Exhibit 10.1
October 14, 2008
Gary W. Bogatay, Jr.
601 Arden Drive
Monroeville, PA 15146
Dear Gary:
     Tollgrade Communications, Inc. (“Tollgrade”) considers the stability of its
executive management team to be essential to Tollgrade’s best interests. In
order to induce you to accept and to remain in Tollgrade’s employment, this
severance agreement (the “Agreement”) describes the severance compensation which
Tollgrade agrees will be provided to you in the event your employment with
Tollgrade is terminated under the circumstances described below. This Agreement
will remain in effect for a period of two (2) years from the date your
employment with Tollgrade commences (the “Term”).
1. At-will Employment. Notwithstanding any provisions of this Agreement, any
offer letter, confidentiality agreement, or other document that you sign in
connection with your employment, your employment at Tollgrade is and continues
to be “at-will” employment and may be terminated at any time with or without
cause or notice.
2. Scope of Agreement. This Agreement is not intended to supersede the terms of
any offer letter, confidentiality agreement, or other document which you sign in
connection with your employment with Tollgrade, except insofar as such document
deals with severance pay (e.g., in the event the terms of any offer letter
conflict with the terms of this Agreement the terms of this Agreement shall
control).
3. Severance Payment if Termination Occurs Without Cause. If your employment is
terminated by Tollgrade without Cause (as defined in Section 5 hereof):
(a) during the first twelve months of the Term, then Tollgrade shall continue
your Base Salary for a period of twelve (12) months; or (b) during the second
twelve months of the Term, then Tollgrade shall continue your Base Salary for a
period of six (6) months and you shall be entitled to receive additional
severance as defined under the terms of the Tollgrade Severance Policy. Any
severance payable hereunder is subject to your execution and delivery (and
non-revocation of) a release of claims in form and substance acceptable to
Tollgrade and is payable in accordance with Tollgrade’s normal payroll
practices. For purposes of this Agreement, the term “Base Salary” means the
highest annual base salary you received while employed by Tollgrade, excluding
bonuses, commissions and other similar amounts. Notwithstanding the foregoing,
if you become employed during the period that severance is being paid, then from
and after such time, Tollgrade shall only be obligated to continue your Base
Salary to the extent that (and only in such amount as) it exceeds the gross
salary that you are paid from such new employment.
4. Payment if Termination Occurs Other than by Tollgrade Without Cause. If your
employment is terminated other than by Tollgrade without Cause, Tollgrade shall
have no obligations to you under this Agreement.
5. Definition of “Cause.” For purposes of this Agreement, termination of your
employment shall be for “Cause” if it is for any of the following:

 

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     (a) After receipt of written notice and a reasonable opportunity to cure,
refusal to carry out any of your material lawful duties in your position with
Tollgrade or any directions or instructions of Tollgrade’s Board or senior
management reasonably consistent with those duties;
     (b) A documented pattern, which documentation shall include reasonable
written notice and cure periods, of your failure to perform to Tollgrade’s
satisfaction any of your lawful duties in your position with Tollgrade or any
directions or instructions of the Board or senior management reasonably
consistent with those duties;
     (c) Violation of a local, state or federal law involving the commission of
a crime, other than minor traffic violations, or any other criminal act
involving moral turpitude;
     (d) Gross negligence, willful misconduct or breach of your duty to
Tollgrade involving self-dealing or personal profit;
     (e) Abuse of alcohol or controlled substances; deception, fraud,
misrepresentation or dishonesty;
     (f) After receipt of written notice thereof and a reasonable opportunity to
cure, any incident materially compromising your reputation or ability to
represent Tollgrade with investors, customers or the public;
     (g) After receipt of written notice thereof and a reasonable opportunity to
cure, violation of the work rules, policies and procedures set forth in any
current or future employee handbook of Tollgrade or otherwise implemented by
Tollgrade; or
     (h) Any other material violation by you of any provision of this Agreement
not described in (a) or (b) above, subject to the same notice and opportunity to
correct provisions as are set forth in (b) above.
6. Notices. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally, sent by courier or
mailed by United States certified or registered mail, return receipt requested,
postage prepaid. All notices to Tollgrade shall be directed to the attention of
the Chief Executive Officer of Tollgrade with a copy to the General Counsel of
Tollgrade. All notices to you may be delivered to your last-known address as
maintained by Tollgrade and you are responsible for maintaining the accuracy of
that address.
7. Successors; Binding Agreement.
     (a) This Agreement shall inure to the benefit of, and be binding upon, any
corporate or other successor or assignee of Tollgrade which shall acquire,
directly or indirectly, by merger, consolidation or purchase, or otherwise, all
or substantially all of the business or assets of Tollgrade. Tollgrade shall
require any such successor to expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as Tollgrade would be
required to perform if no such succession had taken place.
     (b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die after termination of
employment where any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your estate.

 

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8. No Waiver or Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in a writing signed by you and an authorized officer of Tollgrade that
expressly references this letter agreement. No waiver by either party hereto at
any time of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same, or at any prior or subsequent time.
9. Entire Agreement. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter hereof and supersedes
all prior contemporaneous agreements, whether written or oral.
10. Severability; Validity. If any provision of this Agreement shall be held
invalid, illegal or unenforceable in any jurisdiction, for any reason, then, to
the full extent permitted by law: (a) all other provisions hereof shall remain
in full force and effect in such jurisdiction and shall be liberally construed
in order to carry out the intent of the parties hereto as nearly as may be
possible, (b) such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision hereof, and
(c) any court or arbitrator having jurisdiction thereover shall have the power
to reform such provision to the extent necessary for such provision to be
enforceable under applicable law.
11. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to conflicts of laws principles. You hereby irrevocably submit to
the personal jurisdiction of the United States District Court for the Western
District of Pennsylvania or the Court of Common Pleas of Allegheny County,
Pennsylvania in any action or proceeding arising out of or relating to this
Agreement, and that all claims in respect of any such action or proceeding may
be heard and determined in either such court.
12. Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes. If any payment
due you pursuant to this Agreement results in a tax being imposed pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended (“Section 4999”),
then Tollgrade shall reduce the total payments payable to you to the maximum
amount payable without incurring the Section 4999 tax.
13. Covenant Not to Compete. You covenant and agree that if you receive payment
under this Agreement, then during the Restricted Period (as defined below), you
shall not in the United States of America, directly or indirectly, whether as
principal or as agent, officer, director, employee, consultant, shareholder or
otherwise alone or in association with any other person, corporation or other
entity, engage or participate in, be connected with, lend credit or money to,
furnish consultation or advice or permit your name to used in connection with,
any Competing Business (as defined below). “Restricted Period” shall mean the
period of time during which you receive a payment of severance hereunder
following the termination of your employment with Tollgrade, plus any amount of
time during such period during which you are in violation of this provision.
“Competing Business” shall mean any person, corporation or other entity engaged
in the business of selling or attempting to sell any product or service which
competes with (i) products or services sold by Tollgrade within the two years
prior to termination of your employment or (ii) new products of Tollgrade with
respect to which, at the date of your termination, we had allocated engineering
resources to develop such new products.
14. Section 409A Compliance. It is intended that any payments due to you
hereunder will not be subject to Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”). However, to the extent it is determined that
payment under this Agreement would violate the six-month delay requirement of
Section 409A, any payment that otherwise would have been made during the
six-month period will be

 

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paid in a single sum on the first day of the seventh month following the date of
such separation from service.
15. Precedence. This Agreement is not intended to establish and does not
establish a practice or policy for the treatment of any other employees with
respect to severance or any other matter.
16. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.
If you would like to enter into this Agreement, kindly sign and return to
Tollgrade the enclosed copy of this letter, which will then constitute our
agreement on this subject.

              Very truly yours,        
 
            TOLLGRADE COMMUNICATIONS, INC.        
 
           
By:
  /s/ Joseph O’Brien
 
       
Name:
  Joseph O’Brien        
Title:
  V.P., Human Resources        
 
            AGREED:        
 
            /s/ Gary W. Bogatay, Jr.                   Gary W. Bogatay, Jr.