EXHIBIT 10.22
PROMISSORY NOTE SECURED BY DEED OF TRUST
----------------------------------------
$500,000 San Jose, California
March 24, 1998
FOR VALUE RECEIVED, the undersigned, Thomas W. Steipp ("Employee") and
Debra L. Steipp, husband and wife ("Borrowers"), promise to pay to Symmetricom,
Inc., a California corporation (the "Company"), or order, the principal amount
of Five Hundred Thousand Dollars ($500,000). The outstanding principal amount
shall not bear interest except as otherwise provided below with respect to a
default.
The outstanding principal amount shall be due and payable to the holder
hereof at 2300 Orchard Parkway, San Jose, California 95131, or such other place
as the holder hereof may designate, upon the earlier of the following dates
(collectively, "Maturity Events"):
(i) Five (5) days following the date that Employee resigns from the
Company.
(ii) Five (5) days following the date that Employee's employment with the
Company is terminated for cause. The term "termination for cause" includes,
without limitation, dishonesty, commission of a felony, a breach of Employee's
fiduciary duty or willful failure to follow a directive of the Company or the
Board of Directors of the Company.
(iii) Three hundred sixty (360) days following the date that Employee's
employment with the Company is terminated without cause.
(iv) The date of any sale, conveyance, assignment, alienation or any other
form of transfer, whether voluntary or involuntary, of that certain real
property commonly known as 15560 Shannon Road, Los Gatos, California (the
"Property"), or any part thereof or interest therein; except that the following
transfers of the Property shall not be deemed to be a Maturity Event:
a) A transfer upon the death of Employee to Employee's surviving
spouse (provided the surviving spouse is an obligor hereunder) or to Employee
upon the death of Employee's surviving spouse;
b) A transfer by an obligor hereof whereby such obligor's spouse
becomes a co-owner of the Property;
c) A transfer resulting from a decree of dissolution of the marriage
or legal separation of Employee and Debra L. Steipp or from a property
settlement agreement incidental to such a decree which requires the obligor
spouse to assume responsibility for the obligations under this Note and the Deed
of Trust (hereinafter defined) and pursuant to which Employee or Debra L. Steipp
(whoever is the obligor) becomes the sole owner of the Property; or
d) A transfer by one or both obligors under the Note into an inter
vivos trust in which one or both obligors are beneficiaries.
(v) March 25, 2008.
In the event that any of the following occurs, then unless otherwise
prohibited by law, the holder hereof shall have the option, without demand or
notice, to declare the entire outstanding principal balance of this Note,
together with all accrued and unpaid interest thereon to be immediately due and
payable: (i) Borrowers default in the payment of principal or interest when due
pursuant to the terms hereof; (ii) Borrowers default in their performance of any
obligation contained in the deed of trust encumbering the Property and securing
this Note (the "Deed of Trust") or any other deed of trust, security agreement
or other agreement (including any amendment, modification or extension thereof)
which may hereafter be executed by Borrowers for the purpose of securing this
Note; (iii) any representation or warranty contained in this Note, the Deed of
Trust, or any other agreement or instrument executed in connection with the loan
proves to have been false or misleading in any material respect; (iv) Borrowers
default in their obligation to pay any indebtedness or to perform any other
obligation which is secured by a deed of trust or other lien on the Property or
default under any deed of trust securing such indebtedness; or (v) Borrowers
default in their obligation to pay any indebtedness evidenced by any promissory
note executed by Borrowers and payable to the holder hereof or there occurs any
other default under any deed of trust, mortgage or other document securing
repayment of such indebtedness.
The principal amount evidenced by this Note shall be used by Borrowers to
purchase the Property which shall become the primary residence of Borrowers.
This Note shall be secured by a deed of trust given by Borrowers to the Company
(the "Deed of Trust"). The Deed of Trust shall be a first-priority deed of
trust.
In addition to causing the execution and delivery of the Deed of Trust,
Borrowers shall take any and all further actions that may from time to time be
required to ensure that the Deed of Trust creates a valid first-priority lien on
the Property in favor of the Company, which shall secure this Note. Borrowers
shall furnish evidence reasonably satisfactory to the Company that as of the
date of the close of escrow for the Property: (i) Borrowers shall have good and
marketable title to the Property; (ii) the consent of no other person or entity
shall be required to grant a security interest in the Property to the Company;
and (iii) there shall be no deed of trust, mortgage or other encumbrance against
the Property or other title defect unless approved by the Company, which
approval may be withheld in the Company's sole discretion. If it should
hereafter be determined that there are defects against title or matters which
could result in defects against title to the Property or that the consent of
another person or entity is required to grant to, and perfect in, the Company a
valid first-priority lien on the Property, Borrowers shall, promptly on demand
by the Company, take all actions necessary to remove such defects and to obtain
such consent and grant (or cause to be granted) and perfect such lien on the
Property. Failure of Borrowers to comply with the provisions of this paragraph
shall be deemed a default under this Note and the Deed of Trust.
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In the event any amount owed by Borrowers pursuant to this Note is not paid
when due, such unpaid amount shall bear interest from the due date until paid at
a rate equal to the lower of: (i) ten percent (10%) per annum; or (ii) the
maximum rate permitted by law. After such due date, all payments shall be
credited first to accrued interest and then to principal.
If an action is instituted for collection of this Note, the Borrowers agree
to pay court costs and reasonable attorneys' fees incurred by the holder
thereof.
This Note may be amended or modified, and provisions hereof may be waived,
only by the written agreement of Borrowers and the holder hereof. No delay or
failure by the holder hereof in exercising any right, power or remedy hereunder
shall operate as a waiver of such right, power or remedy, and a waiver of any
right, power or remedy on any one occasion shall not operate as a bar or waiver
of any such right, power or remedy on any other occasion. Without limiting the
generality of the foregoing, the delay or failure by the holder hereof for any
period of time to enforce collection of any amounts due hereunder shall not be
deemed to be a waiver of any rights of the holder hereof under contract or under
law. The rights of the Company under this Note are in addition to any other
rights and remedies which the holder hereof may have.
This Note shall be governed by and construed in accordance with the laws of
the State of California, without regard to the principles of conflicts of laws
of that State.
This Note may be prepaid at any time without penalty.
THIS NOTE, THE DEED OF TRUST AND ALL RELATED DOCUMENTATION ARE EXECUTED
VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE ON THE PART OR BEHALF OF
THE PARTIES HERETO, WITH THE FULL INTENT OF CREATING THE OBLIGATIONS AND
SECURITY INTERESTS DESCRIBED HEREIN AND THEREIN. THE PARTIES ACKNOWLEDGE THAT:
(a) THEY HAVE READ SUCH DOCUMENTATION; (b) THEY HAVE BEEN REPRESENTED IN THE
PREPARATION, NEGOTIATION AND EXECUTION OF SUCH DOCUMENTATION BY LEGAL COUNSEL OF
THEIR OWN CHOICE OR THAT THEY HAVE VOLUNTARILY DECLINED TO SEEK SUCH COUNSEL;
(c) THEY UNDERSTAND THE TERMS AND CONSEQUENCES OF THIS NOTE, THE DEED OF TRUST
AND ALL RELATED DOCUMENTATION AND THE OBLIGATIONS THEY CREATE; AND (d) THEY ARE
FULLY AWARE OF THE LEGAL AND BINDING EFFECT OF THIS NOTE, THE DEED OF TRUST AND
THE OTHER DOCUMENTS CONTEMPLATED BY THIS AGREEMENT. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, BORROWERS HEREBY ACKNOWLEDGE THAT THE COMPANY HAS
MADE NO REPRESENTATION OR WARRANTY TO BORROWERS CONCERNING THE INCOME TAX
CONSEQUENCES OF THE LOAN TO BORROWERS, AND BORROWERS SHALL BE SOLELY RESPONSIBLE
FOR ASCERTAINING AND BEARING SUCH TAX CONSEQUENCES. BORROWERS FURTHER
ACKNOWLEDGE THAT (i) THE COMPANY MAY, IN ITS SOLE DISCRETION, DETERMINE THAT IT
IS REQUIRED UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
AND THE RULES AND REGULATIONS PROMULGATED BY THE INTERNAL REVENUE SERVICE
("IRS")
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THEREUNDER, TO IMPUTE INTEREST ON THE PRINCIPAL OF THIS NOTE AT THE RATE
SET BY THE IRS, (ii) THE AMOUNT OF ANY SUCH IMPUTED INTEREST WOULD BE DEEMED TO
BE COMPENSATION INCOME TO EMPLOYEE WHICH WOULD BE SUBJECT TO TAX WITHHOLDING,
AND (iii) IF SO DETERMINED BY THE COMPANY, THE COMPANY WOULD REPORT AND WITHHOLD
THE REQUIRED AMOUNT OUT OF THE CURRENT COMPENSATION PAID TO EMPLOYEE IN
ACCORDANCE WITH THE CODE AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
BORROWERS:
/s/ Thomas W. Steipp
-------------------------------------
Thomas W. Steipp
/s/ Debra L. Steipp
by Thomas W. Steipp Attorney-in-Fact
-------------------------------------
Debra L. Steipp
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PROMISSORY NOTE SECURED BY DEED OF TRUST
----------------------------------------
$400,000 San Jose, California
24 March, 1998
FOR VALUE RECEIVED, the undersigned, Thomas W. Steipp ("Employee") and
Debra L. Steipp, husband and wife ("Borrowers"), promise to pay to Symmetricom,
Inc., a California corporation (the "Company"), or order, the principal amount
of Four Hundred Thousand Dollars ($400,000) together with interest on the
outstanding principal balance at the rate of six percent (6%) per annum.
The outstanding principal amount and all accrued and unpaid interest on the
outstanding principal amount, to the extent not forgiven pursuant to the terms
hereof, shall be due and payable to the holder hereof at 2300 Orchard Parkway,
San Jose, California 95131, or such other place as the holder hereof may
designate, upon the earlier of the following dates (collectively, "Maturity
Events"):
(i) Five (5) days following the date that Employee resigns from the
Company.
(ii) Five (5) days following the date that Employee's employment with the
Company is terminated for cause. The term "termination for cause" includes,
without limitation, dishonesty, commission of a felony, a breach of Employee's
fiduciary duty or willful failure to follow a directive of the Company or the
Board of Directors of the Company.
(iii) Three hundred sixty (360) days following the date that Employee's
employment with the Company is terminated without cause.
(iv) The date of any sale, conveyance, assignment, alienation or any other
form of transfer, whether voluntary or involuntary, of that certain real
property commonly known as 15560 Shannon Road, Los Gatos, California (the
"Property"), or any part thereof or interest therein; except that the following
transfers of the Property shall not be deemed to be a Maturity Event:
a) A transfer upon the death of Employee to Employee's surviving
spouse (provided the surviving spouse is an obligor hereunder) or to Employee
upon the death of Employee's surviving spouse;
b) A transfer by an obligor hereof whereby such obligor's spouse
becomes a co-owner of the Property;
c) A transfer resulting from a decree of dissolution of the marriage
or legal separation of Employee and Debra L. Steipp or from a property
settlement agreement incidental to such a decree which requires the obligor
spouse to assume responsibility for the obligations under
this Note and the Deed of Trust (hereinafter defined) and pursuant to which
Employee or Debra L. Steipp (whoever is the obligor) becomes the sole owner of
the Property; or
d) A transfer by one or both obligors under the Note into an inter
vivos trust in which one or both obligors are beneficiaries.
(v) March 25, 2008.
Notwithstanding the foregoing to the contrary, on each of June 25, 1998,
June 25, 1999, June 25, 2000 and June 25, 2001 (each, a "Forgiveness Date"), so
long as there is then no uncured default hereunder or a default under the Deed
of Trust (hereinafter defined), that certain Promissory Note between Borrower
and the Company of even date herewith with an original principal amount of
$500,000 (the "Other Note"), or the deed of trust securing the Other Note,
Employee is still employed by the Company, and no Maturity Event shall have
occurred, the principal amount hereof shall be automatically reducedby the sum
of One Hundred Thousand Dollars ($100,000) and all accrued and unpaid interest
on the outstanding principal amount shall be automatically foregiven, without
fee or penalty, and on each such date Borrowers shall be released and relieved
from the obligation to repay such amounts to the holder hereof.
Any portion of the outstanding principal amount and all accrued and unpaid
interest which is not forgiven pursuant to this paragraph shall be due and
payable as otherwise set forth in this Note.
In the event that any of the following occurs, then unless otherwise
prohibited by law, the holder hereof shall have the option, without demand or
notice, to declare the entire outstanding principal balance of this Note,
together with all accrued and unpaid interest thereon to be immediately due and
payable: (i) Borrowers default in the payment of principal or interest when due
pursuant to the terms hereof; (ii) Borrowers default in their performance of any
obligation contained in the deed of trust encumbering the Property and securing
this Note (the "Deed of Trust") or any other deed of trust, security agreement
or other agreement (including any amendment, modification or extension thereof)
which may hereafter be executed by Borrowers for the purpose of securing this
Note; (iii) any representation or warranty contained in this Note, the Deed of
Trust, or any other agreement or instrument executed in connection with the loan
proves to have been false or misleading in any material respect; (iv) Borrowers
default in their obligation to pay any indebtedness or to perform any other
obligation which is secured by a deed of trust or other lien on the Property or
default under any deed of trust securing such indebtedness; or (v) Borrowers
default in their obligation to pay any indebtedness evidenced by any promissory
note executed by Borrowers and payable to the holder hereof or there occurs any
other default under any deed of trust, mortgage or other document securing
repayment of such indebtedness.
The principal amount evidenced by this Note shall be used by Borrowers to
purchase the Property which shall become the primary residence of Borrowers.
This Note shall be secured by a deed of trust given by Borrowers to the Company
(the "Deed of Trust"). The Deed of Trust shall be a second-priority deed of
trust, subject only to that certain Deed of Trust made by Borrowers to the
Company securing that certain Promissory Note Secured by Deed of Trust made by
Borrowers in
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favor of the Company with an original principal amount of Five Hundred Thousand
Dollars ($500,000).
In addition to causing the execution and delivery of the Deed of Trust,
Borrowers shall take any and all further actions that may from time to time be
required to ensure that the Deed of Trust creates a valid second-priority lien
on the Property in favor of the Company, which shall secure this Note.
Borrowers shall furnish evidence reasonably satisfactory to the Company that as
of the date of the close of escrow for the Property: (i) Borrowers shall have
good and marketable title to the Property; (ii) the consent of no other person
or entity shall be required to grant a security interest in the Property to the
Company; and (iii) there shall be no deed of trust, mortgage or other
encumbrance against the Property or other title defect unless approved by the
Company, which approval may be withheld in the Company's sole discretion. If it
should hereafter be determined that there are defects against title or matters
which could result in defects against title to the Property or that the consent
of another person or entity is required to grant to, and perfect in, the Company
a valid second-priority lien on the Property, Borrowers shall, promptly on
demand by the Company, take all actions necessary to remove such defects and to
obtain such consent and grant (or cause to be granted) and perfect such lien on
the Property. Failure of Borrowers to comply with the provisions of this
paragraph shall be deemed a default under this Note and the Deed of Trust.
In the event any amount owed by Borrowers pursuant to this Note is not paid
when due, such unpaid amount shall bear interest from the due date until paid at
a rate equal to the lower of: (i) ten percent (10%) per annum; or (ii) the
maximum rate permitted by law. After such due date, all payments shall be
credited first to accrued interest and then to principal.
If an action is instituted for collection of this Note, the Borrowers agree
to pay court costs and reasonable attorneys' fees incurred by the holder
thereof.
This Note may be amended or modified, and provisions hereof may be waived,
only by the written agreement of Borrowers and the holder hereof. No delay or
failure by the holder hereof in exercising any right, power or remedy hereunder
shall operate as a waiver of such right, power or remedy, and a waiver of any
right, power or remedy on any one occasion shall not operate as a bar or waiver
of any such right, power or remedy on any other occasion. Without limiting the
generality of the foregoing, the delay or failure by the holder hereof for any
period of time to enforce collection of any amounts due hereunder shall not be
deemed to be a waiver of any rights of the holder hereof under contract or under
law. The rights of the Company under this Note are in addition to any other
rights and remedies which the holder hereof may have.
This Note shall be governed by and construed in accordance with the laws of
the State of California, without regard to the principles of conflicts of laws
of that State.
This Note may be prepaid at any time without penalty.
THIS NOTE, THE DEED OF TRUST AND ALL RELATED DOCUMENTATION ARE EXECUTED
VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE ON
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THE PART OR BEHALF OF THE PARTIES HERETO, WITH THE FULL INTENT OF CREATING THE
OBLIGATIONS AND SECURITY INTERESTS DESCRIBED HEREIN AND THEREIN. THE PARTIES
ACKNOWLEDGE THAT: (a) THEY HAVE READ SUCH DOCUMENTATION; (b) THEY HAVE BEEN
REPRESENTED IN THE PREPARATION, NEGOTIATION AND EXECUTION OF SUCH DOCUMENTATION
BY LEGAL COUNSEL OF THEIR OWN CHOICE OR THAT THEY HAVE VOLUNTARILY DECLINED TO
SEEK SUCH COUNSEL; (c) THEY UNDERSTAND THE TERMS AND CONSEQUENCES OF THIS NOTE,
THE DEED OF TRUST AND ALL RELATED DOCUMENTATION AND THE OBLIGATIONS THEY CREATE;
AND (d) THEY ARE FULLY AWARE OF THE LEGAL AND BINDING EFFECT OF THIS NOTE, THE
DEED OF TRUST AND THE OTHER DOCUMENTS CONTEMPLATED BY THIS AGREEMENT. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, BORROWERS HEREBY ACKNOWLEDGE THAT THE
COMPANY HAS MADE NO REPRESENTATION OR WARRANTY TO BORROWERS CONCERNING THE
INCOME TAX CONSEQUENCES OF THE LOAN TO BORROWERS, AND BORROWERS SHALL BE SOLELY
RESPONSIBLE FOR ASCERTAINING AND BEARING SUCH TAX CONSEQUENCES. BORROWERS
FURTHER ACKNOWLEDGE THAT (i) THE COMPANY MAY, IN ITS SOLE DISCRETION, DETERMINE
THAT IT IS REQUIRED UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), AND THE RULES AND REGULATIONS PROMULGATED BY THE INTERNAL REVENUE
SERVICE ("IRS") THEREUNDER, TO IMPUTE INTEREST ON THE PRINCIPAL OF THIS NOTE AT
THE RATE SET BY THE IRS, (ii) THE AMOUNT OF ANY SUCH IMPUTED INTEREST WOULD BE
DEEMED TO BE COMPENSATION INCOME TO EMPLOYEE WHICH WOULD BE SUBJECT TO TAX
WITHHOLDING, AND (iii) IF SO DETERMINED BY THE COMPANY, THE COMPANY WOULD REPORT
AND WITHHOLD THE REQUIRED AMOUNT OUT OF THE CURRENT COMPENSATION PAID TO
EMPLOYEE IN ACCORDANCE WITH THE CODE AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
BORROWERS:
/s/ Thomas W. Steipp
-------------------------------------
Thomas W. Steipp
/s/ Debra L. Steipp
by Thomas W. Steipp Attorney-in-Fact
--------------------------------------
Debra L. Steipp
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