EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement"), effective as of July 1, 2001, is entered into
by and between, XXXXXX X. XXXXXX ("Executive") and SYMMETRICOM, INC. (the
"Company").
1. Employment Period.
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(a) Basic Term. Company shall employ Executive from the date of this
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Agreement through December 31, 2001 (the "Term Date"), or such later date
through which this Agreement may be extended under Section 1(b), unless
Executive is terminated sooner in accordance with Section 4.
(b) Renewal. Unless terminated sooner in accordance with Section 4, this
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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 sixty (60) days prior to such
date. Company may elect not to renew this Agreement only for Cause, within the
meaning of Section 4(g).
2. Position and Responsibilities.
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(a) Position. Executive accepts employment with Company as Chief Executive
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Officer and shall perform all services appropriate to that position.
(b) Outside Activity. Except upon the prior written consent of Company,
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Executive, during his employment with 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
Company, create a conflict of interest with Company, or otherwise interfere with
the business of Company or any of its affiliates.
3. Compensation and Benefits.
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(a) Base Salary. Executive's base salary shall be at the annual rate of
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$345,000 for fiscal 2001. 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; provided, however, that in no event shall
the annual increase be less than the percentage increase during the preceding
calendar year as determined with reference to the U.S. Department of Labor and
Bureau of Labor Statistics' Consumer Price Index for the San Francisco
Metropolitan Area.
(b) Incentive Compensation. Executive shall participate in the Company's
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Management Incentive Plan, the terms of which shall be determined each fiscal
year by the Board of Directors. For fiscal year 2001 and subsequent years,
Executive shall be eligible to earn up to 130% of Executive's Base Salary as
Incentive Compensation ("Target Bonus"). The balance of Executive's fiscal 2001
Incentive Compensation shall be determined according to the profit-
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based formula previously established by the Board of Directors at its first
regularly scheduled fiscal year 2002 meeting.
(c) Equity Compensation. The parties acknowledge that Executive has the
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same right to participate in the Company's current Stock Option Plan and in
future Stock Option Plans as other Company executives.
(d) Relocation Assistance. The parties acknowledge that Company has
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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:
(i) Interest-Bearing Loan. Company has loaned Executive the principal
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amount of $400,000, with an interest rate of 6.0% (the "Interest-Bearing
Loan"), and has agreed to forgive such principal and interest in four equal
installments. The first three forgiveness installments were made on June
30, 1998, June 30, 1999 and June 30, 2000. The final forgiveness
installment is due on June 30, 2001. Except as provided in Section 4,
Executive shall be responsible for paying any income taxes that may become
due on any income he may realize as a result of such forgiveness
installments.
(ii) Interest-Free Loan. Company has loaned Executive the principal
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amount of $500,000, free of interest (the "Interest-Free Loan"). This loan
is intended to 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 (10th) anniversary of its making; and (z)
interest-bearing in the event Executive ceases to be an employee of
Company.
(e) Benefits. Executive shall receive the following benefits:
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(i) eligibility to participate in the SymmetriCom Executive Medical
Plan;
(ii) long-term disability insurance coverage;
(iii) life insurance coverage;
(iv) eligibility to participate in Company's retirement and deferred
compensation plans; and
(v) four weeks' annual paid vacation.
(f) Business Equipment. Company shall furnish Executive with such
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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. Company also shall
furnish Executive with a cellular telephone, and shall pay the monthly telephone
xxxx therefor.
4. Termination of Employment.
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(a) By Death. Executive's employment shall terminate upon his death. In the
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event of such termination, Company shall: (i) 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(a) at the time of his death;
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(ii) promptly transfer to Executive's estate any accrued but unpaid incentive
compensation to which Executive may have been entitled under Section 3(b); and
(iii) promptly reimburse Executive's estate for any outstanding reasonable
business expenses incurred by Executive prior to his death. Thereafter,
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 Company.
(b) By Disability. This Agreement shall terminate as of the end of the
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calendar month in which Executive: (i) 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 (ii) has been determined by the insurer that issued the Company's
long-term disability policy in effect pursuant to Section 3(e) to be eligible to
commence receiving long-term disability benefits. In the event of such
termination, Company shall: (w) pay Executive the salary to which he is entitled
pursuant to Section 3(a) through the date of termination; (x) promptly transfer
to Executive's estate any accrued but unpaid incentive compensation to which
Executive may have been entitled under Section 3(b); and (y) promptly reimburse
Executive for any outstanding reasonable business expenses incurred by Executive
prior to his termination. Thereafter, the obligations of Company shall
terminate. This Section shall not in any way diminish Executive's right to
receive disability insurance proceeds.
(c) By Company For Cause. Company may terminate Executive's employment for
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Cause (as defined in Section 4(g)) without notice at any time after the written
warning and minimum cure period have been provided in accordance with Section
4(g). In the event of such termination, Company shall: (i) pay Executive the
salary to which he is entitled pursuant to Section 3(a) through the date of
termination; (ii) promptly transfer to Executive any accrued but unpaid
incentive compensation to which he is entitled pursuant to Section 3(b); and
(iii) promptly pay any outstanding reasonable business expenses incurred by
Executive prior to such termination. Thereafter, the obligations of Company
shall terminate.
(d) By Company Other Than For Cause or By Executive For Good Reason. Except
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as expressly provided in Section 4(b) or 4(e), if Executive is terminated from
Company other than for Cause, or if Company fails to renew this Agreement other
than for Cause, or if Executive resigns from Company for Good Reason within a
reasonable period following the event constituting Good Reason, then Company
shall:
(i) within thirty (30) days of such termination, pay Executive a lump
sum equal to 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 termination occurs;
(ii) provide to Executive 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
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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.
(iii) forgive any remaining amounts due on the loans described in
Section 3(d), and within 30 days of such forgiveness of indebtedness shall pay
Executive in a single lump sum 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 total federal and state taxes
imposed upon the forgiveness of indebtedness.
(e) By Executive Other Than For Good Reason. At any time after the Term
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Date, Executive may terminate his employment, other than for Good Reason, by
providing Company at least sixty (60) days' advance written notice. 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, Company shall pay
Executive all salary and incentive compensation earned through the last day
actually worked, plus an amount equal to the base salary Executive would have
earned through the balance of the above notice period, not to exceed sixty (60)
days. Thereafter, except as set forth herein, all of Company's obligations under
this Agreement shall cease.
(f) Termination of Employment After Change in Control. Upon the occurrence
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of a Change of Control, as defined in the Change of Control Retention Agreement
dated ___________, between Company and Executive, Executive shall become
entitled to retention or severance benefits in accordance with that agreement,
and the provisions of this Section 4 shall no longer apply.
(g) Definitions.
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(i) Cause. Termination shall be for "Cause" if:
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(A) 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;
(B) Executive commits a material act of dishonesty or fraud; or
(C) Executive is convicted of any serious felony.
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(ii) Good Reason. "Good Reason" means any one or more of the
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following:
(A) 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;
(B) 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 residence;
(C) 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 Benefits under
Sections 3(a)-(e), unless such failure to pay or reduction is completely cured
by Company within the thirty (30) day period immediately following written
notice from Executive to Company of such failure or reduction;
(iii) Other than for Cause. Termination shall be "other than for
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Cause" unless Executive is terminated for engaging in conduct described in
Section 4(g)(i)(A)-(C).
5. No Solicitation/Raiding of Employees. Executive acknowledges and agrees that
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Company has invested substantial time and effort in assembling its staff.
Accordingly, Executive agrees and covenants that, for a period of eighteen (18)
months following the termination of his employment with Company pursuant to
Section 4(d), above, Executive will not, directly or indirectly, attempt to
recruit, induce or solicit any employee to leave his/her employment with
Company.
6. Non-Disclosure. Executive agrees to maintain in strict confidence any
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confidential and proprietary information pertaining to the business of Company,
its agents, representatives, officers, staff and all related entities.
7. Consideration for No Solicitation/Raiding of Employees and Non-Disclosure.
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In consideration of Executive's covenants and promises herein contained in
paragraphs 5 and 6, and notwithstanding any provision in any Stock Option Plan
or Stock Agreement, 1/3 of the shares subject to unvested stock options held by
Executive, and 1/3 of any unvested restricted stock held by Executive, shall be
vested immediately upon the termination of his employment with the Company
pursuant to section 4(d) above. Executive shall have until the first anniversary
of the date of termination to exercise any such options as to which the vesting
shall have been accelerated in accordance with this section 7.
8. Notices.
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(a) General. Notices and all other communications contemplated by this
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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
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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 or by
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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 subsection (a), above, and after the period for cure, as
required by Section 4(g), has been provided. Such notice shall indicate the
specific termination provision in this Agreement relied upon, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated and specify the termination date,
which shall be not more than thirty (30) days after the giving of such notice.
The failure by Executive to include in the notice any fact or circumstance which
contributes to a showing of a voluntary termination for Good Reason shall not
waive any right of Executive hereunder or preclude Executive from asserting such
fact or circumstance in enforcing his rights hereunder.
9. Miscellaneous Provisions.
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(a) No Duty to Mitigate. Executive shall not be required to mitigate the
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value of any benefits contemplated by the Agreement, nor shall any such benefits
be reduced by any earnings or benefits that 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 an authorized officer of the Company (other than
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 between Executive and Company, dated ________________, 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.
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(e) Severability. The invalidity or unenforceability of any provision of
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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 shall constitute
one and the same document.
(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.
The parties have duly executed this Agreement, effective as of the date
first written above.
XXXXXX X. XXXXXX SYMMETRICOM, INC.
/s/ /s/
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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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