EXHIBIT 10.3

 

SERVICES AGREEMENT

 

THIS SERVICES AGREEMENT (the “Agreement”) is made and entered into as of May 22,
2002, by and between SYMMETRICOM, INC., a Delaware corporation (the “Company”),
and ERIK VAN DER KAAY (“Executive”) to be effective as of the Effective Time (as
defined below).

 

W I T N E S S E T H:

 

WHEREAS, Executive has served as the Chairman and Chief Executive Officer of
Datum, Inc. (“Dco”), which will be merged into a wholly owned subsidiary of the
Company in a reverse triangular merger (the “Acquisition”) pursuant to a Merger
Agreement dated May 22, 2002 (the “Merger Agreement”) by and among the Company,
Datum, Inc. and Dublin Acquisition Subsidiary, Inc. effective as of the
Effective Time (as that term is defined under the Merger Agreement) (the
“Effective Time”); and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
it is in the best interests of the Company and its stockholders for Executive to
resign as Dco’s Chairman and Chief Executive Officer as of the Effective Time,
and to become the Chairman of the Board of the Company, and Executive desires to
accept such position; and

 

WHEREAS, Executive, Dco and the Company have agreed to terminate Executive’s
services as Chairman and Chief Executive Officer of Dco as of the Effective
Time;

 

WHEREAS, the parties hereto wish to enter into this Agreement to set forth the
terms and conditions of Executive’s future services for the Company;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:

 

1.    Resignation as Dco Chairman and Chief Executive Officer and Service as
Chairman of the Company Thereafter. As of the Effective Time, Executive has
voluntarily and irrevocably resigned as Dco’s Chairman and Chief Executive
Officer, and hereby agrees to serve as the Chairman of the Board of Directors of
the Company in accordance with and subject to the applicable provisions of the
Company’s By-Laws and Delaware General Corporation Law. Executive acknowledges
that his services as Chairman of the Board or otherwise as a director or
consultant shall not constitute “employment” by the Company.

 

2.    Compensation.

 

(a)    The Company shall compensate Executive for his services as Chairman of
the Board at the rate of $200,000 per annum, payable on a monthly basis, and
shall reimburse Executive for the premium cost of continued coverage under the
Company’s group health under COBRA for Executive and his family for a period of
twelve months following the Effective Time, provided Executive has properly
elected such continuation coverage and remains eligible therefor. Executive
shall not be eligible to participate in any Company

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executive bonus or other bonus programs, profit sharing plan or management
incentive plan, or other benefit plans or programs for employees.

 

(b)    Executive shall be entitled to an automatic grant of an option to
purchase 10,000 shares of common stock of the Company on the date he first
becomes a member of the Board pursuant to the provisions of the Company’s 1999
Director Stock Option Plan, and shall be eligible for additional grants of
options subject to and in accordance with the provisions of such plan.

 

(c)    Company options and restricted stock issued to Executive in substitution
for Dco options and restricted stock pursuant to the Acquisition shall continue
to vest and be exercisable during the period that Executive continues to render
services to the Company as a director or consultant.

 

(d)    If Executive incurs reasonable expenses while providing services to the
Company hereunder, he shall be entitled to reimbursement in accordance with the
Company’s standard policies.

 

(e)    Upon termination of Executive’s service as a member of the Board for any
reason other than death or disability, the Company shall pay Executive in
consideration of Executive’s covenants under Section 3 $200,000 per annum (or
portion thereof) payable on a monthly basis for the period (the “Consulting
Period”) equal to the difference between five years and that number of years (or
portion thereof) that Executive served as Chairman. Notwithstanding the
foregoing, the Company shall have no liability for income, employment or excise
taxes that may be imposed on any payment or benefit provided by the Company to
Executive pursuant to this Agreement, and Executive shall indemnify the Company
against any liability therefor.

 

3.    Covenants.

 

(a)    For the Consulting Period, Executive agrees that, without the prior
express written consent of the Company, Executive shall not, anywhere in the
world, for his own benefit or for, with or through any other person, firm,
partnership, corporation or other entity or individual (other than the Company
or its affiliates) as or in the capacity of an owner, shareholder, employee,
consultant, director, officer, trustee, partner, agent, independent contractor
and/or in any other representative capacity or otherwise:

 

(i)    directly or indirectly, induce or attempt to induce any employee of the
Company or its subsidiaries to terminate his or her employment for the purpose
of accepting employment with any employer other than the Company, its
subsidiaries, or an entity formed by or with the participation of the Company
(provided that in the case of any such entity formed by or with the
participation of the Company the hiring of any such employee by such entity is
approved, either on an individual employee basis or a general basis by which it
is acknowledged that such entity may hire employees of the Company or its
subsidiaries, by the Company’s Board of Directors or Chief Executive Officer),
nor, during the two (2) year period following the Consulting Period, directly or
indirectly hire (A) any employee of the Company or its subsidiaries at the time
of such hiring or (B) any former employee of the Company or its

 

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subsidiaries who had such relationship within six (6) months prior to the date
of such hiring, it being understood that nothing herein shall prohibit Executive
from serving as and providing a reference for any such employee or former
employee;

 

(ii)    personally (or personally direct another to) make or publish any
statement (orally or in writing) to a current or prospective client of the
Company or its affiliates or any other entity with whom the Company has a
collaboration, strategic partnership, joint venture or other similar
relationship (collectively, a “Customer Entity”) that would libel, slander,
disparage, denigrate or ridicule the Company or any of its affiliates;

 

(iii)    personally (or personally direct another to) solicit any Customer
Entity to purchase a product competitive with a product marketed by or under
development at the Company; or

 

(iv)    engage, directly or indirectly, in any other business activity that is
competitive with, or places him in a competing position to that of, the Company
or its affiliates (provided that Executive may own less than five percent of the
outstanding securities of any publicly traded corporation). Executive
acknowledges that the payments to which he is otherwise entitled under Section
2(e) of the Agreement are in consideration of his obligations under this Section
3(a)(iv) and agrees to provide the Company with prior written notice of any
business activity in which Executive proposes to engage during the term of his
obligations under this Section 3(a)(iv).

 

(b)    For the Consulting Period, Executive agrees to provide consulting
services to the Company upon reasonable request. In connection with Executive’s
duties as a director (whether or not as Chairman) and/or consultant he agrees to
be available up to 25% of a normal executive’s time to perform his duties. While
Executive is a director (whether or not as Chairman) and/or consultant,
Executive is hereby permitted to serve as a member of a board of director of any
entity which is not directly or indirectly competitive with the Company.

 

(c)    Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by Executive during Executive’s employment by the
Company or any of its affiliated companies or other predecessors and which shall
not be or become public knowledge (other than by acts by Executive or
representatives of Executive in violation of this Agreement). After the
Consulting Period, Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.

 

(d)    Any termination of Executive’s services or of this Agreement shall have
no effect on the continuing operation of this Section 3.

 

(e)    Executive acknowledges and agrees that the Company will have no adequate
remedy at law, and could be irreparably harmed, if Executive breaches or
threatens to breach any of the provisions of this Section 3. Executive agrees
that, in all jurisdictions in which it is lawful

 

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and not against public policy, the Company shall be entitled to equitable and/or
injunctive relief to prevent any breach or threatened breach of this Section 3,
and to specific performance of each of the terms hereof in addition to any other
legal or equitable remedies that the Company may have. Executive further agrees
that he shall not, in any equity proceeding relating to the enforcement of the
terms of this Section 3, raise the defense that the Company has an adequate
remedy at law.

 

(f)    The terms and provisions of this Section 3 are intended to be separate
and divisible provisions and if, for any reason, any one or more of them is held
to be invalid or unenforceable, neither the validity nor the enforceability of
any other provision of this Agreement shall thereby be affected. The parties
hereto acknowledge that the potential restrictions on Executive’s future
employment imposed by this Section 3 are reasonable in both duration and
geographic scope and in all other respects. If for any reason any court of
competent jurisdiction shall find any provisions of this Section 3 unreasonable
in duration or geographic scope or otherwise, Executive and the Company agree
that the restrictions and prohibitions contained herein shall be effective to
the fullest extent allowed under applicable law in such jurisdiction. The
parties acknowledge that this Agreement would not have been entered into and the
benefits described herein would not have been promised in the absence of
Executive’s promises under this Section 3.

 

4.    Mutual Release.

 

The benefits to be provided to Executive during the Consulting Period pursuant
to this Agreement are expressly conditioned upon Executive’s execution of a
release, within 21 days following the Consulting Period, in the following form,
and the Company’s obligation to provide such benefits shall not become effective
until 7 days after the date of execution by Executive of such release (the
“Release Effective Time”):

 

“In consideration of the benefits to be provided to Executive pursuant to the
Agreement, the sufficiency of which Executive acknowledges, Executive, on behalf
of himself, his family members and his and their heirs and successors, assigns,
attorneys and agents, hereby releases and forever discharges the Company and its
subsidiaries, as well as the officers, attorneys, directors, employees,
stockholders and agents of each, and their successors and assigns, and the
employee pension benefit or welfare benefit plans of each and current and former
trustees and administrators of such plans (collectively “Company Releasees”)
from any and all claims, contracts, liabilities, damages, expenses and causes of
action, whether in law or in equity, known or unknown, which may have existed or
which may now exist from the beginning of time to the Release Effective Time
against one or more of the Company Releasees (collectively “Executive Claims”),
to the extent such Executive Claims relate in any way directly or indirectly, in
whole or in part to: Executive’s resignation as Chairman and Chief Executive
Officer of Dco and termination of services as Chairman of the Board of the
Company; the fact that Executive is or was an employee, officer, director,
stockholder or agent of the Company, Dco or their affiliates; any services
performed by Executive for the Company or Dco; Executive’s employment or
non-employment by the Company or Dco; any alleged harassment or

 

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disparagement suffered by Executive during his period of service at the Company
or Dco; any status, term or condition of such service; any physical or mental
harm or distress arising from such termination, employment or non-employment;
any claims based upon federal, state or local laws prohibiting employment
discrimination, including but not limited to claims of discrimination under the
Fair Employment and Housing Act, Title VII of the 1964 Civil Rights Act, the
Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the
Rehabilitation Act of 1973, the Family and Medical Leave Act of 1993, or the
Employee Retirement Income Security Act of 1974; breach of contract or any other
legal basis. This release also includes release of any claims for age
discrimination under the Age Discrimination in Employment Act, as amended
(“ADEA”). The ADEA requires that Executive be advised to consult with an
attorney before Executive waives any claim under the ADEA. In addition, the ADEA
provides Executive with at least 21 days to decide whether to waive claims under
the ADEA and seven days after Executive signs this Agreement to revoke that
waiver.

 

Executive understands that various federal, state and local laws prohibit age,
sex, national origin, race and other forms of employment discrimination and that
these laws are enforced through the U.S. Equal Employment Opportunity
Commission, and similar state and local agencies. Executive understands that if
he believed that his treatment by the Company or Dco had violated any of these
laws, he could consult with these agencies and file a charge with them. Instead,
Executive has voluntarily decided to accept the Company’s offer in the Agreement
and to waive and release any and all claims he may have under such laws.

 

The Company hereby releases and forever discharges Executive, his successors and
assigns (collectively “Executive Releasees”) from any and all claims, demands,
costs, contracts, liabilities, objections, rights, damages, expenses,
compensation and actions and causes of action of every nature, whether in law or
in equity, known or unknown, or suspected or unsuspected, which may have existed
or which may now exist from the beginning of time to the Release Effective Time,
against Executive of any type, nature and description, or may have in the future
(collectively “Company Claims”), to the extent such Company Claims relate in any
way directly or indirectly, in whole or in part to, or are in any way connected
with or based upon: the fact that Executive is or was an employee, officer,
director, stockholder, consultant or agent of the Company or Dco; any services
performed by Executive for the Company or Dco; Executive’s employment or
non-employment by the Company or Dco; or any status, term or condition of such
service other than any breach of Executive’s covenants under Section 3 of the
Agreement.

 

Nothing in this release shall affect the parties’ obligations under the
Agreement, or any agreement under which the options or restricted stock were
granted, or release Executive from any claims arising from any fraudulent or
illegal acts committed while he was an employee or director of the Company or
Dco. In addition, nothing in this release shall affect Executive’s rights to
indemnification as an officer, director and/or an employee of the Company or Dco
pursuant to applicable law, the Company’s or Dco’s articles of incorporation and
bylaws or indemnification agreement between the Company or Dco and Executive.

 

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Each of Executive and the Company expressly waive and relinquish any and all
rights that such party may have under Section 1542 of the California Civil Code,
which reads as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

5.    Successors.

 

(a)    This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive’s legal representatives.

 

(b)    This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

 

(c)    The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

 

6.    Miscellaneous.

 

(a)    This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties or their
respective successors and legal representatives.

 

(b)    All notices and other communications hereunder shall be given by hand
delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

 

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If to Executive:

at Executive’s current address shown on the records of the Company

 

If to the Company:

Symmetricom, Inc.

2300 Orchard Parkway

San Jose, CA 95131

Attention: Chief Financial Officer

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

(c)    The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

 

(d)    The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to applicable law or regulation.

 

(e)    Executive’s or the Company’s failure to insist on strict compliance with
any provision of this Agreement or the failure to assert any right Executive or
the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

 

(f)    Any and all disputes, claims and causes of action arising under or
relating to the interpretation or application of this Agreement or concerning
Executive’s service or association with the Company or termination thereof,
including but not limited to whether such claims are subject to arbitration,
shall be resolved by final and binding arbitration in San Jose, California
through the auspices of the American Arbitration Association under the then
existing National Rules for the Resolution of Employment Disputes. Any such
arbitration shall be conducted in the strictest confidence, e.g., no
communications are to be made to third parties or publications concerning the
terms of this Agreement, the existence of the arbitration proceeding, the nature
or fact of a dispute between the parties, or the evidence presented at the
arbitration, unless authorized by law. A judgment on the arbitration award may
be entered in any court having jurisdiction over the subject matter of the
controversy. The prevailing party in any such arbitration shall be entitled to
recovery of its reasonable attorneys’ fees and costs, including costs of
arbitration. Nothing contained in this Section 6(f) shall limit the right of the
Company to enforce by court injunctive or other equitable relief Executive’s
obligations under Section 3. The arbitrator shall not have the authority to
modify, change or refuse to enforce the terms of this Agreement. In no event
shall either party be liable for any special, consequential or incidental
damages, including, without limitation, loss of profits or goodwill, regardless
of the form of the action, as a result of the breach of this Agreement or any
action taken hereunder. Executive specifically agrees to waive a jury trial
right with respect to any breach of this Agreement.

 

(g)    This Agreement constitutes the entire agreement of the parties relating
to the subject matter hereof, and supersedes all prior and contemporaneous
negotiations,

 

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correspondence, understandings and agreements of the parties relating to the
subject matter hereof; provided, however, that the stock option agreements and
restricted stock grant agreements between Executive and Dco, as the same may be
modified by this Agreement and the Merger Agreement, shall remain in full force
and effect.

 

IN WITNESS WHEREOF, Executive and Dco and the Company have executed this
Agreement effective as of the day and year first written above.

 

EXECUTIVE

   

/s/ ERIK VAN DER KAY        

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COMPANY

By:

 

/s/ WILLIAM SLATER        

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Its

 

     CFO

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