EXHIBIT 10.19
SYMMETRICOM, INC.
CHANGE OF CONTROL RETENTION AGREEMENT
This CHANGE OF CONTROL RETENTION AGREEMENT (the "Agreement") is made and
entered into by and between XXXXXX X. XXXXXX (the "Executive") and SYMMETRICOM,
INC. (the "Company"), effective as of the latest date set forth by the
signatures of the parties hereto below (the "Effective Date").
RECITALS
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A. 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. 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. 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.
B. 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.
C. 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.
D. Certain capitalized terms used in the Agreement are defined in Section 5
below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate on the date that all
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obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. Coordination with Employment Agreement. Prior to a Change of Control,
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payments, if any, to Executive upon termination of employment shall be
determined in accordance with the Employment Agreement between Executive and
Company, dated July 1, 2001. After a Change of Control, payments to Executive
upon termination of employment shall be determined in accordance with this
Agreement.
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3. Change of Control Retention/Severance Benefits.
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(a) Involuntary Termination other than for Cause, Death or Disability or
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Voluntary Termination for Good Reason Within 24 Months Following A
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Change of Control. If Executive's employment with the Company
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terminates within twenty four (24) months following a Change of
Control by virtue of (A) an involuntary termination by the Company
other than for Cause, (B) Executive's death or Disability, or (C) a
Voluntary Termination for Good Reason, then the Company shall provide
Executive with the following benefits:
(i) Base Salary and Target Bonus Payment. Within thirty (30) days
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of the triggering event, pay Executive a lump sum equal to
three (3) times the sum of (A) Executive's annual base salary
as in effect as of the date of such termination, and (B) 100%
of Executive's Target Bonus for the year prior to the year in
which the payment occurs;
(ii) Equity Compensation Vesting. Immediately and fully vest
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Executive's outstanding stock options and shares of stock, if
any, subject to restricted stock purchase agreements;
(iii) COBRA and Life Insurance. Provide to Executive, upon his
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termination of employment with the Company, one hundred percent
(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 Company
expense. Company-Paid Coverage shall continue until the earlier
of (x) the end of the eighteenth (18th) month following the
month in which the date of termination occurred, or (y) 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.
(b) Voluntary Resignation; Termination for Cause. If the Executive's
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employment terminates by reason of the Executive's voluntary
resignation (and is not a Voluntary Termination for Good Reason), or
if the Executive is terminated for Cause, then the Executive shall not
be entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company's then existing
severance and benefits plans or pursuant to other written agreements
with the Company, except that Executive shall receive the Company-Paid
Coverage if he remains employed with the Company for twelve (12)
months following a Change of Control.
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(c) Termination After the Twenty Four Month Period Following a Change of
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Control. In the event the Executive's employment is terminated for any
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reason after the twenty four (24) month period following a Change of
Control, then the Executive shall be entitled to receive severance and
any other benefits only as may then be established under the Company's
existing severance and benefits plans or pursuant to other written
agreements with the Company.
4. Taxation of Severance Benefits. In the event that the benefits provided for
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in this Agreement or otherwise payable to the Executive constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and will be subject to the excise tax imposed by
Section 4999 of the Code, then Company shall pay Executive an amount ("Gross-Up
Payment") 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 excise tax
imposed upon the Payments. Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 5 shall be made in
writing by independent public accountants agreed to by the Company and Executive
(the "Accountants"), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes. For purposes of making the
calculations required by this Section 5, 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 Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 5. The Company shall
bear all costs the Accountants may reasonable incur in connection with any
calculations contemplated by this Section 5.
5. Definition of Terms. The following terms referred to in this Agreement
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shall have the following meanings:
(a) Cause. Termination shall be for "Cause" if:
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(i) Executive grossly neglects significant duties he is required to
perform or egregiously violates a material written policy of
Company, other than as a result of incapacity due to physical or
mental illness, and, after (A) being warned in writing, and (B)
having had a reasonable opportunity to cure (the length of such
cure period to be determined by taking into account the nature of
the conduct resulting in the warning, but in no event to be less
than 30 days), continues to grossly neglect such duties or
egregiously violate the specified Company policy;
(ii) Executive commits a material act of dishonesty or fraud; or
(iii) Executive is convicted of any serious felony.
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(b) Good Reason. "Good Reason" means any one or more of the following:
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(i) a significant reduction in Executive's title, authority, duties
or reporting relationships provided, however, that "Good Reason"
shall not exist merely by reason of a Change of Control to the
extent that after such Change of Control, Executive is the Chief
Executive Officer of the Company;
(ii) without Executive's express written consent, the relocation of
Executive's principal place of employment to a location more
than thirty (30) miles from Executive's current residence;
(iii) any failure by Company or its affiliates to pay, or any
reduction by Company or its affiliates of, Executive's Base
Salary, incentive compensation, equity compensation, relocation
assistance, or other benefits received by Executive prior to the
Change of Control.
(c) Other than for Cause. Involuntary termination shall be "other than for
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Cause" unless Executive is terminated for engaging in conduct
described in Section 5(a).
(d) Change in Control. "Change in Control" means:
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(i) the sale, lease, conveyance or other disposition of all or
substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of
persons acting in concert;
(ii) any transaction or series of related transactions that results
in any Person (as defined in Section 13(h)(8)(E) under the
Securities Exchange Act of 1934) becoming the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of more than 45% of the aggregate
voting power of all classes of common equity of the Company,
except if such Person is (I) a subsidiary of the Company, (II)
an employee stock ownership plan for employees of the Company or
(III) a company formed to hold the Company's common equity
securities and whose shareholders constituted, at the time such
company became such holding company, substantially all the
shareholders of the Company;
(iii) a change in the composition of the Company's Board of Directors
occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating
to the election of directors to the Company);
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(iv) the consummation of a merger or consolidation of the Company
with any other corporation other than a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least fifty-five percent (55%) of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation.
6. Successors.
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(a) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially
all of the Company's business and/or assets shall assume the
obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to
the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes
under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes
and delivers the assumption agreement described in this Section
6(a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Executive's Successors. The terms of this Agreement and all
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rights of the Executive hereunder shall inure to the benefit of,
and be enforceable by, the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
7. Notice.
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(a) General. Notices and all other communications contemplated by
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this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, one day following
mailing via Federal Express or similar overnight courier service,
upon facsimile transmission, after confirmation of receipt of
such transmission, or as of five business days after deposit in
the United States mail in a sealed envelope, registered or
certified, with postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address that
he most recently communicated to the Company in writing. In the
case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause
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or by the Executive pursuant to a Voluntary Termination for Good
Reason shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 7(a) of this
Agreement. Such notice shall indicate the specific termination
provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide
a basis for
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termination under the provision so indicated, and shall specify the
termination date (which shall be not more than 30 days after the
giving of such notice). The failure by the Executive to include in the
notice any fact or circumstance which contributes to a showing of
Voluntary Termination for Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact
or circumstance in enforcing his rights hereunder.
8. Miscellaneous Provisions***.
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(a) No Duty to Mitigate. The Executive shall not be required to mitigate
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the value of any benefits contemplated by this Agreement, nor shall
any such benefits be reduced by any earnings or benefits that the
Executive may receive from any other source.
(b) Waiver. No provision of this Agreement shall be modified, waived or
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discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Executive and by an authorized officer of
the Company (other than the Executive). No waiver by either party of
any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of any
other condition or provision or of the same condition or provision at
another time.
(c) Entire Agreement. No agreements, representations or understandings
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(whether oral or written, express or implied) which are not expressly
set forth or referenced in this Agreement (including without
limitation the Interest-Bearing Loan, the Interest Free Loan, the
Change of Control Retention Agreement, the Symmetricom Executive
Medical Plan) have been made or entered into by either party with
respect to the subject matter hereof. This Agreement represents the
entire understanding of the parties hereto with respect to the subject
matter hereof. To the extent the terms of this Agreement conflict in
any way with the terms of any other agreement between the Company and
the Executive, the terms of this Agreement shall control.
(d) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the
State of California, with the exception of its conflict of laws
provisions.
(e) Severability. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
(f) Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed an original, but all of which together will
constitute one and the same document.
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(g) Attorneys' Fees. Company hereby agrees to pay the cost of Executive's
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attorney's fees reasonably incurred in negotiating and documenting the
terms of this Agreement. In the event of a controversy arising in
connection with the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to receive the cost of his or
its reasonable attorney's fees from the nonprevailing party.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year set
forth below.
XXXXXX X. XXXXXX SYMMETRICOM, INC.
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
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Date: July 1, 2001 By: Xxxxx X. Xxxxxx
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Its: Chairman, Symmetricom, Inc.
Compensation Committee
Member, Board of Directors,
Symmetricom
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Date: July 1, 2001
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