
4.3
By the Company for Cause. The Company may
terminate Executive’s employment for Cause (as defined in
Section 12) without notice at any time after the written warning
and minimum cure period have been provided in accordance with
Section 12. In the event of such termination, the Company shall:
(a) pay Executive the salary to which he is entitled pursuant to
Section 3.1 through the date of termination; (b) promptly transfer
to Executive any accrued but unpaid incentive compensation to which
he is entitled pursuant to Section 3.2; and (c) promptly pay any
outstanding reasonable business expenses incurred by Executive
prior to such termination. Thereafter, the
obligations of the Company shall terminate.
4.4
By the Company Other Than for Cause (Including Non-Renewal) or By
Executive for Good Reason. Except as expressly
provided in Section 4.2 or 4.5, if Executive is terminated from the
Company other than for Cause, or if the Company fails to renew this
Agreement other than for Cause, or if Executive resigns from the
Company for Good Reason within 90 days following the event
constituting Good Reason, then the Company shall:
(a)
within 30 days of such termination, pay Executive a lump sum equal
to the sum of (i) Executive’s annual base salary as in effect
as of the date of such termination, and (ii) 100% of
Executive’s Target Bonus for the year prior to the year in
which the termination occurs;
(b)
provide to Executive 100% Company-paid health, dental, vision and
life insurance coverage at the same level of coverage as was
provided to Executive immediately prior to the date of termination
(the “Company-Paid Coverage”). If such coverage
included the Executive’s dependents immediately prior to the
date of termination, such dependents shall also be covered at the
Company’s expense. Company-Paid Coverage shall continue until
the earlier of: (i) the end of the 18th month following the month
in which the date of termination occurred, or (ii) the date that
the Executive and his dependents become covered under another
employer’s group health, dental, vision and life insurance
plans that provide Executive and his dependents with comparable
benefits and levels of coverage. For purposes of Title X of
the Consolidated Budget Reconciliation Act of 1985
(“COBRA”), the date of the “qualifying
event” for Executive and his dependents shall be the date
upon which the Company-Paid Coverage terminates;
(c)
forgive any remaining amounts due on the loans described in Section
3.4, and within 30 days of such forgiveness of indebtedness shall
pay Executive in a single lump sum an amount (“Gross-Up
Payment”) estimated by the Company in good faith to be an
amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes and excise
tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the total federal and state
taxes imposed upon the forgiveness of indebtedness.
4.5
By Executive Other Than For Good Reason . At any time
after the Term Date, Executive may terminate his employment, other
than for Good Reason, by providing the Company at least sixty (60)
days’ advance written notice. The Company shall have
the option, in its complete discretion, to make Executive’s
termination effective at any time prior to the end of such notice
period. Should Executive terminate his employment under this
provision, the
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Company shall pay
Executive all salary and incentive compensation earned through the
last day actually worked, plus an amount equal
