10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended December 28, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

Commission file number 0-02287

SYMMETRICOM, INC.

(Exact name of registrant as specified in our charter)

Delaware	No. 95-1906306
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2300 Orchard Parkway, San Jose, California 95131-1017

(Address of principal executive offices)

Registrant’s telephone number: (408) 433-0910

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.   See the definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    o	Accelerated filer    x
Non-accelerated filer    o	Smaller reporting company   o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes oNo x

Indicate number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Class	Outstanding as of January 25, 2009
Common Stock	43,995,579

SYMMETRICOM, INC.
FORM 10-Q
INDEX

				Page
PART I.	FINANCIAL INFORMATION
		Item 1.	Financial Statements:
			Condensed Consolidated Balance Sheets—December 28, 2008 and June 29, 2008	3
			Condensed Consolidated Statements of Operations—Three and six months ended December 28, 2008 and December 30, 2007	4
			Condensed Consolidated Statements of Cash Flows— Six months ended December 28, 2008 and December 30, 2007	5
			Notes to Condensed Consolidated Financial Statements	6
		Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
		Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
		Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
		Item 1.	Legal Proceedings	29
		Item 1A.	Risk Factors	29
		Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
		Item 3.	Defaults Upon Senior Securities	29
		Item 4.	Submission of Matters to a Vote of Security Holders	29
		Item 5.	Other Information	30
		Item 6.	Exhibits	30
		SIGNATURES		31

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SYMMETRICOM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)
(Unaudited)

	December 28,		June 29,
	2008		2008
ASSETS
Current assets:
Cash and cash equivalents	$	84,357	$	142,419
Short-term investments	17,583		21,910
Accounts receivable, net of allowance for doubtful accounts of $361 and $731	36,302		36,682
Inventories, net	43,701		38,273
Prepaids and other current assets	15,307		14,402
Total current assets	197,250		253,686
Property, plant and equipment, net	23,180		25,036
Goodwill	48,144		48,144
Other intangible assets, net	6,250		7,191
Deferred taxes and other assets	41,430		44,512
Total assets	$	316,254	$	378,569
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,931	$	9,018
Accrued compensation	14,456		13,582
Accrued warranty	3,644		3,801
Other accrued liabilities	9,734		11,233
Current maturities of long-term obligations	595		64,515
Total current liabilities	38,360		102,149
Long-term obligations	59,877		59,855
Deferred income taxes	426		426
Total liabilities	98,663		162,430
Commitments and contingencies (Notes 6 and 11)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 500 shares authorized, none issued	—		—
Common stock, $0.0001 par value; 70,000 shares authorized, 49,371 shares issued and 43,978 outstanding at December 28, 2008; 49,395 shares issued and 44,925 outstanding at June 29, 2008	179,428		182,201
Accumulated other comprehensive loss	108		(60		)
Retained earnings	38,055		33,998
Total stockholders’ equity	217,591		216,139
Total liabilities and stockholders’ equity	$	316,254	$	378,569

See notes to the unaudited condensed consolidated financial statements.

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SYMMETRICOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	December 28,			December 30,			December 28,			December 30,
	2008			2007			2008			2007
Net revenue	$	48,207		$	48,843		$	104,105		$	99,578
Cost of sales:
Cost of products and services	24,971			26,022			51,580			54,049
Amortization of purchased technology	369			861			737			1,666
Integration and restructuring charges	—			164			—			167
Total cost of sales	25,340			27,047			52,317			55,882
Gross profit	22,867			21,796			51,788			43,696
Operating expenses:
Research and development	6,448			6,587			13,752			13,873
Selling, general and administrative	12,831			15,531			28,510			31,047
Amortization of intangible assets	103			233			206			493
Integration and restructuring charges	252			7			837			300
Total operating expenses	19,634			22,358			43,305			45,713
Operating income (loss)	3,233			(562		)	8,483			(2,017		)
Loss on repayment of convertible notes, net	—			—			(522		)	—
Gain on sale of asset	—			700			—			700
Loss on short-term investments, net	(895		)	(620		)	(1,368		)	(620		)
Interest income	491			2,147			1,259			4,357
Interest expense	(543		)	(1,185		)	(1,308		)	(2,380		)
Income before income taxes and discontinued operations	2,286			480			6,544			40
Income tax provision	827			279			2,487			150
Income (loss) from continuing operations	1,459			201			4,057			(110		)
Gain from discontinued operations, net of tax	—			15			—			83
Net income (loss)	$	1,459		$	216		$	4,057		$	(27	)
Earnings (loss) per share—basic:
Earnings (loss) from continuing operations	$	0.03		$	—		$	0.09		$	—
Gain from discontinued operations	—			—			—			—
Net earnings (loss)	$	0.03		$	—		$	0.09		—
Weighted average shares outstanding—basic	43,684			44,532			43,824			45,013
Earnings (loss) per share—diluted:
Earnings (loss) from continuing operations	$	0.03		$	—		$	0.09		$	—
Gain from discontinued operations	—			—			—			—
Net earnings (loss)	$	0.03		$	—		$	0.09		$	—
Weighted average shares outstanding—diluted	44,139			44,919			44,379			45,013

See notes to the unaudited condensed consolidated financial statements.

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SYMMETRICOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)

	Six Months Ended
	December 28,			December 30,
	2008			2007
Cash flows from operating activities:
Net income (loss)	$	4,057		$	(27	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	4,154			5,199
Deferred income taxes	1,379			(847		)
Loss on investments	1,368			620
Loss on repayment of convertible notes	522			—
Allowance for doubtful accounts	(371		)	—
Provision for excess and obsolete inventory	688			1,043
Loss (gain) on asset disposals	506			(700		)
Stock-based compensation	1,420			2,615
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	750			4,448
Inventories	(6,115		)	(6,563		)
Prepaids and other assets	(901		)	78
Accounts payable	1,016			(6,420		)
Accrued compensation	874			(320		)
Other accrued liabilities	(1,634		)	1,508
Net cash provided by operating activities	7,713			634
Cash flows from investing activities:
Purchases of short-term investments	(220		)	(25,254		)
Maturities of short-term investments	3,522			70,304
Purchases of property and equipment	(1,965		)	(2,101		)
Purchased technology related costs	—			(1,455		)
Net cash provided by investing activities	1,337			41,494
Cash flows from financing activities:
Repayment of long-term obligations	(800		)	(683		)
Proceeds from issuance of common stock	211			140
Repurchase of common stock	(4,090		)	(9,340		)
Repayment of convertible notes	(62,489		)	—
Net cash used for financing activities	(67,168		)	(9,883		)
Effect of exchange rate changes in cash	56			(137		)
Net increase (decrease) in cash and cash equivalents	(58,062		)	32,108
Cash and cash equivalents at beginning of period	142,419			37,587
Cash and cash equivalents at end of period	$	84,357		$	69,695
Non-cash investing and financing activities:
Unrealized loss on securities, net	$	112		$	(36	)
Plant and equipment purchases included in accounts payable	67			88
Cash payments for:
Interest	$	1,193		$	2,092
Income taxes	531			1,310

See notes to the unaudited condensed consolidated financial statements.

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SYMMETRICOM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation and Recently Issued Accounting Pronouncements

The condensed consolidated financial statements of Symmetricom, Inc. (“Symmetricom,” “we,” “us,” the “Company,” or “our”) included herein are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of the management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Symmetricom’s Annual Report on Form 10-K for the year ended June 29, 2008. The results of operations for the three and six months ended December 28, 2008 and December 30, 2007 are not necessarily indicative of the results to be anticipated for the entire fiscal year ending June 28, 2009.

The condensed consolidated balance sheet as of June 29, 2008 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Fiscal Quarter

Our fiscal quarter is 13 weeks ending on the Sunday closest to the end of the calendar quarter.

Reclassifications

Certain prior-year amounts in the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current period's presentation.   The Condensed Consolidated Statements of Cash Flows now includes non cash charges for the allowance for doubtful accounts and provision for excess and obsolete inventory that were previously included in the Accounts Receivable and Inventories amounts, respectively.

Change in Accounting Estimate

In the second quarter of fiscal 2009, we performed a review of our allowance for doubtful accounts.  Based on this most recent review, we determined that a reduction in the allowance was appropriate based upon the experience rate of actual write-offs for uncollectible receivable balances.  This change in accounting estimate resulted in a $0.4 million benefit which was recognized in the second quarter of fiscal 2009 and was included within selling, general and administrative expenses in the condensed consolidated statement of operations.

Summary of Significant Accounting Policies

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price is fixed or determinable and collectibility is reasonably assured. Our standard arrangement for our domestic and international customers includes a signed purchase order or contract and no right of return of delivered products. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

In rare circumstances, our customers may request that certain transactions be on a bill and hold basis. For these transactions, we recognize revenue in accordance with SAB 104.

We assess collectibility based on the creditworthiness of the customer and past transaction history. We perform periodic credit evaluations of our customers and do not require collateral from our customers. However, for many of our international customers, we require an irrevocable letter of credit to be issued by the customer before the purchase order is accepted. If we determine that collection of the invoice is not reasonably assured, we recognize the revenue at the time that collection becomes reasonably assured, which is generally upon the receipt of cash. We commonly have transactions that involve sales of both product and services to our customers. Product revenue is generated from the sale of synchronization and timing equipment with embedded software that is essential to product functionality. We account for these transactions in accordance with the rules applicable to software revenue recognition. Service revenue is recognized as the services are performed provided collection of the related receivable is reasonably assured. Our sales to distributors are made under agreements allowing for returns or credits under certain circumstances. Accordingly, we defer an estimate of returns from distributors based on a historical average of distributor returns. We record commission expense both when orders are received and shipped, at which times the commission is both earned and payable.

Revenue from contracts that require development and manufacture in accordance with customer specifications and have a lengthy development period may be categorized into two types: firm fixed price and cost-plus reimbursement. Revenue is recognized under the fixed price contracts using the percentage of completion method (cost-to-cost basis), principally based upon the costs incurred relative to the total estimated costs at completion on the individual contracts. Any

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anticipated losses on contracts are charged to operations as soon as they are determinable. Revenue recognized under cost plus contracts is recognized on the basis of direct and indirect costs incurred plus a negotiated profit calculated as a percentage of costs or as a performance based award fee. Revenue from long-term contracts is reviewed periodically, with adjustments recorded in the period in which the revisions are made. A contract is determined to be substantially complete when the physical deliverables are completed, shipped and accepted. Unbilled receivables totaled $4.9 million as of December 28, 2008. Any anticipated losses on contracts are charged to operations as soon as they are determinable.

Recently Issued Accounting Pronouncements

In October 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarified the application of Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements. FSP 157-3 demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of this standard did not have an impact on our consolidated financial statements.

In April 2008, the FASB adopted FASB Staff Position FAS No. 142-3, Determination of the Useful Life of Intangible Assets, amending the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. This FASB Staff Position is effective for intangible assets acquired on or after June 29, 2009. We are currently evaluating the impact of the implementation of FASB Staff Position SFAS No. 142-3 on our consolidated financial statements.

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning June 29, 2009, and this standard must be applied on a retrospective basis. We are currently evaluating the impact of the adoption of FSP APB 14-1 on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of SFAS No. 133. This statement changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 will require us to provide enhanced disclosures about (a) how and why we use derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect our financial position, financial performance, and cash flows. SFAS No. 161 is effective for us beginning June 29, 2009. We do not believe that SFAS No. 161 will have a material impact on our consolidated financial statements.

In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 to June 29, 2009 for us, for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We believe the adoption of the delayed items of SFAS No. 157 will not have a material impact on our financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This Statement amends ARB 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. This Statement establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation. SFAS No. 160 is effective for our fiscal year beginning June 29, 2009. We do not believe that SFAS No. 160 will have a material impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS No. 141(R)). The standard changes the accounting for business combinations including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain

7

and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance. SFAS No. 141(R) is effective for us beginning June 29, 2009. We are currently assessing the potential impact that adoption of SFAS No. 141(R) would have on our consolidated financial statements.

Note 2. Income Taxes

Symmetricom reported in its Form 10-K for the year ended June 29, 2008, that its subsidiary Symmetricom Puerto Rico, Ltd. had applied to the Internal Revenue Service, or IRS, for a ruling request related to its tax-free restructuring in July 2006.  Symmetricom Puerto Rico Ltd received a favorable ruling from the IRS dated September 19, 2008 confirming the tax-free treatment.

Note 3. Financial Instruments

We adopted SFAS No. 157 on June 30, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

SFAS No. 157 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

In addition to defining fair value, SFAS No. 157 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

·Level 1 — inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

·Level 2 — inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

·Level 3 — inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

Financial assets measured at fair value on a recurring basis consisted of the following types of instruments as of December 28, 2008:

			Quoted Prices in
			Active Markets for		Significant Other
	Balance as of		Identical Assets		Observable Inputs
	December 28, 2008		(Level 1)		(Level 2)
			(In thousands)
Assets:
Cash and cash equivalents: Bank deposits and money market funds	$	84,357	$	84,357	$	—
Short-term investments:
Corporate debt securities	$	14,920	$	—	$	14,920
Mutual funds	2,663		1,751		912
Total short-term investments	17,583		1,751		15,832
Total financial assets	$	101,940	$	86,108	$	15,832

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Our valuation techniques used to measure the fair values of our money market funds and mutual funds were derived from quoted market prices as active markets for these instruments exist. Our valuation techniques used to measure the fair values of corporate debt securities were derived from non-binding market consensus prices that are corroborated by observable market data.

Short-term investments

Components of short-term investments were as follows:

	December 28,		June 29,
	2008		2008
	(In thousands)
Corporate debt securities	$	14,920	$	15,331
Mutual funds	2,663		3,427
Other investments	—		3,152
	$	17,583	$	21,910

Loss on investments

In the fourth quarter of fiscal 2007, we purchased asset-backed commercial paper with a $7.8 million par value maturing on March 13, 2008, and classified this as a short-term investment. At the time of purchase, the investment’s portfolio consisted primarily of triple-A rated assets, with sub-prime loan assets making up approximately 23% of the investment. Subsequently, the structured investment vehicle (SIV) issuing the commercial paper was declared insolvent and entered receivership. On January 8, 2008, our investment manager advised us that the fair value of this investment had declined, and that an impairment loss should be considered other than temporary based on discussions with the receiver and potential options expected to be made available to senior debt holders of which Symmetricom was one. Our investment manager determined the fair value of the investment using pricing levels of the underlying portfolio by three different broker/dealers. Management then made an independent valuation assessment of similar securities using the ABX index (which is an index to track the performance of mortgage backed securities), to confirm that the valuation results from our investment manager were reasonable. Based on this assessment of fair value, Symmetricom recognized a loss of $3.2 million related to this investment during fiscal year 2008. After the receivers sold the SIV to an investment bank, we received a cash distribution of $1.4 million, relating to the cash portion of the fund, in the fourth quarter of fiscal 2008. In the first quarter of fiscal 2009, the investment bank offered investors the option of cashing out of the fund or reinvesting in a new investment vehicle. We elected to cash out and received a final capital distribution of $3.3 million in the first quarter of fiscal 2009. As a result of the final settlement with this investment, including a recovery on previously recognized losses, we recognized a $0.1 million gain in the first quarter of fiscal 2009.

In the first quarter of fiscal 2009, we determined that three corporate debt instruments, whose market values had declined, were other than temporarily impaired.  We made this determination based on the uncertainty and volatility of the market, particularly since these debt instruments were related to financial institutions, the failure of several other large financial institutions and the continued downgrades from credit rating agencies.  As a result of this assessment, we recognized a $0.6 million other than temporary loss in the first quarter of fiscal 2009.   This amount was partially offset by the previously mentioned $0.1 million gain, resulting in net loss on short-term investments of $0.5 million for the first quarter of fiscal 2009.

In the second quarter of fiscal 2009, we determined that mutual funds related to our deferred compensation plan, whose market values had declined, were other than temporarily impaired.  We made this determination based on the overall decline in the value of the mutual funds and the uncertainty as to whether they would recover.  As a result of this assessment, we recognized a $0.9 million other than temporary loss in the second quarter of fiscal 2009.

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Note 4. Inventories

Components of inventories were as follows:

	December 28, 2008		June 29, 2008
	(In thousands)
Raw materials	$	21,600	$	16,753
Work-in-process	9,324		10,162
Finished goods	12,777		11,358
Inventories	$	43,701	$	38,273

Note 5. Goodwill and Other Intangible Assets

Goodwill

Goodwill as of December 28, 2008 consists of:

			Timing, Test
			and
	Wireline		Measurement		Total
	(In thousands)
Balances as of December 28, 2008	$	28,032	$	20,112	$	48,144

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we test the carrying amount of goodwill annually during the fourth fiscal quarter and at other times if an event occurs or circumstances change that would more likely than not that reduce the fair value of a reporting unit  below its carrying amount including goodwill.

Our market capitalization declined from approximately $175.1 million at June 29, 2008, the date of our last goodwill impairment test, to approximately $162.4 million of the end of second fiscal quarter of 2009.  Accordingly, we completed a step one goodwill impairment test to determined whether the decline in market capitalization indicated that the carrying value of our reporting units were in excess of fair value.

A step one goodwill impairment test compares the fair value of a reporting unit to its carrying value to determine if a step two test is required. We estimate our reporting unit’s fair values using a weighted average of values determined under an income approach and a market approach. We weighed these approaches at approximately 67% and for the income approach 33% for the market approach.  We applied a lower weighting to the market approach as there are a limited number of highly comparable companies, which is a key component of the market approach.  Under the income approach, fair value is determined by discounting estimated future cash flows and is dependent on several significant assumptions, including our earnings projections and our cost of capital. A significant reduction in our forecasted revenues would negatively impact our fair value under the income approach. Under the market approach, we estimate the fair value of each reporting unit based on pricing multiples of certain financial parameters observed in comparable companies. Future market declines and declines in the performance of these comparable companies would negatively impact our fair value under the market approach. We compare the sum of our reporting units to recent trends in our market capitalization and have reconciled them to within a reasonable control premium.

Based on the results of our step one test, we have determined that fair value of our reporting units is greater than their carrying value and that a step two test is not required as of December 28, 2008.

We will continue to monitor our market capitalization, along with other operational performance measures and general economic conditions. A downward trend in one or more of these factors could cause us to determine that the fair value of our reporting units is less than their carrying amounts and require us to perform additional future goodwill impairment tests, resulting in a material impairment charge.

Other Intangible Assets

Other intangible assets as of December 28, 2008 and June 29, 2008 consist of:

	Gross				Net
	Carrying		Accumulated		Intangible
	Amount		Amortization		Assets
	(in thousands)
Purchased technology	$	24,357	$	19,380	$	4,977
Customer lists, trademarks, other	7,025		4,811		2,214
Total as of June 29, 2008	$	31,382	$	24,191	$	7,191
Purchased technology	$	24,357	20,119		4,238
Customer lists, trademarks, other	7,025		5,013		2,012
Total as of December 28, 2008	$	31,382	$	25,132	$	6,250

The estimated future amortization expense by fiscal year is as follows:

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Fiscal year:	(in thousands)
2009 (remaining six months)	$	941
2010	1,573
2011	1,307
2012	726
2013	502
Thereafter	1,201
Total amortization	$	6,250

Intangible asset amortization expense for the first six months of fiscal 2009 and 2008 was $0.9 million and $2.2 million, respectively.

In conjunction with our goodwill impairment test mentioned above, we also reviewed our other intangible assets and determined there was no impairment. As with goodwill, we will continue to monitor the carrying value of intangible assets and perform impairment tests when necessary.  If, in the future, we determine that other intangible assets are impaired, we may incur a material impairment charge.

Note 6. Long-term Obligations

Long-term obligations consist of:

	December 28, 2008			June 29, 2008
	(In thousands)
Long-term obligations:
Convertible subordinated notes	$	56,880		$	120,000
Deferred revenue	1,214			1,297
Capital lease	498			1,286
Lease accrual	854			706
Income tax	690			690
Post-retirement benefits	215			240
Conditional grant	97			109
Lease loss accrual, net	24			42
Less—current maturities	(595		)	(64,515		)
Total	$	59,877		$	59,855

Convertible Subordinated Notes

On June 30, 2008, we offered to purchase for cash, on a pro rata basis, $63.1 million aggregate principal amount of our $120.0 million convertible subordinated notes (the “Notes”), at a purchase price equal to $990 per $1,000 of the principal amount of the Notes, plus accrued and unpaid interest. The tender offer cap was equal to 52.6% of the $120.0 million aggregate principal amount outstanding. As of July 30, 2008, pursuant to the offer, Symmetricom accepted for payment $63.1 million aggregate principal amount of the Notes. The aggregate purchase price for the Notes surrendered was approximately $62.5 million, which includes interest of $0.3 million. After the purchase pursuant to the offer, approximately $56.9 million aggregate principal amount of the Notes remains outstanding. In connection with the completion of the tender offer, the holder of a majority of the outstanding notes prior to the offer waived certain defaults alleged to have occurred under the indenture and rescinded an acceleration notice received by Symmetricom on May 7, 2008. We may repurchase some or all of our remaining outstanding Notes.

In connection with the issuance of the Notes, Symmetricom initially recorded bond fees of approximately $4.0 million, which were amortized using the straight-line method over a period of seven years ending in fiscal 2012. As of June 29, 2008, $2.2 million of unamortized costs remained. As a result of the tender offer, $1.1 million of this unamortized cost was expensed in the first quarter of fiscal 2009. This, combined with a $0.6 million gain relating to difference between the principal amount and the purchase price of the Notes, resulted in a $0.5 million net loss on repayment of convertible notes recognized in the first quarter of fiscal 2009.

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Note 7. Stockholders’ Equity

Stock Award Activity

During the six months ended December 28, 2008, we granted non performance-based options to purchase 1.3 million shares of Symmetricom’s common stock, and we did not grant any shares of restricted stock. In the second quarter of fiscal 2009 we changed the contractual life of future options grants from 5 years to 7 years.

			Non Performance-based Options Outstanding				Performance-based Options Outstanding				Restricted Stock Outstanding
													Weighted
	Shares				Weighted				Weighted				Average
	Available		Number of		Average		Number of		Average		Number of		Grant-Date
	For Grant		Shares		Exercise Price		Shares		Exercise Price		Shares		Fair Value
	(In thousands, except per share amounts)
Balances at June 29, 2008	2,183		4,964		$	7.10	195		$	8.53	994		$	6.62
Update of 2006 Plan	5,500		—		—		—		—		—		—
Granted - options	(1,341	)	1,341		4.64		—		—		—		—
Exercised	—		(54	)	3.88		—		—		—		—
Vested	—		—		—		—		—		(273	)	6.82
Cancelled	478		(408	)	6.83		(70	)	8.53		(78	)	7.53
Expired	(35	)	—		—		—		—		—		—
Balances at December 28, 2008	6,785		5,843		$	6.59	125		$	8.53	643		$	6.43

The total number of in-the-money options outstanding and exercisable as of December 28, 2008 was as follows:

		Weighted
		Average
		Remaining	Weighted		12/28/2008		Intrinsic		Aggregate
	Number of	Contractual	Average		Closing		Value		Intrinsic
Option	Shares	Life	Exercise Price		Price		Per Share		Value
	(In thousands)	(In years)							(In thousands)
Outstanding at
December 28, 2008	65	2.16	$	2.61	$	3.69	$	1.08	$	71
Exercisable at
December 28, 2008	65	2.16	$	2.61	$	3.69	$	1.08	$	71

The aggregate intrinsic value in the preceding table represents the total pre-tax value of stock options outstanding as of December 28, 2008, based on our common stock closing price of $3.69 on December 28, 2008, which would have been received by the option holders had all option holders exercised their options as of that date.

For the quarters ended December 28, 2008 and December 30, 2007, the weighted average estimated fair values of options granted was $1.61 and $1.57, respectively. For the six months ended December 28, 2008 and December 30, 2007, the weighted average estimated fair values of options granted was $1.89 and $1.91. Our calculations were made using the Black-Scholes option-pricing model. The fair value of Symmetricom’s stock-based awards to employees was estimated assuming no expected dividend and the following weighted-average assumptions for the three months ended December 28, 2008 and December 30, 2007 and six months ended December 28, 2008 and December 30, 2007, as follows:

	Three months ended				Six months ended
	December 28,		December 30,		December 28,		December 30,
	2008		2007		2008		2007
Expected life (in years)	3.9		3.8		3.8		3.8
Risk-free interest rate	1.4	%	3.7	%	2.0	%	4.1	%
Volatility	53.5	%	45.0	%	49.7	%	45.3	%

We recorded stock-based compensation expenses of $0.4 million and $1.0 million in the second quarter of fiscal 2009 and 2008, respectively, and $1.4 million and $2.6 million in the six months ended December 28, 2008 and December 30, 2007, respectively, which includes the net cumulative impact of 10.0% (fiscal 2009) or 4.75% (fiscal 2008) estimated future annual forfeitures in the determination of the expense in the period, rather than recording forfeitures when they occur. At December 28, 2008, the total cumulative compensation cost related to unvested stock-based awards granted to employees, directors and consultants under the Company’s stock option plans but not yet recognized was approximately $4.0 million, net of estimated forfeitures of $1.3 million. This cost will be amortized on an accelerated method basis over a period of

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approximately 1.5 years and will be adjusted for subsequent changes in estimated forfeitures.

Stock Repurchase Program

During the first six months of fiscal 2009, we repurchased 0.8 million shares of common stock pursuant to our repurchase program for an aggregate price of approximately $3.7 million.

On September 29, 2008, the Company’s Board of Directors authorized management to repurchase an additional 2.0 million shares of Symmetricom common stock. As of December 28, 2008, the total number of shares available for repurchase under the repurchase program authorized by the Board of Directors was approximately 2.1 million.

A further 76,342 shares were repurchased by us in the first six months of fiscal 2009 for an aggregate price of approximately $0.4 million to cover the cost of taxes on vested restricted stock.

Note 8. Integration and Restructuring Charges

The following table shows the details of the restructuring cost accruals included in other accrued liabilities, which consist of facilities and severance costs, at December 28, 2008 and June 29, 2008:

	Balance at							Balance at
	June 29,		Expense					December 28,
	2008		Additions		Payments			2008
	(in thousands)
Lease loss accrual (fiscal 2004)	$	86	$	—	$	(26	)	$	60
All other integration and restructuring changes (fiscal 2004)	299		—		(43		)	256
Austin facility shutdown (fiscal 2008)	588		837		(709		)	716
Total	$	973	$	837	$	(778	)	$	1,032

The balance of the $0.1 million lease loss accrual for facilities as of December 28, 2008 will be paid over the next three years.  Also, we expect to incur additional integration and restructuring charges of $0.5 million related to shutting down our Austin, Texas facility in addition to the $0.7 million accrued as of December 28, 2008. As of December 28, 2008, we have vacated this facility, written off any leasehold improvements and are attempting to sublease the property.

See Note 15 — Subsequent Event below, for information regarding our restructuring activity announced in January 2009.

Note 9. Comprehensive Income (Loss)

Comprehensive income is comprised of two components: net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of stockholders’ equity but are excluded from net income. Other comprehensive income is comprised of unrealized gains and losses, net of taxes, on marketable securities categorized as available-for-sale and foreign currency translation adjustments. The components of comprehensive income (loss), net of tax, are as follows:

	Three Months Ended				Six Months Ended
	December 28,		December 30,		December 28,		December 30,
	2008		2007		2008		2007
	(in thousands)				(in thousands)
Net income (loss)	$	1,459	$	216	$	4,057	$	(27	)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	162		41		56		(137		)
Unrealized gain (loss) on investments	8		22		112		(36		)
Other comprehensive income (loss)	170		63		168		(173		)
Total comprehensive income (loss)	$	1,629	$	279	$	4,225	$	(200	)

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Note 10. Net Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income by the weighted average number of common shares outstanding during the period less unvested shares of restricted common stock. Diluted earnings (loss) per share is calculated by dividing net income by the weighted average number of common shares outstanding and common equivalent shares from stock options, warrants and unvested restricted stock using the treasury method, except when anti-dilutive.

The following table reconciles the number of shares utilized in the earnings (loss) per share calculations:

	Three Months Ended						Six Months Ended
	December 28, 2008			December 30, 2007			December 28, 2008			December 30, 2007
	(In thousands, except per share amounts)						(In thousands, except per share amounts)
Numerator:
Net income (loss) from continuing operations	$	1,459		$	201		$	4,057		$	(110	)
Gain from discontinued operations	—			15			—			83
Net income (loss)	$	1,459		$	216		$	4,057		$	(27	)
Shares (Denominator):
Weighted average common shares outstanding	44,331			45,635			44,571			46,078
Weighted average common shares outstanding subject to repurchase	(647		)	(1,103		)	(747		)	(1,065		)
Weighted average shares outstanding—basic	43,684			44,532			43,824			45,013
Weighted average dilutive share equivalents from stock options and warrants	17			51			23			—
Weighted average common shares dilutive subject to repurchase	438			336			532			—
Weighted average shares outstanding—diluted	44,139			44,919			44,379			45,013
Earnings per share—basic:
Earnings (loss) from continuing operations	$	0.03		$	—		$	0.09		$	—
Gain from discontinued operations	—			—			—			—
Net earnings (loss)	$	0.03		$	—		$	0.09		$	—
Earnings per share—diluted:
Earnings (loss) from continuing operations	$	0.03		$	—		$	0.09		$	—
Gain from discontinued operations	—			—			—			—
Net earnings (loss)	$	0.03		$	—		$	0.09		$	—

The following common stock equivalents were excluded from the net earnings (loss) per share calculation as their effect would have been anti-dilutive:

	Three Months Ended		Six Months Ended
	December 28, 2008	December 30, 2007	December 28, 2008	December 30, 2007
	(In thousands)		(In thousands)
Stock options.	5,835	4,658	5,544	5,238
Common shares subject to repurchase..	—	22	—	1,065
Total shares of common stock excluded from diluted net earnings (loss) per share calculation.	5,835	4,680	5,544	6,303

Note 11. Contingencies

Former Texas Facility Environmental Cleanup

        We formerly leased a tract of land in Texas for our operations. Those operations involved the use of solvents and, at the end of the lease, we remediated an area where the solvents had been deposited on the ground and obtained regulatory approval for that remediation activity. In 1996, an environmental investigation of the property detected those same contaminants in groundwater in excess of then current regulatory standards. The groundwater contamination has migrated to some adjacent properties. We have entered into the Texas Natural Resource Conservation Commission’s Voluntary Cleanup Program (the “Voluntary Cleanup Program”) to obtain regulatory approval for closure of this site and a release from liability to the State of Texas for subsequent landowners and lenders. We have notified adjacent property owners affected by the contamination of participation in the Voluntary Cleanup Program. On May 20, 2004, we received a demand from the owner of several adjacent lots for damages in the amount of $1.3 million, as well as seeking an indemnity for the contamination and a promise to remediate the contamination. On March 14, 2006, the adjacent property owner filed suit in Probate Court No. 1, Travis County, Texas (Anna B. Miller, Individually and as Executrix of the Estate of Robert L. Miller, et al. vs. Austron, Inc., et al.), seeking damages. Symmetricom has not yet been served in this matter, but we intend to defend this lawsuit vigorously. We are continuing to work on the remediation of the formerly leased site as well as the adjacent properties, and have also taken steps to begin work on the Miller property. As of December 28, 2008, we had an accrual of $0.3 million, included in other accrued liabilities on the accompanying condensed consolidated balance sheets, for remediation costs, appraisal fees and other ongoing monitoring costs.

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Shipments of Product with Lead-free Solder

        In the fourth quarter of fiscal 2007 until the third quarter of fiscal 2008, we inadvertently shipped certain products that included lead-free solder in the product backplanes to two customers whose contracts specified that the products would be made with lead solder. As of December 28, 2008, we have received a waiver from one customer to use lead-free solder but not the other. The total sales value of product shipped with lead-free solder to the customer that has not as yet granted us the waiver is $1.2 million. Management believes that this customer will not request that the parts be replaced and that our existing warranty accrual is adequate to cover costs associated with any potential product failures. Also, beginning in March 2008, new product shipments to this customer included lead solder.

Other

        Under the indemnification provisions of our standard sales contracts, we agree to defend the customer against third party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay any judgments entered on such claims against the reseller/customer. The exposure to us under these indemnification provisions is generally limited to the total amount paid by the customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received under the agreement. To date, there have been no claims under such indemnification provisions. We believe the estimated fair value of these indemnification agreements is not material.

        We are also a party to certain other claims in the normal course of our operations. While the results of these claims cannot be predicted with any certainty, we believe that the final outcome of these matters will not have a material adverse effect on our financial position and results of operations.

Note 12. Business Segment Information

Symmetricom is organized into five reportable segments that are within two divisions. For each of our reporting segments, we have separate financial information, including gross profit amounts, which are evaluated regularly by the Chief Operating Decision Maker in deciding how to allocate resources and in assessing performance. We do not allocate assets or specific operating expenses to these individual reporting segments. Therefore, the segment information reported here includes only net revenue and gross profit.

 The following describes our two divisions:

Telecom Solutions Division

        There are four reportable segments within the Telecom Solutions Division:

·Wireline Products consist principally of Building Integrated Timing Supply, or BITS, based on quartz, rubidium and Global Positioning System (GPS) technologies. Our Wireline Products provide highly accurate and uninterruptible timing to meet the synchronization requirements of telecommunication networks.

·Wireless/OEM Products includes our OEM base station timing products that are designed to deliver stable timing to cellular/PCS base stations through a GPS receiver to capture cesium-based time signals produced by GPS satellites.

·Quality of Experience (QoE) Assurance products are hardware and software-based probes (and/or embedded agents) that are distributed throughout an IP (Internet Protocol) network in order to monitor network and application performance, and particularly to correlate how those factors impact end users’ QoE. The primary application for these system-level solutions is for IPTV (Internet Protocol Television), VoD (video on demand), ITV (Internet television), and other IP-based video delivery mechanisms.

·Global Services offers a broad portfolio of services for our customers around the world.

15

Timing, Test and Measurement Division

The Timing, Test and Measurement Division products are precision time and frequency systems that are important to communications systems of wireline, wireless, satellite and computer network technologies for government, power utilities, aerospace, defense, and enterprise markets.

	Three Months Ended						Six Months Ended
	December 28, 2008			December 30, 2007			December 28, 2008			December 30, 2007
	(Dollars in thousands)						(Dollars in thousands)
Net revenue:
Telecom Solutions Division:
Wireline Products	$	19,188		$	19,097		$	46,960		$	39,612
Wireless/OEM Products	3,195			5,585			10,147			11,123
Global Services	4,308			5,516			8,359			9,800
Quality of Experience Assurance Division	561			305			787			460
Timing, Test and Measurement Division	20,955			18,340			37,852			38,583
Total net revenue	$	48,207		$	48,843		$	104,105		$	99,578
Cost of sales:
Telecom Solutions Division:
Wireline Products	$	8,642		$	8,859		$	17,739		$	18,614
Wireless/OEM Products	2,516			4,098			7,594			7,790
Global Services	3,024			3,790			6,047			7,023
Quality of Experience Assurance Division	136			91			259			128
Timing, Test and Measurement Division	10,653			9,184			19,941			20,494
Other cost of sales*	369			1,025			737			1,833
Total cost of sales	$	25,340		$	27,047		$	52,317		$	55,882
Gross profit:
Telecom Solutions Division:
Wireline Products	$	10,546		$	10,238		$	29,221		$	20,998
Wireless/OEM Products	679			1,487			2,553			3,333
Global Services	1,284			1,726			2,312			2,777
Quality of Experience Assurance Division	425			214			528			332
Timing, Test and Measurement Division	10,302			9,156			17,911			18,089
Other cost of sales*	(369		)	(1,025		)	(737		)	(1,833		)
Total gross profit	$	22,867		$	21,796		$	51,788		$	43,696
Gross margin:
Telecom Solutions Division:
Wireline Products	55.0		%	53.6		%	62.2		%	53.0		%
Wireless/OEM Products	21.3		%	26.6		%	25.2		%	30.0		%
Global Services	29.8		%	31.3		%	27.7		%	28.3		%
Quality of Experience Assurance Division	75.8		%	70.2		%	67.1		%	72.2		%
Timing, Test and Measurement Division	49.2		%	49.9		%	47.3		%	46.9		%
Other cost of sales as percentage of total revenue*	(0.8		)%	(2.1		)%	(0.7		)%	(1.8		)%
Total gross margin	47.4		%	44.6		%	49.7		%	43.9		%

* Includes amortization of purchased technology and applicable integration, and restructuring charges.

Note 13. Warranty

Changes in our accrued warranty liability during the first six months of fiscal 2009 were as follows:

	(In thousands)
Product warranty at June 29, 2008	$	3,801
Provision for warranty	1,436
Accruals related to change in estimate	(49		)
Less: Actual warranty costs	(1,544		)
Product warranty at December 28, 2008	$	3,644

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Note 14. Revenue

In the second quarter of fiscal 2009, we agreed with a distributor that shipments previously made to them would be returned, due to our decision to sell directly to several customers. As a result, we determined that $1.1 million of revenue related to these shipments should not be recognized as revenue in the second quarter of fiscal 2009.

On January 14, 2009, Nortel Networks, one of our customers, filed for bankruptcy protection from its creditors. We reviewed our shipments that related to Nortel as of the end of the second quarter of fiscal 2009. As a result of this review, we determined that $0.5 million in shipments made in the quarter and not yet paid should not be recognized as revenue due to the uncertain nature of the collectability of the related receivables prior to the bankruptcy filing. Similarly, another customer, Hawaiian Telcom, filed for bankruptcy on December 1, 2008, and we determined that $0.1 million in shipments made earlier in the quarter and not yet paid should not be recognized as revenue due to the uncertain nature of the collectability of the related receivables prior to their bankruptcy filing.

Note 15. Subsequent Event

On January 20, 2009, we announced a restructuring plan to further streamline our manufacturing operations and improve operational efficiencies. As part of our ongoing outsourcing and operational efficiency program, we plan to eliminate approximately 100 positions, or about 11% of our total workforce. The reductions began in January 2009 and will be complete by December 2009. We expect to incur restructuring charges in the range of $6.5 to $7.5 million in connection with the plan, including approximately $5.0 million which we expect to record in the second half of our current fiscal year. Total restructuring charges are expected to include $3.5 to $4.0 million in one-time termination benefits, approximately $2.5 million in asset impairment charges and $0.5 to $1.0 million in other restructuring related charges. Total cash expenditures associated with the restructuring plan are expected to be $4.0 to $5.0 million.

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the condensed consolidated financial statements and related notes included elsewhere in this report.

When used in this discussion or elsewhere in this report, the words “expects,” “anticipates,” “estimates,” “believes,” “plans,” “will,” “intend,” “can” and similar expressions are intended to identify forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, risks relating to general economic conditions in the markets we address and the telecommunications market in general, risks related to the development of our new products and services, the effects of competition and competitive pricing pressure, uncertainties associated with changing intellectual property laws, developments in and expenses related to litigation, increased competition in our markets, inability to obtain sufficient amounts of key components, the rescheduling or cancellations of key customer orders, the loss of a key customer, the effects of new and emerging technologies, the risk that excess inventory may result in write-offs, price erosion and decreased demand, fluctuations in the rate of exchange of foreign currency, changes in our effective tax rate, potential short-term investment losses and other risks due to credit market dislocation, changes in accounting for convertible debt, market acceptance of our new products and services, technological advancements, undetected errors or defects in our products, the risks associated with our international sales, geopolitical risks and risk of terrorist activities, the risks associated with attempting to integrate other companies and businesses we acquire, and the risks set forth below in Part II, Item 1A, “Risk Factors.”

These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances or on which any such statement is based.

All references to “Symmetricom,” “we,” “us,” and “our” mean Symmetricom, Inc. and its subsidiaries, except where it is made clear that the term means only the parent company.

Overview

Symmetricom is a leading supplier of precise timing standards to industry, government, utilities, research centers and aerospace markets. We also supply QoE (Quality of Experience) solutions that enable communication service providers to monitor the performance, as perceived by end users, of IP-based video and other next generation network applications. Timing and synchronization products and services include network synchronization systems and timing elements used by network operators and users, governments and professional services. Such products play an important role in the operation, bandwidth utilization, and quality of service of wireline, wireless and cable networks enabling our customers to increase the reliability of their networks in today’s evolving communications environment.

 Symmetricom’s customers include worldwide public network providers, incumbent local exchange carriers (ILECs), public telephone and telegraph companies (PTTs), competitive local exchange carriers (CLECs), other telephone companies, wireless service providers, cable television operators, distributors and systems integrators, communications original equipment manufacturers (OEMs), aerospace contractors, governments and research facilities.

On January 20, 2009, we announced a restructuring plan to further streamline manufacturing operations and improve operational efficiencies. As part of our ongoing outsourcing and operational efficiency program, we plan to eliminate approximately 100 positions, or about 11% of our total workforce. The reductions began in January 2009 and will be complete by December 2009. We expect to incur restructuring charges in the range of $6.5 to $7.5 million in connection with the plan, including approximately $5.0 million which we expect to record in the second half of our current fiscal year. Total restructuring charges are expected to include $3.5 to $4.0 million in one-time termination benefits, approximately $2.5 million in asset impairment charges and $0.5 to $1.0 million in other restructuring related charges. Total cash expenditures associated with the restructuring plan are expected to be $4.0 to $5.0 million. Upon completion, we expect the restructuring and other actions to reduce our annual manufacturing and operating costs by approximately $7.0 million.

On January 14, 2009, Nortel Networks, one of our customers, filed for bankruptcy protection from its creditors. We reviewed our shipments that related to Nortel as of the end of the second quarter of fiscal 2009. As a result of this review, we determined that $0.5 million in shipments made in the quarter and not yet paid should not be recognized as revenue due to the uncertain nature of the collectability of the related receivables prior to the bankruptcy filing. Additionally, we reviewed accounts receivable balances as of the end of the second quarter of fiscal 2009 related to Nortel and recognized a $0.1 million charge to the allowance for doubtful accounts. Please see “Known Trends and Uncertainties Impacting Future Results of

18

Operations: Global Market and Economic Conditions” below.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures at the date of our financial statements. On an ongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Other than the change of estimate for doubtful accounts (See Item 1 of Part I, Financial Statements — Note 1 — Basis of Presentation and Recently Issued Financial Statements), we believe that there have been no significant changes during the six months ended December 28, 2008 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 29, 2008.

Known Trends and Uncertainties Impacting Future Results of Operations: Global Market and Economic Conditions

Global market and economic conditions became increasingly negative in the six-month period ended December 28, 2008. Financial markets in the U.S. and abroad have experienced a severe downturn arising from a multitude of factors, including concerns about the systemic impact of inflation and deflation, geopolitical issues, adverse credit conditions, higher energy costs, lower corporate profits and capital spending, and declining real estate and mortgage markets, combined with volatile oil prices, decreased business and consumer confidence and increased unemployment. As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers.

Adverse economic conditions in the U.S. and other markets in which we operate and into which we sell our products have adversely affected and may continue to adversely affect our liquidity and financial condition. If current economic conditions or the constrained credit environment continue, our customers may be unable to timely replace maturing liabilities and to access the capital markets to meet liquidity needs on satisfactory terms or at all, resulting in adverse effects on our results of operations. In addition, our customers may delay or reduce capital expenditures. This could result in reductions in sales of our products, longer sales cycles, difficulties in collecting accounts receivable, additional excess and obsolete inventory, potential impairment charges related to our goodwill and intangible assets, gross margin deterioration, slower adoption of new technologies, increased price competition and supplier difficulties.

As of December 28, 2008, we had recorded goodwill and other intangible assets with a net book value of $48.1 million and $6.3 million respectively, related to various acquisitions. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we test the carrying amount of goodwill annually during the fourth fiscal quarter and at other times if an event occurs or circumstances change that would more likely than not that reduce the fair value of a reporting unit  below its carrying amount including goodwill.

Our market capitalization declined from approximately $175.1 million at June 29, 2008, the date of our last goodwill impairment test, to approximately $162.4 million of the end of second fiscal quarter of 2009.  Accordingly, we completed a step one goodwill impairment test to determined whether the decline in market capitalization indicated that the carrying value of our reporting units were in excess of fair value.

A step one goodwill impairment test compares the fair value of a reporting unit to its carrying value to determine if a step two test is required. We estimate our reporting unit’s fair values using a weighted average of values determined under an income approach and a market approach. We weighed these approaches at approximately 67% and for the income approach 33% for the market approach.  We applied a lower weighting to the market approach as there are a limited number of highly comparable companies, which is a key component of the market approach.  Under the income approach, fair value is determined by discounting estimated future cash flows and is dependent on several significant assumptions, including our earnings projections and our cost of capital. A significant reduction in our forecasted revenues would negatively impact our fair value under the income approach. Under the market approach, we estimate the fair value of each reporting unit based on pricing multiples of certain financial parameters observed in comparable companies. Future market declines and declines in the performance of these comparable companies would negatively impact our fair value under the market approach. We compare the sum of our reporting units to recent trends in our market capitalization and have reconciled them to within a reasonable control premium.

Based on the results of our step one test, we have determined that fair value of our reporting units is greater than their carrying value and that a step two test is not required as of December 28, 2008.

We will continue to monitor our market capitalization, along with other operational performance measures and general economic conditions. A downward trend in one or more of these factors could cause us to determine that the fair value of our reporting units is less than their carrying amounts and require us to perform additional future goodwill impairment tests, resulting in a material impairment charge.

Results of Operations

The following table presents selected items in our condensed consolidated statements of operations as a percentage of total revenues for the three and six months ended December 28, 2008 and December 30, 2007:

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	Three Months Ended				Six Months Ended
	December 28,		December 30,		December 28,		December 30,
	2008		2007		2008		2007
Net revenue
Telecom Solutions Division:
Wireline Products	39.8	%	39.1	%	45.1	%	39.8	%
Wireless/OEM Products	6.6	%	11.4	%	9.7	%	11.2	%
Global Services	8.9	%	11.3	%	8.0	%	9.8	%
Quality of Experience Assurance	1.2	%	0.6	%	0.8	%	0.5	%
Timing, Test and Measurement Division	43.5	%	37.6	%	36.4	%	38.7	%
Total net revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products and services	51.8	%	53.3	%	49.5	%	54.3	%
Amortization of purchased technology	0.8	%	1.8	%	0.7	%	1.7	%
Integration and restructuring charges	—	%	0.3	%	—	%	0.2	%
Gross profit	47.4	%	44.6	%	49.7	%	43.9	%
Operating expenses:
Research and development	13.4	%	13.5	%	13.2	%	13.9	%
Selling, general and administrative	26.6	%	31.8	%	27.4	%	31.2	%
Amortization of intangible assets	0.2	%	0.5	%	0.2	%	0.5	%
Integration and restructuring charges	0.5	%	—	%	0.8	%	0.3	%
Operating income (loss)	6.7	%	(1.2	)%	8.1	%	(2.0	)%
Loss on repayment of convertible notes, net	—	%	—	%	(0.5	)%	—	%
Gain on sale of asset	—	%	1.4	%	—	%	0.7	%
Loss on short-term investments, net	(1.9	)%	(1.3	)%	(1.3	)%	(0.6	)%
Interest income	1.0	%	4.4	%	1.2	%	4.4	%
Interest expense	(1.1	)%	(2.4	)%	(1.3	)%	(2.4	)%
Income before income taxes	4.7	%	1.0	%	6.3	%	—	%
Income tax provision	1.7	%	0.6	%	2.4	%	0.2	%
Income (loss) from continuing operations	3.0	%	0.4	%	3.9	%	(0.1	)%
Gain from discontinued operations, net of tax	—	%	—	%	—	%	0.1	%
Net Income (loss)	3.0	%	0.4	%	3.9	%	—	%

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Net Revenue:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Net Revenue (dollars in thousands):
Wireline Products	$	19,188		$	19,097		$	91		0.5	%	$	46,960		$	39,612		$	7,348		18.5	%
Wireless/OEM Products	3,195			5,585			(2,390		)	(42.8	)	10,147			11,123			(976		)	(8.8	)
Global Services	4,308			5,516			(1,208		)	(21.9	)	8,359			9,800			(1,441		)	(14.7	)
Quality of Experience Assurance	561			305			256			83.9		787			460			327			71.1
Timing, Test and Measurement Division	20,955			18,340			2,615			14.3		37,852			38,583			(731		)	(1.9	)
Total Net Revenue	$	48,207		$	48,843		$	(636	)	(1.3	)%	$	104,105		$	99,578		$	4,527		4.5	%
Percentage of Revenue	100.0		%	100.0		%						100.0		%	100.0		%

Q2-09: Net revenue consists of sales of products, software licenses and services. In the second quarter of fiscal 2009, net revenue was flat when compared to the corresponding quarter of fiscal 2008. Although Wireline revenue was positively impacted by higher sales of cable products, this was offset by lower carrier spending, the Nortel bankruptcy and returns from a distributor. Wireless/OEM Products revenue decreased $2.4 million, or 42.8%, due to decreased sales to one customer and a price reduction for another customer. Global Service revenue decreased by $1.2 million, or 21.9%, due primarily to lower installation revenue related to lower year end carrier spending. Revenue for Quality of Experience Assurance Products increased by $0.3 million or 83.9%, due primarily to a new product introduction. Timing, Test and Measurement Division revenue increased by $2.6 million, or 14.3%, due to higher sales to the government communication and electronic system programs.

1st Half-09: Net revenue increased by $4.5 million to $104.1 million from $99.6 million in the first six months of fiscal 2008. Wireline revenue increased $7.3 million, or 18.5%, primarily due to higher sales of cable products. Wireless/OEM Products revenue decreased by $1.0 million, or 8.8%, compared to the corresponding half in fiscal 2008, due to a price reduction to a customer. Global Services revenue decreased by $1.4 million, or 14.7%, primarily due to lower installation and repair revenue related to lower year end carrier spending. Revenue for Quality of Experience Assurance Products increased $0.3 million, or 71.1%, due to a new product introduction. Revenue from the Timing, Test and Measurement Division for the first six months of fiscal 2009 was slightly below the same period for the prior year.

Gross Profit:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Gross Profit (dollars in thousands):
Wireline Products	$	10,546		$	10,238		$	308		3.0	%	$	29,221		$	20,998		$	8,223		39.2	%
Wireless/OEM Products	679			1,487			(808		)	(54.3	)	2,553			3,333			(780		)	(23.4	)
Global Services	1,284			1,726			(442		)	(25.6	)	2,312			2,777			(465		)	(16.7	)
Quality of Experience Assurance	425			214			211			98.6		528			332			196			59.0
Timing, Test and Measurement Division	10,302			9,156			1,146			12.5		17,911			18,089			(178		)	(1.0	)
Other cost of sales	(369		)	(1,025		)	656			(64.0	)	(737		)	(1,833		)	1,096			(59.8	)
Total Gross Profit	$	22,867		$	21,796		$	1,071		4.9	%	$	51,788		$	43,696		$	8,092		18.5	%
Percentage of Revenue	47.4		%	44.6		%						49.7		%	43.9		%

Q2-09: Gross profit in the second quarter of fiscal 2009 increased by $1.1 million or 4.9% compared to the corresponding quarter of fiscal 2008. Gross profit for Wireline Products increased by $0.3 million, or 3.0%, which is greater than the revenue increase of 0.5%, primarily due to a favorable sales mix for higher cable products revenue, which has a higher gross margin and lower costs as a result of the initial phase of outsourcing certain manufacturing capacity to a subcontractor in China. However, the overall gross margin related to Wireline in the second quarter of 2009 was adversely impacted by the revenue reversals related to the Nortel bankruptcy, where cost of sales was recognized in conjunction with these shipments and of high margin product returned from a major distributor. Gross profit for Wireless/OEM Products decreased by $0.8 million, or 54.3%, which was greater than the revenue decrease of 42.8% for the same period, due to the impact of a price reduction for a major OEM customer. Gross profit for Global Services decreased $0.4 million, or 25.6%, which is greater than the revenue decrease of 21.9% for the same period due primarily to a decrease in revenue for repairs, which has a higher gross margin than other services. Gross profit for Quality of Experience Products, increased by $0.2 million, or 98.6%, which is slightly higher than the revenue increase of 83.9%. Gross profit for the Timing, Test and Measurement Division increased by $1.1 million, or 12.5%, which is fairly consistent with the revenue increase of 14.3%.

Other cost of sales decreased $0.7 million or 64.0% primarily due to lower costs for amortization of intangibles due to the write off of intangible assets that were determined to be impaired in the fourth quarter of fiscal 2008 and other intangible assets that were fully amortized prior to the second fiscal quarter of 2009.

1st Half-09: Gross profit increased $8.1 million or 18.5% during the first six months of fiscal 2009 compared to the same period in the prior year. Gross profit for Wireline Products increased by $8.2 million, or 39.2%, which is higher than the revenue increase of 18.5%, primarily due to a favorable sales mix for higher cable products revenue and lower costs as a

21

 result of the initial phase of outsourcing certain manufacturing to a subcontractor in China. However, the overall gross margin related to Wireline in the first six months of 2009 was adversely impacted by the revenue reversals related to the Nortel bankruptcy and of high margin product returned from a major distributor. Gross profit for the Wireless/OEM Products decreased by $0.8 million or 23.4%, which was higher than the revenue decrease of 8.8% for the same period due primarily to a reduction in price to a major customer. Gross profit for Global Services decreased $0.5 million or 16.7%, as compared to the 14.7% revenue decrease for the same period due to a decrease in revenue for repairs which has high gross margins than other services. Gross profit for Quality of Experience Assurance increased by $0.2 million or 59.0%, which is lower than the revenue increase of 71.1%, primarily due to higher manufacturing period costs. Gross profit for the Timing, Test and Measurement Division was flat compared to the first six months of fiscal 2008.

Other cost of sales decreased $1.1 million or 59.8% primarily due to lower costs for amortization of intangibles due to the write off of intangible assets that were determined to be impaired in the fourth quarter of fiscal 2008 and other intangible assets that were fully amortized prior to the second fiscal quarter of 2009.

Operating Expenses:

Research and Development Expense:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Research and development expense (dollars in thousands)	$	6,448		$	6,587		$	(139	)	(2.1	)%	$	13,752		$	13,873		$	(121	)	(0.9	)%
Percentage of Revenue	13.4		%	13.5		%						13.2		%	13.9		%

Q2-09: Research and development expense consists primarily of salaries and benefits, prototype expenses and fees paid to outside consultants. Research and development expense in the second quarter of fiscal 2009 was slightly lower compared to the second quarter of fiscal 2008 due primarily to lower stock based compensation costs.

1st Half-09: Research and development expense for the first six months of fiscal 2009 was slightly lower compared to the corresponding period of fiscal 2008 due primarily to lower stock based compensation costs.

Selling, General and Administrative:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Selling, general and administrative(dollars in thousands)	$	12,831		$	15,531		$	(2,700	)	(17.4	)%	$	28,510		$	31,047		$	(2,537	)	(8.2	)%
Percentage of Revenue	26.6		%	31.8		%						27.4		%	31.2		%

Q2-09: Selling, general and administrative expenses consist primarily of salaries, benefits, sales commissions and travel-related expenses for our sales and services, marketing, finance, human resources, information technology and facilities departments. These expenses decreased by 17.4% to $12.8 million for the second quarter of fiscal 2009, or $2.7 million lower compared to $15.5 million for the corresponding quarter of fiscal 2008. The decrease in expenses consisted primarily of a $1.4 million reduction in compensation related expenses including stock based compensation, fringe benefits and deferred compensation costs, a reduction of $0.4 million for a change in estimate for the allowance for doubtful accounts to correspond to our current bad debt write-off experience, and the remaining operating expense decrease of $0.9 million consists of spending reductions for consulting, legal and travel related costs.

1st Half-09: Selling, general and administrative expenses decreased by 8.2% to $28.5 million for the first six months of fiscal 2009 compared to $31.0 million for the corresponding period of fiscal 2008. The decrease in expenses consisted primarily of a $1.7 million reduction in compensation related expenses including stock based compensation, fringe benefits and deferred compensation costs, a reduction of $0.4 million for a change in estimate for the allowance for doubtful accounts to correspond to our current bad debt write-off experience, and the remaining operating expense decrease of $0.4 million consists of spending reductions for other costs.

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Amortization of intangibles:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Amortization of intangible assets(dollars in thousands)	$	103		$	233		$	(130	)	(55.8	)%	$	206		$	493		$	(287	)	(58.2	)%
Percentage of Revenue	0.2		%	0.5		%						0.2		%	0.5		%

Amortization of intangibles decreased in the second quarter and first half of fiscal 2009 compared to the corresponding periods of fiscal 2008 due to the write-off of $2.1 million in non-purchased technology related intangible assets related to the Quality of Experience Assurance segment that were determined to be impaired in the fourth quarter of fiscal 2008.

Integration and restructuring charges:

	Three Months Ended										Six Months Ended
	December 28,			December 30,							December 28,			December 30,
	2008			2007			$ Change		% Change		2008			2007			$ Change		% Change
Integration and restructuring charges(dollars in thousands)	$	252		$	7		$	245	3,500.0	%	$	837		$	300		$	537	179.0	%
Percentage of Revenue	0.5		%	0.0		%					0.8		%	0.3		%

Integration and restructuring charges increased in the second quarter and first half of fiscal 2009 compared to the corresponding period of fiscal 2008 due to higher costs related to the shutdown of the Austin, Texas engineering facility which was fully vacated as of September 2008.

Loss on repayment of convertible notes, net:

	Three Months Ended										Six Months Ended
	December 28,			December 30,							December 28,			December 30,
	2008			2007			$ Change		% Change		2008			2007			$ Change			% Change
Loss on repayment of converible notes, net (dollars in thousands)	$	—		$	—		$	—	—	%	$	(522	)	$	—		$	(522	)	100.0	%
Percentage of Revenue	—		%	—		%					(0.5		)%	—		%

In the first quarter of fiscal 2009 we repaid $62.5 million of our convertible notes and incurred a loss of $0.5 million mostly related to the write-off of a portion of capitalized bond costs that were previously being amortized. See the “Liquidity and Capital Resources” section below for additional information regarding the details of this loss.

Gain on sale of asset:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Gain on sale of asset(dollars in thousands)	$	—		$	700		$	(700	)	(100.0	)%	$	—		$	700		$	(700	)	(100.0	)%
Percentage of Revenue	—		%	1.4		%						—		%	0.7		%

In the second quarter of fiscal 2008 we sold a domain name, which was not previously used, for a gain of $0.7 million.

Loss on short-term investments, net:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Loss on short-term investments, net (dollars in thousands)	$	(895	)	$	(620	)	$	(275	)	44.4	%	$	(1,368	)	$	(620	)	$	(748	)	(120.6	)%
Percentage of Revenue	(1.9		)%	(1.3		)%						(1.3		)%	(0.6		)%

The net loss on short-term investments recognized in the first six months of fiscal 2009 is attributable to an “other than temporary” loss of $1.5 million related to corporate debt securities and mutual funds related to our deferred compensation plan, partially offset by a gain of $0.1 million related to a recovery on an investment for which we previously recognized an

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“other than temporary” loss in fiscal 2008. See the “Liquidity and Capital Resources” section below for additional information regarding our determination of the fair value of these investments at December 28, 2008.

The net loss on short-term investments recognized in the first six months of fiscal 2008 is attributable to an “other than temporary” loss of $0.6 million.

Interest income:

	Three Months Ended											Six Months Ended
	December 28,			December 30,								December 28,			December 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
Interest income (dollars in thousands)	$	491		$	2,147		$	(1,656	)	(77.1	)%	$	1,259		$	4,357		$	(3,098	)	(71.1	)%
Percentage of Revenue	1.0		%	4.4		%						1.2		%	4.4		%

Interest income decreased $1.7 million in the second quarter and $3.1 million in the first- half of fiscal 2009 compared to the same periods in the prior year due to lower interest rates and lower cash and short-term investment balances.

Interest expense:

	Three Months Ended										Six Months Ended
	December 28,			December 30,							December 28,			December 30,
	2008			2007			$ Change		% Change		2008			2007			$ Change		% Change
Interest expense (dollars in thousands)	$	(543	)	$	(1,185	)	$	642	(54.2	)%	$	(1,308	)	$	(2,380	)	$	1,072	(45.0	)%
Percentage of Revenue	(1.1		)%	(2.4		)%					(1.3		)%	(2.4		)%

Interest expense decreased $0.6 million in the second quarter and $1.1 million in the first half of fiscal 2009 compared to the same periods in the prior year due to the repayment of $62.5 million in convertible notes in the first quarter of fiscal 2009 and the repayment of a $2.4 million industrial development bond in the third quarter of fiscal 2008.

Income taxes:

	Three Months Ended										Six Months Ended
	December 28,			December 30,							December 28,			December 30,
	2008			2007			$ Change		% Change		2008			2007			$ Change		% Change
Income tax expense (dollars in thousands)	$	827		$	279		$	548	196.4	%	$	2,487		$	150		$	2,337	1,558.0	%
Percentage of Revenue	1.7		%	0.6		%					2.4		%	0.2		%

Q2-09:  Our income tax provision was $0.8 million in the second quarter of fiscal 2009, compared to $0.3 million in the corresponding quarter of fiscal 2008. Our effective tax rate in the second quarter of fiscal 2009 was 36.2%, compared to an effective tax rate of 58.1% in the corresponding period of fiscal 2008. The effective tax rate in the second quarter of fiscal 2009 was affected by a favorable discrete item from the reinstatement of federal tax credits related to the prior year. The effective tax rate in the second quarter of fiscal 2008 was also affected by a discrete item.

1st Half-09: Our income tax provision was $2.5 million for the first six months of fiscal 2009, compared to an income tax provision of $0.2 million in the corresponding period of fiscal 2008. Our effective tax rate for the first six months of fiscal 2009 was 38.0%, compared to an effective tax rate of 375.0% in the corresponding period of fiscal 2008. The effective tax rate for the first half of fiscal 2009 is not comparable to the effective tax rate for the first half of fiscal 2008 because both periods had different discrete items and significantly different pre-tax income.

Key Operating Metrics

Key operating metrics for measuring our performance include sales backlog and contract revenue. A comparison of these metrics at the end of the second quarter of fiscal 2009 with the end of fiscal 2008 is discussed below:

Sales Backlog:

Our backlog consists of firm orders that have yet to be shipped to the customer, or may not be shippable to a customer until a future period. Most orders included in backlog can be rescheduled or cancelled by customers without significant penalty. Historically, a substantial portion of net revenue in any fiscal period has been derived from orders received during that fiscal period.

Our backlog amounted to $50.1 million as of December 28, 2008, compared to $58.4 million as of June 29, 2008 and $49.1 million as of December 30, 2007. Our backlog, which is shippable within the next six months, was $40.8 million as of

24

December 28, 2008, compared to $47.1 million as of June 29, 2008. The $8.3 million reduction in backlog between December 28, 2008 and June 29, 2008 was primarily due to the ramp up in supply capacity to meet pent-up demand and lower lead times for our new cable timing product.

Contract Revenue:

As of December 28, 2008, we had approximately $10.4 million in contract revenue to be performed and recognized within the next 36 months, compared to approximately $9.5 million in contract revenue that was to be performed and recognized within 36 months following June 29, 2008. These amounts have been included in our sales backlog discussed above.

Liquidity and Capital Resources

As of December 28, 2008, working capital was $158.9 million compared to $151.5 million as of June 29, 2008. Cash and cash equivalents as of December 28, 2008 decreased to $84.4 million from $142.4 million as of June 29, 2008. This decrease was primarily the result of the repayment of $62.5 million of our convertible notes. Short-term investments decreased from $21.9 million as of June 29, 2008 to $17.6 million as of December 28, 2008. This decrease was attributable primarily to maturities of short-term investments and a $1.4 million other than temporary impairment charge during the first six months of fiscal 2009.

The $7.7 million net cash provided by operating activities for the six months ended December 28, 2008 was primarily attributable to net income of $4.1 million and non-cash expenses related to depreciation and amortization of $4.2 million, a $0.9 million increase in accrued compensation, a $1.4 million decrease in deferred income tax assets, a $0.8 million decrease in accounts receivable, a decrease in the allowance for doubtful accounts of $0.4 million, a $0.5 million net loss related to the repayment of convertible notes, stock-based compensation expenses of $1.4 million and a $1.4 million net loss on short-term investments. This was partially offset by an inventory increase of $6.1 million, a decrease in the provision for excess and obsolete inventory of $0.7 million, a decrease in other accrued liabilities of $1.6 million and an increase in prepaid expenses and other assets of $0.9 million. The $1.3 million net cash provided by investing activities for the six months ended December 29, 2008 was primarily attributable to $3.5 million in maturities of short-term investments that was partially offset by $2.0 million in purchases of plant and equipment. The $67.2 million net cash used for financing activities was primarily attributable to $62.5 million used for the repayment of convertible notes and $4.1 million to repurchase common stock.

Our days sales outstanding in accounts receivable was 67 days as of December 28, 2008, compared to 59 as of June 29, 2008. The primary reason for the increase in days sales outstanding was the impact on collections activity due to a corporate-wide holiday shutdown at the end of December 2008.

Loss on Short-term Investment, Net

In the fourth quarter of fiscal 2007, we purchased asset-backed commercial paper with a $7.8 million par value maturing on March 13, 2008, and classified this as a short-term investment. At the time of purchase, the investment’s portfolio consisted primarily of triple-A rated assets, with sub-prime loan assets making up approximately 23% of the investment. Subsequently, the structured investment vehicle (SIV) issuing the commercial paper was declared insolvent and entered receivership. On January 8, 2008, our investment manager advised us that the fair value of this investment had declined, and that an impairment loss should be considered other than temporary based on discussions with the receiver and potential options expected to be made available to senior debt holders of which Symmetricom was one. Our investment manager determined the fair value of the investment using pricing levels of the underlying portfolio by three different broker/dealers. Management then made an independent valuation assessment of similar securities using the ABX index (which is an index to track the performance of mortgage backed securities), to confirm that the valuation results from our investment manager were reasonable. Based on this assessment of fair value, Symmetricom recognized a loss of $3.2 million related to this investment during fiscal year 2008. After the receivers sold the SIV to an investment bank, we received a cash distribution of $1.4 million, relating to the cash portion of the fund, in the fourth quarter of fiscal 2008. In the first quarter of fiscal 2009, the investment bank offered investors the option of cashing out of the fund or reinvesting in a new investment vehicle. We elected to cash out and received a final capital distribution of $3.3 million in the first quarter of fiscal 2009. As a result of the final settlement with this investment, including a recovery on previously recognized losses, we recognized a $0.1 million gain in the first quarter of fiscal 2009.

In the first quarter of fiscal 2009, we determined that three corporate debt instruments, whose market values had declined, were other than temporarily impaired. We made this determination based on the uncertainty and volatility of the market, particularly since these debt instruments were related to financial institutions, the failure of several other large financial institutions and the continued downgrades from credit rating agencies. As a result of this assessment, we recognized a $0.6 million other than temporary loss in the first quarter of fiscal 2009. This amount was partially offset by the previously mentioned $0.1 million gain, resulting in net loss on short-term investments of $0.5 million for the first quarter of fiscal 2009.

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In the second quarter of fiscal 2009, we determined that mutual funds related to our deferred compensation plan, whose market values had declined, were other than temporarily impaired.  We made this determination based on the overall decline in the value of the mutual funds and the uncertainty as to whether they would recover.  As a result of this assessment, we recognized a $0.9 million other than temporary loss in the second quarter of fiscal 2009.

Convertible Subordinated Notes

On June 30, 2008, we offered to purchase for cash, on a pro rata basis, $63.1 million aggregate principal amount of our $120.0 million convertible subordinated notes (the “Notes”), at a purchase price equal to $990 per $1,000 of the principal amount of the Notes, plus accrued and unpaid interest. The tender offer cap was equal to 52.6% of the $120.0 million aggregate principal amount outstanding. As of July 30, 2008, pursuant to the offer, Symmetricom accepted for payment $63.1 million aggregate principal amount of the Notes. The aggregate purchase price for the Notes surrendered was approximately $62.5 million, which includes interest of $0.3 million. After the purchase pursuant to the offer, approximately $56.9 million aggregate principal amount of the Notes remains outstanding. In connection with the completion of the tender offer, the holder of a majority of the outstanding notes prior to the offer waived certain defaults alleged to have occurred under the indenture and rescinded an acceleration notice received by Symmetricom on May 7, 2008. We may repurchase some or all of our remaining outstanding Notes.

In connection with the issuance of the Notes, Symmetricom initially recorded bond fees of approximately $4.0 million, which were amortized using the straight-line method over a period of seven years ending in fiscal 2012. As of June 29, 2008, $2.2 million of unamortized costs remained. As a result of the tender offer, $1.1 million of this unamortized cost was expensed in the first quarter of fiscal 2009. This, combined with a $0.6 million gain relating to difference between the principal amount and the purchase price of the Notes, resulted in a $0.5 million net loss on repayment of convertible notes recognized in the first quarter of fiscal 2009.

Contingencies

See Item 1 of Part I, Financial Statements — Note 11 — Contingencies.

Recently Issued Accounting Pronouncements

In October 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarified the application of Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements. FSP 157-3 demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of this standard did not have an impact on our consolidated financial statements.

In April 2008, the FASB adopted FASB Staff Position FAS No. 142-3, Determination of the Useful Life of Intangible Assets, amending the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. This FASB Staff Position is effective for intangible assets acquired on or after June 29, 2009. We are currently evaluating the impact of the implementation of FASB Staff Position SFAS No. 142-3 on our consolidated financial statements.

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning June 29, 2009, and this standard must be applied on a retrospective basis. We are currently evaluating the impact of the adoption of FSP APB 14-1 on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of SFAS No. 133. This statement changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 will require us to provide enhanced disclosures about (a) how and why we use derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect our financial position, financial

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performance, and cash flows. SFAS No. 161 is effective for us beginning June 29, 2009. We do not believe that SFAS No. 161 will have a material impact on our consolidated financial statements.

In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 to June 29, 2009 for us, for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We believe the adoption of the delayed items of SFAS No. 157 will not have a material impact on our financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This Statement amends ARB 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. This Statement establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation. SFAS No. 160 is effective for our fiscal year beginning June 29, 2009. We do not believe that SFAS No. 160 will have a material impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS No. 141(R)). The standard changes the accounting for business combinations including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance. SFAS No. 141(R) is effective for us beginning June 29, 2009. We are currently assessing the potential impact that adoption of SFAS No. 141(R) would have on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Exposure

As of December 28, 2008, we had cash and cash equivalents of $84.4 million and short-term investments of $17.6 million. Currently our short-term investment portfolio consists mainly of corporate debt securities and mutual funds. Our exposure to market risk due to fluctuations in interest rates relates primarily to our corporate debt securities, which are subject to interest rate risk in as much as their fair value will fall if market interest rates increase. If market interest rates were to increase or decrease immediately and uniformly by 10% from the levels prevailing as of December 28, 2008, the fair value of the portfolio would not change by a material amount. We do not use derivative financial instruments to mitigate the risks inherent in these securities. However, we do attempt to reduce these risks by typically limiting the maturity date of such securities to no more than nine months, placing our investments with high credit quality issuers and limiting the amount of credit exposure with any one issuer. In addition, we have the ability and currently intend to hold these investments to recovery, which may be maturity, and therefore we believe that reductions in the value of these securities attributable to short-term fluctuations in interest rates would not materially harm our business.

On June 8, 2005, we issued convertible subordinated notes with a fixed rate of 3.25%, which have no interest rate risk impact to our business.

Foreign Currency Exchange Rate Exposure

Our exposure to market risk due to fluctuations in currency exchange rates relates primarily to the intercompany balances with our subsidiaries in the United Kingdom and Germany. Although we transact business with various countries, settlement amounts are usually based on U.S. currency. Transaction gains or losses have not been significant in the past and we do not presently engage in hedging activity. Based on our foreign currency denominated assets as of December 28, 2008, a hypothetical 10% adverse change in British Pounds or Euro against U.S. dollars would not result in a material foreign exchange loss. Consequently, we do not expect that reductions in the value of such assets or other accounts denominated in foreign currencies resulting from even a sudden and significant fluctuation in foreign exchange rates would have a direct material impact on our business.

Notwithstanding the foregoing analysis of the direct effects of interest rate and currency exchange rate fluctuations on the value of certain of our investments and accounts, the indirect effects of such fluctuations could have a materially harmful effect on our business. For example, international demand for our products is affected by foreign currency exchange rates. In addition, interest rate fluctuations may affect the buying patterns of our customers. Furthermore, interest rate and currency exchange rate fluctuations have broad influence on the general condition of the U.S., foreign and global economies, which could materially harm our business.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed in the reports that we file or submit under the Exchange Act.

Changes in Internal Control Over Financial Reporting

During the first six months of fiscal 2009, we implemented a new procedure for the reconciliation and review of accrued liabilities related to inventory receipts, which constitutes a material change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). This was done to address a material weakness identified in the second quarter of fiscal 2008 that led us to amend our Form 10-K for the fiscal year ended July 1, 2007 and our Form 10-Q for the quarter ended September 30, 2007.

Other than this change, no other material changes in the Company’s internal control over financial reporting occurred during the second quarter of fiscal 2009.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Item 1 of Part I, Financial Statements — Note 11 — Contingencies.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 29, 2008. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

As of the first quarter of fiscal 2009, the risk factor entitled “The tax treatment of the restructuring of our Puerto Rico subsidiary may negatively impact our net earnings,” is no longer applicable.  See Item 1 of Part I, Financial Statements — Note 2 — Income Taxes.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a)Not applicable.

b)Not applicable.

c)The following table provides monthly detail regarding our share repurchases and forfeitures during the three months ended December 28, 2008:

					Approximate Number
	Total			Total Number of Shares	of Shares That
	Number of	Average		Purchased as Part of	May Yet Be
	Shares	Price Paid		Publicly Announced	Purchased Under the
Period	Purchased	per Share		Plans or Programs	Plans or Programs
September 29, 2008 through October 26, 2008	—	$	—	—	2,538,996
October 27, 2008 through November 23, 2008	—	$	—	—	2,538,996
November 24, 2008 through December 28, 2008	484,589	$	3.95	484,589	2,054,407
Total	484,589	$	3.95	484,589

During the first six months of fiscal 2009, we repurchased 0.8 million shares of common stock pursuant to our repurchase program for an aggregate price of approximately $3.7 million.

On September 29, 2008, the Company’s Board of Directors authorized management to repurchase an additional 2.0 million shares of Symmetricom common stock. As of December 28, 2008, the total number of shares available for repurchase under the repurchase program authorized by the Board of Directors was approximately 2.1 million.

A further 76,342 shares were repurchased by us in the first six months of fiscal 2009 for an aggregate price of approximately $0.4 million to cover the cost of taxes on vested restricted stock.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

On October 31, 2008, we held our annual meeting of stockholders. The following summarizes the matters submitted to vote of our stockholders.

1. The election of the following nominees to serve on the Board of Directors constituting the full Board:

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Nominee	For	Withheld
Alfred Boschulte	39,871,627	1,430,504
James A. Chiddix	39,288,147	2,013,984
Robert T. Clarkson	40,016,873	1,285,258
Elizabeth A. Fetter	38,802,085	2,500,046
Robert M. Neumeister, Jr.	39,871,013	1,431,118
Dr. Richard W. Oliver	39,478,678	1,823,453
Richard N. Snyder	39,832,412	1,469,719
Robert J. Stanzione	39,461,236	1,840,895
Thomas W. Steipp	39,878,996	1,423,135

2. The ratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditors for the current 2009 fiscal year.

For	Against	Abstain
40,004,603	1,240,584	56,942

3. The approval of the amendment and restatement of the Company’s 2006 Incentive Award Program.

For	Against	Abstain
22,664,322	6,472,759	1,822,669

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit Number	Description of Exhibits
10.1#	Form of Second Amended and Restated Executive Severance Benefits Agreement between the Company and executive officers party to those certain Amended and Restated Executive Severance Benefits Agreements, dated September 11, 2007.
10.2#	Form of Executive Severance Benefits Agreement for new executive officers.
10.3#	Amended and Restated Employment and Executive Severance Agreement between the Company and Thomas W. Steipp dated October 30, 2008.
10.4#	Forms of agreements under the Symmetricom, Inc. 2006 Incentive Award Plan (As Amended Through October 31, 2008) (incorporated by reference from Exhibit 4.4 to the Company’s registration statement on Form S-8 (file no. 333-155566) filed on November 21, 2008).
31	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

# Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

		SYMMETRICOM, INC.
		(Registrant)
DATE: February 6, 2009	By:	/s/ THOMAS W. STEIPP
		Thomas W. Steipp
		Chief Executive Officer (Principal Executive Officer) and Director
DATE: February 6, 2009	By:	/s/ JUSTIN SPENCER
		Justin Spencer
		Executive Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

SECOND AMENDED AND RESTATED

EXECUTIVE SEVERANCE BENEFITS AGREEMENT

On May       , 2006,                                                                      (“Executive”) and SYMMETRICOM, INC. (the “Company”) entered into an EXECUTIVE SEVERANCE BENEFITS AGREEMENT, which was intended to provide Executive with certain compensation and benefits upon the occurrence of specific events and the parties amended and restated such agreement on September 11, 2007 (as amended and restated, the “Prior Agreement”).  The Company and Executive wish to amend and restate the Prior Agreement in its entirety, effective as of this              day of                     , 2008 (the “Effective Date”), pursuant to the terms and conditions set forth in this SECOND AMENDED AND RESTATED EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the “Agreement”).

Certain capitalized terms used in this Agreement are defined below, in Article 5.

The Company and Executive hereby agree as follows:

ARTICLE 1

SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT

1.1          Position and Duties.  Executive is currently employed by the Company as                               .  Executive reports directly to the Company’s Chief Executive Officer.

1.2          Restrictions.  During [his/her] employment by the Company, Executive agrees to the best of [his/her] ability and experience that [he/she] will at all times loyally and conscientiously perform all of the duties and obligations required of and from [him/her] as                                               .  During the term of [his/her] employment, Executive further agrees that [he/she] will devote all of [his/her] business time and attention to the business of the Company, the Company will be entitled to all of the benefits and profits arising from or incident to all such work, services and advice, Executive will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Board or its authorized designee, and Executive will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company.  Nothing in this Agreement will prevent Executive from accepting speaking or presentation engagements in exchange for honoraria or from service on boards of charitable organizations or otherwise participating in civic, charitable or fraternal organizations, or from owning no more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national stock exchange.

1.3          Confidential Information and Invention Assignment Agreement.  Executive acknowledges that [he/she] has previously executed and delivered to an officer of the Company the Company’s Confidentiality and Invention Assignment Agreement (the “Confidentiality Agreement”) and that the Confidentiality Agreement remains in full force and effect.

1.4          Confidentiality of Terms.  Executive agrees to follow the Company’s strict policy that except as mandated by applicable law employees must not disclose, either directly or

indirectly, any information, including any of the terms of this Agreement, regarding salary, bonuses, or stock purchase or option allocations to any person, including other employees of the Company; provided, however, that Executive may discuss such terms with members of [his/her] immediate family and any legal, tax or accounting specialists who provide Executive with individual legal, tax or accounting advice, and Executive may discuss such terms with other employees of the Company on a need to know basis if required to carry out Executive’s duties, or at the request of the Board or any other superior officer of the Company.

1.5          Consideration.  The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s past services to the Company, Executive’s continued employment with the Company, and Executive’s execution of a release in accordance with Section 3.1.

1.6          Prior Agreement.  This Agreement shall supersede any other agreement relating to severance benefits in the event of Executive’s severance from employment, including the Prior Agreement.

ARTICLE 2

SEVERANCE BENEFITS

2.1          Severance Benefits.  A Covered Termination of Executive’s employment prior to or more than twelve (12) months following the effective date of a Change of Control entitles Executive to receive the benefits set forth in this Section 2.1.

(a)           Base Salary and Bonus.  The Company shall pay to Executive an amount (the “Severance Amount”) equal to the sum of Base Salary plus the excess, if any, of (i) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained, over (ii) any portion of Executive’s annual bonus for the fiscal year in which the Covered Termination occurs that has been paid to Executive prior to the date of the Covered Termination, prorated by the Severance Period.  Such Severance Amount shall be paid over the Severance Period commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(b)           Health Benefits.  Provided that Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay the premiums of Executive’s group health insurance coverage and Executive’s “Exec-U-Care” or similar secondary health insurance coverage, including coverage for Executive’s eligible dependents, until the earlier of the expiration of the Severance Period or the applicable COBRA continuation period; provided, however, that the Company shall pay premiums for Executive’s eligible dependents only for coverage for which those eligible dependents were enrolled immediately prior to the Covered Termination; provided, further, that Executive shall be solely responsible for all matters relating to [his/her] continuation of coverage

2

pursuant to COBRA, including, without limitation, the election of such coverage.  For the balance of the period that Executive is entitled to coverage under federal COBRA law, if any, Executive shall be entitled to maintain such coverage at Executive’s own expense.

2.2          Change of Control Severance Benefits.  A Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control entitles Executive to receive the benefits set forth in this Section 2.2.

(a)           Base Salary.  The Company shall pay to Executive an amount equal to twelve (12) months’ Base Salary.  Such severance amount shall be paid over a period of twelve (12) months commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(b)           Bonus.  The Company shall pay to Executive an amount equal to the sum of (x) the excess, if any, of (i) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained, over (ii) any portion of Executive’s annual bonus for the fiscal year in which the Covered Termination occurs that has been paid to Executive prior to the date of the Covered Termination, prorated by the portion of the fiscal year that the Executive was employed by the Company and (y) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained (i.e., Executive shall be entitled to receive a prorated target bonus for the current year and an additional year’s target bonus).  Such severance amount shall be paid over a period of twelve (12) months commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(c)           Covered Termination Stock Award Acceleration.  In the event of a Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control, the vesting and/or exercisability of one hundred percent (100%) of Executive’s outstanding Stock Awards shall be automatically accelerated on the date of termination.

(d)           Health Benefits.  Provided that Executive elects continued coverage under federal COBRA law, the Company shall pay the premiums of Executive’s group health insurance coverage, including coverage for Executive’s eligible dependents, until the earlier of the expiration of the twelve (12) month period following the Covered Termination or the applicable COBRA continuation period; provided, however, that the Company shall pay premiums for Executive’s eligible dependents only for coverage for which those eligible dependents were enrolled immediately prior to the Covered Termination; provided, further, that Executive shall be solely responsible for all matters relating to [his/her] continuation of coverage

3

pursuant to federal COBRA law, including, without limitation, the election of such coverage.  For the balance of the period that Executive is entitled to coverage under federal COBRA law, if any, Executive shall be entitled to maintain such coverage at Executive’s own expense.

(e)           No Duplication of Benefits.  The payments and benefits provided for in this Section 2.2 shall only be payable in the event of a Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control.  In the event of a Covered Termination of Executive’s employment prior to or more than twelve (12) months following a Change Control, then Executive shall receive the payments and benefits described in Section 2.1 and shall not be eligible to receive any of the payments and benefits described in this Section 2.2.

2.3          Other Terminations.  If Executive’s employment is terminated by the Company for Cause, by Executive other than pursuant to a Constructive Termination or as a result of Executive’s death or disability, the Company shall not have any other or further obligations to Executive under this Agreement (including any financial obligations) except that Executive shall be entitled to receive (a) Executive’s fully earned but unpaid base salary, through the date of termination at the rate then in effect, and (b) all other amounts or benefits to which Executive is entitled under any compensation, retirement or benefit plan or practice of the Company at the time of termination in accordance with the terms of such plans or practices, including, without limitation, any continuation of benefits required by federal COBRA law or applicable law.  The foregoing shall be in addition to, and not in lieu of, any and all other rights and remedies which may be available to the Company under the circumstances, whether at law or in equity.

2.4          Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by any retirement benefits received by Executive after the date of the Covered Termination.

2.5          Exclusive Remedy.  Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s employment shall cease upon such termination.  In the event of a termination of Executive’s employment with the Company, Executive’s sole remedy shall be to receive the payments and benefits described in this Agreement.

ARTICLE 3

LIMITATIONS AND CONDITIONS ON BENEFITS

3.1          Release Prior to Payment of Benefits.  Upon the occurrence of a Covered Termination of Executive’s employment, and prior to the payment of any benefits under this Agreement on account of such Covered Termination, Executive shall execute and not revoke a release (the “Release”) in the form attached hereto and incorporated herein as Exhibit A or Exhibit B, as applicable.  Executive shall execute and deliver such Release to the Company no

4

later than fifty (50) days following the date of the Covered Termination.  Such Release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under the Confidentiality Agreement.  It is understood that, as specified in the applicable Release, Executive has a certain number of calendar days to consider whether to execute such Release, and Executive may revoke such Release within seven (7) calendar days after execution.  In the event Executive does not execute such Release within the applicable period, or if Executive revokes such Release within the subsequent seven (7) day period, no benefits shall be payable under this Agreement.

3.2          Termination of Benefits.  Benefits under this Agreement shall terminate immediately if the Executive, at any time, violates any proprietary information or confidentiality obligation to the Company, including, without limitation, the Confidentiality Agreement.

3.3          Code Section 409A.  Notwithstanding any provision to the contrary in the Agreement, if the Executive is deemed by the Company at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (a) the expiration of the six-month period measured from the date of the Executive’s Separation from Service with the Company or (b) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this Section 3.3 shall be paid in a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein, with all such payments to be subject to all required tax withholding.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s right to receive the installment payments payable pursuant to Article 2 (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

ARTICLE 4

PARACHUTE PAYMENTS

4.1          Parachute Payment Cut-Back.  Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any Payment under this Agreement would, when combined with all other Payments Executive receives from the Company or any successor or parent or subsidiary thereof, but for this Article 4, be considered an “excess parachute payment” under Section 280G of the Code, then such Payments shall be reduced (with cash payments being reduced before Stock Award compensation) as would result in no portion of the payments being considered “excess parachute payments” under Section 280G of the Code.

4.2          Determinations.  All determinations required to be made under this Article 4, including whether and to what extent the Payments shall be reduced and the assumptions to be utilized in arriving at such determination, shall be made by the nationally recognized certified public accounting firm used by the Company immediately prior to the Change of Control or, if

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such firm declines to serve, such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive at such time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  For purposes of making the calculations required by this Article 4, the Accounting Firm 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.

ARTICLE 5

DEFINITIONS

For purposes of the Agreement, the following terms are defined as follows:

5.1          “Base Salary” means Executive’s annual base salary as in effect during the last regularly scheduled payroll period immediately preceding the Covered Termination.

5.2          “Board” means the Board of Directors of the Company.

5.3          The Company shall have “Cause” to terminate the Executive’s employment hereunder upon:

(a)           The Executive’s willful failure to substantially perform the duties set forth in this Agreement (other than any such failure resulting from the Executive’s Disability) which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;

(b)           The Executive’s willful failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board or the appropriate individual to whom Executive reports not inconsistent with the terms of this Agreement, which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;

(c)           The Executive’s commission at any time of any act or omission that results in, or that may reasonably be expected to result in, a conviction, plea of no contest or imposition of unadjudicated probation for any felony or crime involving moral turpitude;

(d)           The Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities under this Agreement; or

(e)           The Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof).

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5.4          “Change of Control” means and includes each of the following:

(a)           the acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities, other than:

(i)            an acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or

(ii)           an acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company;

Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by any person or group for purposes of this Section: an acquisition of the Company’s securities by the Company that causes the Company’s voting securities beneficially owned by a person or group to represent fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change of Control; or

(b)           the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction.

5.5          “Code” means the Internal Revenue Code of 1986, as amended from time to time and the Treasury Regulations thereunder.

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5.6          “Company” means Symmetricom, Inc. or, following a Change of Control, the surviving entity resulting from such transaction, including the acquirer of substantially all the Company’s assets.

5.7          “Constructive Termination” means that Executive voluntarily terminates employment after any of the following are undertaken without Executive’s express written consent:

(a)           A material diminution in the nature or scope of the Executive’s responsibilities, title, duties or authority;

(b)           Failure of the Company to make any material payment or provide any material benefit under an agreement pursuant to which the Executive performs services for the Company; or

(c)           A relocation of Executive’s place of employment by more than thirty (30) miles from such Executive’s place of employment on the Effective Date;

provided, however, that notwithstanding the foregoing the Executive may not resign [his/her] employment as a Constructive Termination unless:  (A) the Executive provides the Company with at least 30 days prior written notice of [his/her] intent to resign as a Constructive Termination (which notice is provided not later than the 30th day following the occurrence of the event constituting Constructive Termination), and (B) the Company has not remedied the alleged violation(s) within the 30-day period.  The termination of Executive’s employment as a result of Executive’s death or disability will not be deemed to be a Constructive Termination.

5.8          “Covered Termination” means an Involuntary Termination Without Cause or a Constructive Termination, provided that such termination constitutes a Separation from Service.

5.9          “Excise Tax” means the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

5.10        “First Payment Date” means the date on which the Release becomes irrevocable.

5.11        “Involuntary Termination Without Cause” means Executive’s dismissal or discharge by the Company other than for Cause.  The termination of Executive’s employment as a result of Executive’s death or disability will not be deemed to be an Involuntary Termination Without Cause.

5.12        A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

5.13        “Separation from Service” means a termination of Executive’s employment with the Company which constitutes a separation from service within the meaning of Section 

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409A of the Code and the regulations promulgated thereunder, including Treasury Regulation Section 1.409A-1(h).

5.14        “Severance Period” shall be determined as follows:

(a)           If, as of the date of [his/her] Covered Termination, Executive has been employed by the Company for less than one year, the Severance Period shall be six (6) months;

(b)           If, as of the date of [his/her] Covered Termination, Executive has been employed by the Company for one year or more, but less than three years, the Severance Period shall be nine (9) months;

(c)           If, as of the date of [his/her] Covered Termination, Executive has been employed by the Company for three years or more, the Severance Period shall be twelve (12) months.

5.15        “Stock Awards” means all stock options, restricted stock and such other awards granted pursuant to the Company’s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.

ARTICLE 6

GENERAL PROVISIONS

6.1          Employment Status.  This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on the Company any obligation (a) to retain Executive as an employee, (b) to change the status of Executive as an at-will employee, or (c) to change the Company’s policies regarding termination of employment.

6.2          Notices.  Any notices provided hereunder must be in writing, and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail to the Company at its primary office location and to Executive at Executive’s address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at the address as listed in the Company’s payroll records.

6.3          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

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6.4          Waiver.  If either party should waive any breach of any provisions of this Agreement, [he/she] or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

6.5          Arbitration.  Any dispute, claim or controversy based on, arising out of or relating to Executive’s employment or this Agreement shall be settled by final and binding arbitration in Santa Clara County, California, before a single neutral arbitrator in accordance with the National Rules for the Resolution of Employment Disputes (the “Rules”) of the American Arbitration Association, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.  Arbitration may be compelled pursuant to the California Arbitration Act (Code of Civil Procedure §§ 1280 et seq.).  If the parties are unable to agree upon an arbitrator, one shall be appointed by the AAA in accordance with its Rules.  Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case; however, Executive and the Company agree that, to the extent permitted by law, the arbitrator may, in [his/her] discretion, award reasonable attorneys’ fees to the prevailing party.  Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, AAA’s administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company.  This Section 6.5 is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Agreement or relating to Executive’s employment; provided, however, that neither this Agreement nor the submission to arbitration shall limit the parties’ right to seek provisional relief, including, without limitation, injunctive relief, in any court of competent jurisdiction pursuant to California Code of Civil Procedure § 1281.8 or any similar statute of an applicable jurisdiction.  Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel arbitration.  Both Executive and the Company expressly waive their right to a jury trial. Pursuant to California Civil Code Section 1717, each party warrants that it was represented by counsel in the negotiation and execution of this Agreement, including the attorneys’ fees provision herein.

6.6          Complete Agreement.  This Agreement, including Exhibit A and Exhibit B, constitutes the entire agreement between Executive and the Company and is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter, wholly superseding all written and oral agreements with respect to severance benefits to Executive in the event of employment termination.  It is entered into without reliance on any promise or representation other than those expressly contained herein.  Notwithstanding anything herein to the contrary, this Agreement shall not supersede any indemnification agreement between Executive and the Company.

6.7          Amendment or Termination of Agreement.  This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive.  The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company after such change or termination has been approved by the Board.

6.8          Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

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6.9          Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

6.10        Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, and the Company, and any surviving entity resulting from a Change of Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company, and their respective successors, assigns, heirs, executors and administrators, without regard to whether or not such person actively assumes any rights or duties hereunder; provided, however, that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.

6.11        Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state’s conflict of laws rules.

6.12        Non-Publication.  The parties mutually agree not to disclose publicly the terms of this Agreement except to the extent that disclosure is mandated by applicable law or regulation or to their respective advisors (e.g., attorneys, accountants).

6.13        Construction of Agreement.  In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties have executed this Agreement on the Effective Date written above.

SYMMETRICOM, INC.	[EXECUTIVE]
By:
Name:
Title:

Exhibit A: Release (Individual Termination)

Exhibit B: Release (Group Termination)

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EXHIBIT A

RELEASE
(INDIVIDUAL TERMINATION)

Certain capitalized terms used in this Release are defined in the Second Amended and Restated Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s proprietary information and inventions agreement.

I acknowledge that I have read and understand 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 or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.

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I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me.

[EXECUTIVE]

Date:

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EXHIBIT B

RELEASE
(GROUP TERMINATION)

Certain capitalized terms used in this Release are defined in the Second Amended and Restated Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s proprietary information and inventions agreement.

I acknowledge that I have read and understand 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 or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.

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I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have forty-five (45) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me; and (F) I have received with this Release a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who were not terminated.

[EXECUTIVE]

Date:

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EX-10.2

Exhibit 10.2

EXECUTIVE SEVERANCE BENEFITS AGREEMENT

This EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the “Agreement”) is entered into this                    day of                             ,              (the “Effective Date”), between                                                                     (“Executive”) and SYMMETRICOM, INC. (the “Company”).  This Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specific events.

Certain capitalized terms used in this Agreement are defined below, in Article 5.

The Company and Executive hereby agree as follows:

ARTICLE 1

SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT

1.1          Position and Duties.  Executive is currently employed by the Company as                               .  Executive reports directly to the Company’s Chief Executive Officer.

1.2          Restrictions.  During his employment by the Company, Executive agrees to the best of his ability and experience that he will at all times loyally and conscientiously perform all of the duties and obligations required of and from him as                                               .  During the term of his employment, Executive further agrees that he will devote all of his business time and attention to the business of the Company, the Company will be entitled to all of the benefits and profits arising from or incident to all such work, services and advice, Executive will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Board or its authorized designee, and Executive will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company.  Nothing in this Agreement will prevent Executive from accepting speaking or presentation engagements in exchange for honoraria or from service on boards of charitable organizations or otherwise participating in civic, charitable or fraternal organizations, or from owning no more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national stock exchange.

1.3          Confidential Information and Invention Assignment Agreement.  Executive acknowledges that he has previously executed and delivered to an officer of the Company the Company’s Confidentiality and Invention Assignment Agreement (the “Confidentiality Agreement”) and that the Confidentiality Agreement remains in full force and effect.

1.4          Confidentiality of Terms.  Executive agrees to follow the Company’s strict policy that except as mandated by applicable law employees must not disclose, either directly or indirectly, any information, including any of the terms of this Agreement, regarding salary, bonuses, or stock purchase or option allocations to any person, including other employees of the Company; provided, however, that Executive may discuss such terms with members of his immediate family and any legal, tax or accounting specialists who provide Executive with individual legal, tax or accounting advice, and Executive may discuss such terms with other

employees of the Company on a need to know basis if required to carry out Executive’s duties, or at the request of the Board or any other superior officer of the Company.

1.5          Consideration.  The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s past services to the Company, Executive’s continued employment with the Company, and Executive’s execution of a release in accordance with Section 3.1.

1.6          Prior Agreement.  This Agreement shall supersede any other agreement relating to severance benefits in the event of Executive’s severance from employment.

ARTICLE 2

SEVERANCE BENEFITS

2.1          Severance Benefits.  A Covered Termination of Executive’s employment prior to or more than twelve (12) months following the effective date of a Change of Control entitles Executive to receive the benefits set forth in this Section 2.1.

(a)           Base Salary and Bonus.  The Company shall pay to Executive an amount (the “Severance Amount”) equal to the sum of Base Salary plus the excess, if any, of (i) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained, over (ii) any portion of Executive’s annual bonus for the fiscal year in which the Covered Termination occurs that has been paid to Executive prior to the date of the Covered Termination, prorated by the Severance Period.  Such Severance Amount shall be paid over the Severance Period commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(b)           Health Benefits.  Provided that Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay the premiums of Executive’s group health insurance coverage and Executive’s “Exec-U-Care” or similar secondary health insurance coverage, including coverage for Executive’s eligible dependents, until the earlier of the expiration of the Severance Period or the applicable COBRA continuation period; provided, however, that the Company shall pay premiums for Executive’s eligible dependents only for coverage for which those eligible dependents were enrolled immediately prior to the Covered Termination; provided, further, that Executive shall be solely responsible for all matters relating to his continuation of coverage pursuant to COBRA, including, without limitation, the election of such coverage.  For the balance of the period that Executive is entitled to coverage under federal COBRA law, if any, Executive shall be entitled to maintain such coverage at Executive’s own expense.

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2.2          Change of Control Severance Benefits.  A Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control entitles Executive to receive the benefits set forth in this Section 2.2.

(a)           Base Salary.  The Company shall pay to Executive an amount equal to twelve (12) months’ Base Salary.  Such severance amount shall be paid over a period of twelve (12) months commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(b)           Bonus.  The Company shall pay to Executive an amount equal to the sum of (x) the excess, if any, of (i) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained, over (ii) any portion of Executive’s annual bonus for the fiscal year in which the Covered Termination occurs that has been paid to Executive prior to the date of the Covered Termination, prorated by the portion of the fiscal year that the Executive was employed by the Company and (y) Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained (i.e., Executive shall be entitled to receive a prorated target bonus for the current year and an additional year’s target bonus).  Such severance amount shall be paid over a period of twelve (12) months commencing on the date of termination in substantially equal installments in accordance with the Company’s regular payroll practices and shall be subject to all required tax withholding; provided, however, that any such payments that would otherwise have been made before the first normal payroll payment date falling on or after the First Payment Date shall be made on the First Payment Date.

(c)           Covered Termination Stock Award Acceleration.  In the event of a Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control:

(i)            if the applicable Change of Control occurs within twelve (12) months after the date on which Executive commenced employment with the Company (the “Employment Commencement Date”), the vesting and/or exercisability of fifty percent (50%) of Executive’s outstanding unvested Stock Awards shall be automatically accelerated on the date of termination; or

(ii)           if the applicable Change of Control occurs on or after the first anniversary of the Employment Commencement Date, the vesting and/or exercisability of one hundred percent (100%) of Executive’s outstanding Stock Awards shall be automatically accelerated on the date of termination.

(d)           Health Benefits.  Provided that Executive elects continued coverage under federal COBRA law, the Company shall pay the premiums of Executive’s group health insurance coverage, including coverage for Executive’s eligible dependents, until the earlier of

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the expiration of the twelve (12) month period following the Covered Termination or the applicable COBRA continuation period; provided, however, that the Company shall pay premiums for Executive’s eligible dependents only for coverage for which those eligible dependents were enrolled immediately prior to the Covered Termination; provided, further, that Executive shall be solely responsible for all matters relating to his continuation of coverage pursuant to federal COBRA law, including, without limitation, the election of such coverage.  For the balance of the period that Executive is entitled to coverage under federal COBRA law, if any, Executive shall be entitled to maintain such coverage at Executive’s own expense.

(e)           No Duplication of Benefits.  The payments and benefits provided for in this Section 2.2 shall only be payable in the event of a Covered Termination of Executive’s employment within twelve (12) months following the effective date of a Change of Control.  In the event of a Covered Termination of Executive’s employment prior to or more than twelve (12) months following a Change Control, then Executive shall receive the payments and benefits described in Section 2.1 and shall not be eligible to receive any of the payments and benefits described in this Section 2.2.

2.3          Other Terminations.  If Executive’s employment is terminated by the Company for Cause, by Executive other than pursuant to a Constructive Termination or as a result of Executive’s death or disability, the Company shall not have any other or further obligations to Executive under this Agreement (including any financial obligations) except that Executive shall be entitled to receive (a) Executive’s fully earned but unpaid base salary, through the date of termination at the rate then in effect, and (b) all other amounts or benefits to which Executive is entitled under any compensation, retirement or benefit plan or practice of the Company at the time of termination in accordance with the terms of such plans or practices, including, without limitation, any continuation of benefits required by federal COBRA law or applicable law.  The foregoing shall be in addition to, and not in lieu of, any and all other rights and remedies which may be available to the Company under the circumstances, whether at law or in equity.

2.4          Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by any retirement benefits received by Executive after the date of the Covered Termination.

2.5          Exclusive Remedy.  Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s employment shall cease upon such termination.  In the event of a termination of Executive’s employment with the Company, Executive’s sole remedy shall be to receive the payments and benefits described in this Agreement.

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ARTICLE 3

LIMITATIONS AND CONDITIONS ON BENEFITS

3.1          Release Prior to Payment of Benefits.  Upon the occurrence of a Covered Termination of Executive’s employment, and prior to the payment of any benefits under this Agreement on account of such Covered Termination, Executive shall execute and not revoke a release (the “Release”) in the form attached hereto and incorporated herein as Exhibit A or Exhibit B, as applicable.  Executive shall execute and deliver such Release to the Company no later than fifty (50) days following the date of the Covered Termination.  Such Release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under the Confidentiality Agreement.  It is understood that, as specified in the applicable Release, Executive has a certain number of calendar days to consider whether to execute such Release, and Executive may revoke such Release within seven (7) calendar days after execution.  In the event Executive does not execute such Release within the applicable period, or if Executive revokes such Release within the subsequent seven (7) day period, no benefits shall be payable under this Agreement.

3.2          Termination of Benefits.  Benefits under this Agreement shall terminate immediately if the Executive, at any time, violates any proprietary information or confidentiality obligation to the Company, including, without limitation, the Confidentiality Agreement.

3.3          Code Section 409A.  Notwithstanding any provision to the contrary in the Agreement, if the Executive is deemed by the Company at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (a) the expiration of the six-month period measured from the date of the Executive’s Separation from Service with the Company or (b) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this Section 3.3 shall be paid in a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein, with all such payments to be subject to all required tax withholding.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s right to receive the installment payments payable pursuant to Article 2 (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

ARTICLE 4

PARACHUTE PAYMENTS

4.1          Parachute Payment Cut-Back.  Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any Payment under this Agreement would, when combined with all other Payments Executive receives from the Company or any

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successor or parent or subsidiary thereof, but for this Article 4, be considered an “excess parachute payment” under Section 280G of the Code, then such Payments shall be reduced (with cash payments being reduced before Stock Award compensation) as would result in no portion of the payments being considered “excess parachute payments” under Section 280G of the Code.

4.2          Determinations.  All determinations required to be made under this Article 4, including whether and to what extent the Payments shall be reduced and the assumptions to be utilized in arriving at such determination, shall be made by the nationally recognized certified public accounting firm used by the Company immediately prior to the Change of Control or, if such firm declines to serve, such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive at such time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  For purposes of making the calculations required by this Article 4, the Accounting Firm 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.

ARTICLE 5

DEFINITIONS

For purposes of the Agreement, the following terms are defined as follows:

5.1          “Base Salary” means Executive’s annual base salary as in effect during the last regularly scheduled payroll period immediately preceding the Covered Termination.

5.2          “Board” means the Board of Directors of the Company.

5.3          The Company shall have “Cause” to terminate the Executive’s employment hereunder upon:

(a)           The Executive’s willful failure to substantially perform the duties set forth in this Agreement (other than any such failure resulting from the Executive’s Disability) which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;

(b)           The Executive’s willful failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board or the appropriate individual to whom Executive reports not inconsistent with the terms of this Agreement, which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;

(c)           The Executive’s commission at any time of any act or omission that results in, or that may reasonably be expected to result in, a conviction, plea of no contest or imposition of unadjudicated probation for any felony or crime involving moral turpitude;

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(d)           The Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities under this Agreement; or

(e)           The Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof).

5.4          “Change of Control” means and includes each of the following:

(a)           the acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities, other than:

(i)            an acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or

(ii)           an acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company;

Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by any person or group for purposes of this Section: an acquisition of the Company’s securities by the Company that causes the Company’s voting securities beneficially owned by a person or group to represent fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change of Control; or

(b)           the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the

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business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction.

5.5          “Code” means the Internal Revenue Code of 1986, as amended from time to time and the Treasury Regulations thereunder.

5.6          “Company” means Symmetricom, Inc. or, following a Change of Control, the surviving entity resulting from such transaction, including the acquirer of substantially all the Company’s assets.

5.7          “Constructive Termination” means that Executive voluntarily terminates employment after any of the following are undertaken without Executive’s express written consent:

(a)           A material diminution in the nature or scope of the Executive’s responsibilities, title, duties or authority;

(b)           Failure of the Company to make any material payment or provide any material benefit under an agreement pursuant to which the Executive performs services for the Company; or

(c)           A relocation of Executive’s place of employment by more than thirty (30) miles from such Executive’s place of employment on the Effective Date;

provided, however, that notwithstanding the foregoing the Executive may not resign his employment as a Constructive Termination unless:  (A) the Executive provides the Company with at least 30 days prior written notice of his intent to resign as a Constructive Termination (which notice is provided not later than the 30th day following the occurrence of the event constituting Constructive Termination), and (B) the Company has not remedied the alleged violation(s) within the 30-day period.  The termination of Executive’s employment as a result of Executive’s death or disability will not be deemed to be a Constructive Termination.

5.8          “Covered Termination” means an Involuntary Termination Without Cause or a Constructive Termination, provided that such termination constitutes a Separation from Service.

5.9          “Excise Tax” means the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

5.10        “First Payment Date” means the date on which the Release becomes irrevocable.

5.11        “Involuntary Termination Without Cause” means Executive’s dismissal or discharge by the Company other than for Cause.  The termination of Executive’s employment as a result of Executive’s death or disability will not be deemed to be an Involuntary Termination Without Cause.

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5.12        A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

5.13        “Separation from Service” means a termination of Executive’s employment with the Company which constitutes a separation from service within the meaning of Section 409A of the Code and the regulations promulgated thereunder, including Treasury Regulation Section 1.409A-1(h).

5.14        “Severance Period” shall be determined as follows:

(a)           If, as of the date of his Covered Termination, Executive has been employed by the Company for less than one year, the Severance Period shall be six (6) months;

(b)           If, as of the date of his Covered Termination, Executive has been employed by the Company for one year or more, but less than three years, the Severance Period shall be nine (9) months;

(c)           If, as of the date of his Covered Termination, Executive has been employed by the Company for three years or more, the Severance Period shall be twelve (12) months.

5.15        “Stock Awards” means all stock options, restricted stock and such other awards granted pursuant to the Company’s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.

ARTICLE 6

GENERAL PROVISIONS

6.1          Employment Status.  This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on the Company any obligation (a) to retain Executive as an employee, (b) to change the status of Executive as an at-will employee, or (c) to change the Company’s policies regarding termination of employment.

6.2          Notices.  Any notices provided hereunder must be in writing, and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail to the Company at its primary office location and to Executive at Executive’s address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at the address as listed in the Company’s payroll records.

6.3          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not

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affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

6.4          Waiver.  If either party should waive any breach of any provisions of this Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

6.5          Arbitration.  Any dispute, claim or controversy based on, arising out of or relating to Executive’s employment or this Agreement shall be settled by final and binding arbitration in Santa Clara County, California, before a single neutral arbitrator in accordance with the National Rules for the Resolution of Employment Disputes (the “Rules”) of the American Arbitration Association, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.  Arbitration may be compelled pursuant to the California Arbitration Act (Code of Civil Procedure §§ 1280 et seq.).  If the parties are unable to agree upon an arbitrator, one shall be appointed by the AAA in accordance with its Rules.  Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case; however, Executive and the Company agree that, to the extent permitted by law, the arbitrator may, in his discretion, award reasonable attorneys’ fees to the prevailing party.  Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, AAA’s administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company.  This Section 6.5 is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Agreement or relating to Executive’s employment; provided, however, that neither this Agreement nor the submission to arbitration shall limit the parties’ right to seek provisional relief, including, without limitation, injunctive relief, in any court of competent jurisdiction pursuant to California Code of Civil Procedure § 1281.8 or any similar statute of an applicable jurisdiction.  Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel arbitration.  Both Executive and the Company expressly waive their right to a jury trial. Pursuant to California Civil Code Section 1717, each party warrants that it was represented by counsel in the negotiation and execution of this Agreement, including the attorneys’ fees provision herein.

6.6          Complete Agreement.  This Agreement, including Exhibit A and Exhibit B, constitutes the entire agreement between Executive and the Company and is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter, wholly superseding all written and oral agreements with respect to severance benefits to Executive in the event of employment termination.  It is entered into without reliance on any promise or representation other than those expressly contained herein.  Notwithstanding anything herein to the contrary, this Agreement shall not supersede any indemnification agreement between Executive and the Company.

6.7          Amendment or Termination of Agreement.  This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive.  The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company after such change or termination has been approved by the Board.

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6.8          Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

6.9          Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

6.10        Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, and the Company, and any surviving entity resulting from a Change of Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company, and their respective successors, assigns, heirs, executors and administrators, without regard to whether or not such person actively assumes any rights or duties hereunder; provided, however, that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.

6.11        Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state’s conflict of laws rules.

6.12        Non-Publication.  The parties mutually agree not to disclose publicly the terms of this Agreement except to the extent that disclosure is mandated by applicable law or regulation or to their respective advisors (e.g., attorneys, accountants).

6.13        Construction of Agreement.  In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties have executed this Agreement on the Effective Date written above.

SYMMETRICOM, INC.	EXECUTIVE
By:
Name:
Title:

Exhibit A:  Release (Individual Termination)

Exhibit B:  Release (Group Termination)

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EXHIBIT A

RELEASE
(INDIVIDUAL TERMINATION)

Certain capitalized terms used in this Release are defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s proprietary information and inventions agreement.

I acknowledge that I have read and understand 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 or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.

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I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me.

EXECUTIVE

Date:

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EXHIBIT B

RELEASE
(GROUP TERMINATION)

Certain capitalized terms used in this Release are defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s proprietary information and inventions agreement.

I acknowledge that I have read and understand 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 or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.

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I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have forty-five (45) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me; and (F) I have received with this Release a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who were not terminated.

EXECUTIVE

Date:

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EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

EMPLOYMENT AND EXECUTIVE SEVERANCE AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AND EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”), effective as of  October 30, 2008, is entered into by and between, THOMAS W. STEIPP (“Executive”) and SYMMETRICOM, INC. (the “Company”).

RECITALS

WHEREAS, Executive is currently employed by the Company as President and Chief Executive Officer;

WHEREAS, the parties now desire to supersede and replace the Employment and Executive Severance Agreement dated September 14, 2007 (the “Prior Agreement”), and any other agreement relating to Executive’s employment with the Company or Executive’s severance benefits in the event of his severance from employment with the terms and provisions set forth herein;

WHEREAS, 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, and 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;

WHEREAS, 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;

WHEREAS, 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; and

WHEREAS, 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.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1.EMPLOYMENT PERIOD.

1.1Basic Term.   The Company shall employ Executive from the date of this Agreement through December 31, 2008 (the “Term Date”), or such later date through which this

Agreement may be extended under Section 1.2, unless Executive is terminated sooner in accordance with Section 4.

1.2Renewal.  Unless terminated sooner in accordance with Section 4, this 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 60 days prior to such date.  The Company may elect not to renew this Agreement only for Cause, within the meaning of Section 12.1.

2.POSITION AND RESPONSIBILITIES.

2.1Position.  Executive accepts employment with the Company as Chief Executive Officer and shall perform all services appropriate to that position.

2.2Outside Activity.  Except upon the prior written consent of the Company, Executive, during his employment with the 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 the Company, create a conflict of interest with the Company, or otherwise interfere with the business of the Company or any of its affiliates.

3.COMPENSATION AND BENEFITS.

3.1Base Salary.  Executive’s base salary shall be at the annual rate of $500,000 for fiscal 2009 (the year ending June 30, 2009). 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 or its Compensation Committee.

3.2Incentive Compensation.  Executive shall participate in the Company’s Management Incentive Plan, the terms of which shall be determined each fiscal year by the Board or the Compensation Committee. For fiscal year 2009 Executive shall be eligible to earn up to 75% of Executive’s Base Salary as Incentive Compensation (“Target Bonus”).  The maximum Target Bonus may be adjusted from time to time by the Compensation Committee in their sole discretion.  The exact amount of the Target Bonus awarded the Executive in any given year shall be determined by the Compensation Committee in their sole discretion.

3.3Equity Compensation.  The parties acknowledge that Executive has the same right to participate in the Company’s current 2006 Incentive Award Plan and in future equity incentive plans as other Company executives.

3.4Relocation Assistance.  The parties acknowledge that the Company 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:

(a)           Interest-Bearing Loan. In March 1998, the Company loaned Executive the principal amount of $400,000, with an interest rate of 6.0% (the “Interest-Bearing Loan”), and agreed to forgive such principal and interest in four equal installments. The four forgiveness installments were made on June 30, 1998, 1999, 2000 and 2001.

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(b)           Interest-Free Loan.  In March 1998, the Company loaned Executive the principal 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 and has been fully repaid as of the effective date of this Agreement.

3.5Benefits.  Executive shall receive the following benefits.

(a)           eligibility to participate in the SymmetriCom Executive Medical Plan;

(b)           long-term disability insurance coverage;

(c)           life insurance coverage;

(d)           eligibility to participate in the Company’s retirement and deferred compensation plans; and

(e)           four weeks’ annual paid vacation.

3.6Business Equipment.  The Company shall furnish Executive with such 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.  The Company also shall furnish Executive with a cellular telephone, and shall pay the monthly telephone bill therefor.

4.TERMINATION OF EMPLOYMENT.

4.1By Death.  Executive’s employment shall terminate upon his death. In the event of such termination, the Company shall:  (a) 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 3.1 at the time of his death; (b) promptly transfer to Executive’s estate any accrued but unpaid incentive compensation to which Executive may have been entitled under Section 3.2; and (c) promptly reimburse Executive’s estate for any outstanding reasonable business expenses incurred by Executive prior to his death.   Thereafter, the 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 the Company.

4.2By Disability.  This Agreement shall terminate as of the end of the calendar month in which Executive: (a) 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 (b) has been determined by the insurer that issued the Company’s long-term disability policy in effect pursuant to Section 3.5 to be eligible to commence receiving long-term disability benefits (“Disability”). In the event of such termination, the Company shall: (i) pay Executive the salary to which he is entitled pursuant to Section 3.1 through the date of termination; (ii) promptly transfer to Executive’s estate any accrued but unpaid incentive compensation to which Executive may have been entitled under Section 3.2; and (iii) promptly reimburse Executive for any outstanding reasonable business expenses incurred by Executive prior to his termination.  Thereafter, the obligations of the

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Company shall terminate. This Section shall not in any way diminish Executive’s right to receive disability insurance proceeds.

4.3By the Company for Cause.  The Company may terminate Executive’s employment for Cause (as defined in Section 12) without notice at any time after the written warning and minimum cure period have been provided in accordance with Section 12. In the event of such termination, the Company shall: (a) pay Executive the salary to which he is entitled pursuant to Section 3.1 through the date of termination; (b) promptly transfer to Executive any accrued but unpaid incentive compensation to which he is entitled pursuant to Section 3.2; and (c) promptly pay any outstanding reasonable business expenses incurred by Executive prior to such termination.  Thereafter, the obligations of the Company shall terminate.

4.4By the Company Other Than for Cause (Including Non-Renewal) or By Executive for Good Reason.  Except as expressly provided in Section 4.2 or 4.5, if Executive is terminated by the Company other than for Cause (or death or Disability), or if the Company fails to renew this Agreement other than for Cause, or if Executive resigns from the Company for Good Reason within 90 days following the event constituting Good Reason, and such termination constitutes a Separation from Service, then the Company shall:

(a)           within 30 days following such termination, pay Executive a lump sum equal to the sum of (i) Executive’s annual base salary as in effect as of the date of such termination, and (ii) 100% of Executive’s Target Bonus for the year prior to the year in which the termination occurs; and

(b)           provide to Executive 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 the Company’s expense. Company-Paid Coverage shall continue until the earlier of: (i) the end of the 18th month following the month in which the date of termination occurred, or (ii) 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.

4.5By Executive Other Than For Good Reason. At any time after the Term Date, Executive may terminate his employment, other than for Good Reason, by providing the Company at least sixty (60) days’ advance written notice.  The 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, the 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 60 days. Thereafter, except as set forth herein, all of the Company’s obligations under this Agreement shall cease.

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4.6By Change of Control.  Notwithstanding Sections 4.1 — 4.5, if there is a Change of Control, payments to Executive upon termination of employment shall be determined in accordance with this Section 4.6.

(a)Involuntary Termination other than for Cause, Death or Disability or Voluntary Termination for Good Reason Within 12 Months Following A Change of Control.  If Executive’s employment with the Company terminates within 12 months following a Change of Control by virtue of (x) an involuntary termination by the Company other than for Cause, (y) Executive’s death or Disability, or (z) a voluntary termination for Good Reason within 90 days following the event constituting Good Reason, and such termination constitutes a Separation from Service, then the Company shall provide Executive with the following benefits:

(i)            Base Salary and Target Bonus Payment. Within 30 days following such termination, pay Executive a lump sum equal to three times the sum of (x) Executive’s annual base salary as in effect as of the date of such termination, and (y) 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 Executive’s outstanding Stock Awards;

(iii)         COBRA and Life Insurance. Provide to Executive, upon his termination of employment with the Company, with Company-Paid Coverage (as defined in Section 4.4(b) above).  If such coverage included the Executive’s dependents immediately prior to the date of termination, such dependents shall also be covered at the Company’s expense. Company-Paid Coverage shall continue until the earlier of (x) the end of the 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 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 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 12 months following a Change of Control.

(c)Termination After the 12 Month Period Following a Change of Control. In the event the Executive’s employment is terminated for any reason after the 12 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.

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5.TAXATION OF SEVERANCE BENEFITS.

In the event that the benefits provided for in Section 4.6 of 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 the 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. Such Gross-Up Payment shall be paid to the Executive by the end of the calendar year next following the calendar year in which the Executive or the Company remits the excise tax imposed by Section 4999 of the Code.  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.

6.NO SOLICITATION/RAIDING OF EMPLOYEES.

Executive acknowledges and agrees that the Company has invested substantial time and effort in assembling its staff.  Accordingly, Executive agrees and covenants that, for a period of 18 months following the termination of his employment with Company pursuant to Section 4.4, above, Executive will not, directly or indirectly, attempt to recruit, induce or solicit any employee to leave his/her employment with the Company.

7.NON-DISCLOSURE.

Executive agrees to maintain in strict confidence any confidential and proprietary information pertaining to the business of the Company, its agents, representatives, officers, staff and all related entities.

8.CONSIDERATION FOR NO SOLICITATION/RAIDING OF EMPLOYEES AND NON-DISCLOSURE.

In consideration of Executive’s covenants and promises herein contained in Sections 6 and 7, and notwithstanding any provision in the 2006 Incentive Award Plan (or any other applicable equity incentive plan or agreement evidencing a Stock Award), 1/3 of the shares subject to unvested Stock Awards held by Executive shall be vested immediately upon the termination of his employment with the Company pursuant to Section 4.4 above.  Executive shall have until the first anniversary of the date of termination (or, if earlier, the expiration of the full

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term of such Stock Award) to exercise any such Stock Awards which are options or stock appreciation rights as to which the vesting shall have been accelerated in accordance with this Section 8.

9.SUCCESSORS.

9.1Company’s Successors. Any successor to the Company (whether 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 9.1 or which becomes bound by the terms of this Agreement by operation of law.

9.2Executive’s Successors. The terms of this Agreement and all 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.

10.NOTICES.

10.1General. Notices and all other communications contemplated by 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.

10.2Notice of Termination. Any termination by the Company for Cause or by 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 10.1, above, and after the period for cure, as required by Section 12, 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 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.

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11.MISCELLANEOUS PROVISIONS.

11.1No Duty to Mitigate. Executive shall not be required to mitigate the 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.

11.2Waiver. No provision of this Agreement shall be modified, waived or 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.

11.3Entire Agreement. No agreements, representations or understandings whether oral or written, express or implied) which are not expressly set forth or referenced in this Agreement 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.  Effective upon the effective date hereof, the Prior Agreement shall be terminated and of no further force or effect.

11.4Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, with the exception of its conflict of laws provisions.

11.5Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

11.6Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

11.7Attorneys’ Fees. 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 non-prevailing party.

11.8Withholding.  All amounts and benefits payable pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.

12.DEFINITIONS.

The following terms referred to in this Agreement shall have the following meanings:

12.1Cause. 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 the Company, other than as a result of incapacity due to physical or mental illness, and, after (i) being warned in writing, and (ii) 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.

12.2Good Reason. “Good Reason” means any one or more of the following events which the Company fails to cure by the Company within the 30-day period immediately following written notice from Executive to the Company of the occurrence of such event:

(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 30 miles from Executive’s current residence;

(c)           any failure by the Company or its affiliates to pay, or any reduction by the Company or its affiliates of, Executive’s base salary, incentive compensation, equity compensation or benefits received by Executive (prior to any Change of Control if Section 4.6 is applicable).

12.3Other than for Cause. Involuntary termination shall be “other than for Cause” unless Executive is terminated for engaging in conduct described in Section 12.1.

12.4Change of Control. “Change of Control” means:

(a)           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;

(b)           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;

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(c)           a change in the composition of the Board 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 (i) are directors of the Company as of the date hereof, or (ii) 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;

(d)           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 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.

12.5Separation from Service.  “Separation from Service” means a termination of Executive’s employment with the Company which constitutes a separation from service within the meaning of Section 409A of the Code and the regulations promulgated thereunder, including Treasury Regulation Section 1.409A-1(h).

12.6Stock Award. “Stock Award” means all stock options, restricted stock and such other awards granted pursuant to the Company’s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.

13.          SECTION 409A.

Notwithstanding any provision to the contrary in the Agreement, if Executive is deemed by the Company at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (a) the expiration of the six-month period measured from the date of the Executive’s Separation from Service with the Company or (b) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this Section 13 shall be paid in a lump sum to the Executive (or his estate), and any remaining payments due under the Agreement shall be paid as otherwise provided herein.  To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any reimbursements payable to Executive (or his estate) shall be paid no later than December 31 of the year following the year in which the cost was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

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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.

THOMAS W. STEIPP
/s/ Thomas W. Steipp
	Date:		October 30, 2008
SYMMETRICOM, INC.
By:	/s/ Bill Minor
	Name:				Bill Minor
	Its:	Vice President, Global Human Resources
	Date:			October 30, 2008

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EX-31

Exhibit 31

CERTIFICATION

I, Thomas W. Steipp, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Symmetricom, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2009

/s/ THOMAS W. STEIPP

Thomas W. Steipp
Chief Executive Officer and Director

CERTIFICATION

I, Justin Spencer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Symmetricom, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2009

/s/ JUSTIN SPENCER

Justin Spencer
Executive Vice President, Chief Financial Officer
and Secretary

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Thomas W. Steipp, Chief Executive Officer of Symmetricom, Inc. (the “Company”), pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify to my knowledge that:

i.the Quarterly Report on Form 10-Q of the Company for the quarterly period ended December 28, 2008 (the “Report”) fully complies with the requirements of Section 13 (a) or Section 15 (d), as applicable, of the Securities Exchange Act of 1934, as amended; and

ii.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATE: February 6, 2009	By:	/s/ THOMAS W. STEIPP
		Thomas W. Steipp
		Chief Executive Officer

* * * * *

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Justin Spencer, Chief Financial Officer of Symmetricom, Inc. (the “Company”), pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify to my knowledge that:

i.the Quarterly Report on Form 10-Q of the Company for the quarterly period ended December 28, 2008 (the “Report”) fully complies with the requirements of Section 13 (a) or Section 15 (d), as applicable, of the Securities Exchange Act of 1934, as amended; and

ii.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATE: February 6, 2009	By:	/s/ JUSTIN SPENCER
		Justin Spencer
		Executive Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)