Change
Of Control Severance Agreement
This Change of
Control Severance Agreement (the “Agreement”) is made
and entered into by and between Charles Bonasera , (the
“Employee”) and Harmonic Inc. (the
“Company”), effective as of the latest date set forth
by the signatures of the parties hereto below.
A. 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. The Board of Directors of the Company (the “Board
“) recognizes that such consideration can be a distraction to
the Employee and can cause the Employee to consider alternative
employment opportunities. The Board has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication and objectivity
of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the
Company.
B. The Board
believes that it is in the best interests of the Company and its
shareholders to provide the Employee with an incentive to continue
his employment and to motivate the Employee to maximize the value
of the Company upon a Change of Control for the benefit of its
shareholders.
C. The Board
believes that it is imperative to provide the Employee with certain
severance benefits upon Employee’s termination of employment
following a Change of Control which provides the Employee with
enhanced financial security and provides incentive and
encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
D. Certain
capitalized terms used in the Agreement are defined in
Section 6 below.
The parties hereto
agree as follows:
1. Term
of Agreement . This Agreement shall terminate upon the date
that all obligations of the parties hereto with respect to this
Agreement have been satisfied.
2.
At-Will Employment . The Company and the Employee
acknowledge that the Employee’s employment is and shall
continue to be at-will, as defined under applicable law. If the
Employee’s employment terminates for any reason, including
(without limitation) any termination prior to a Change of Control,
the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with the
Company’s established employee plans and practices or
pursuant to other agreements with the Company.
(a)
Termination Following a Change of Control . If the
Employee’s employment terminates at any time within eighteen
(18) months following a Change of Control, then, subject to
Section 5, the Employee shall be entitled to receive the
following severance benefits:
(i)
Involuntary Termination . If the Employee’s employment
is terminated as a result of Involuntary Termination other than for
Cause, then the Employee shall receive the following severance
benefits from the Company:
(1)
Severance Payment . A cash payment in an amount equal to one
hundred percent (100%) of the Employee’s Annual
Compensation;
(2)
Bonus Payment . A cash payment in an amount equal to either
50% of the established annual target bonus or the average of the
actual bonus paid in each of the two prior years, whichever is
greater.
(3)
Continued Employee Benefits . One hundred percent (100%)
Company-paid health, dental and life insurance coverage at the same
level of coverage as was provided to such employee immediately
prior to the Change of Control (the “Company-Paid
Coverage”). If such coverage included the Employee’s
dependents immediately prior to the Change of Control, such
dependent shall also be covered at Company expense. Company- Paid
Coverage shall continue until the earlier of (i) one year from the
date of the Change of Control, or (ii) the date that the
Employee and his dependents become covered under another
employer’s group health, dental or life insurance plans. For
purposes of Title X of the Consolidated Budget Reconciliation Act
of 1985 (“COBRA”), the date of the “qualifying
event” for Employee and his dependent shall be the date upon
which the Company-Paid Coverage terminates.
(4)
Option and Restricted Stock Accelerated Vesting . One
hundred percent (100%) of the unvested portion of any outstanding
stock option or restricted stock held by the Employee shall
automatically be accelerated in full so as to become completely
vested and all such outstanding stock options shall be exercisable
for a period of one year after such termination.
(5)
Outplacement Assistance . If desired by Employee, Company
will pay up to five thousand dollars ($5,000.00) for outplacement
assistance selected by Company and approved by Employee.
(b)
Timing of Severance Payments . Any severance payment to
which Employee is entitled under Section 3(a)(i)(1) shall be
paid by the Company to the Employee (or to the Employee’s
successors in interest pursuant to Section 7(b)) in cash and
in full, not later than thirty (30) calendar days following the
Termination Date or within twelve (12) months of Termination
Date at the election of the Employee.
(c)
Voluntary Resignation; Termination For Cause . If the
Employee’s employment terminates by reason of the
Employee’s voluntary resignation (and is not an Involuntary
Termination), or if the Employee is terminated for Cause, then the
Employee 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 and
practices or pursuant to other agreements with the
Company.
(d)
Disability; Death . If the Company terminates the
Employee’s employment as a result of the Employee’s
Disability or such Employee’s employment is terminated due to
the death of the Employee then the Employee 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 and practices or pursuant to other
agreements with the Company.
(e)
Termination Apart from Change of Control . In the event the
Employee’s employment is terminated for any reason, either
prior to the occurrence of a Change of Control or after the
eighteen (18) -month period following a Change of Control, then the
Employee 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 and practices or pursuant to
other agreements with the Company.
4.
Attorney Fees; Costs and Expenses . The Company shall
promptly reimburse Employee, on a monthly basis, for the reasonable
attorney fees, costs and expenses incurred by the Employee in
connection with any action brought by Employee to enforce his
rights hereunder, regardless of the outcome of the
action.
5.
Limitation on Payments . In the event that the severance and
other benefits provided for in this Agreement or otherwise payable
to the Employee (i) constitute “parachute
payments” within the meaning of
2
Section 280G of the Internal Revenue Code
of 1986 as amended (the “Code”) and (ii) but for
this Section 5, would be subject to the excise tax imposed by
Section 4999 of the Code, then the Employee’s severance
benefits under Section 3(a)(i) shall be either
(a) delivered
in full, or
(b) delivered
as to such lesser extent which would result in no portion of such
severance benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts
taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in
the receipt by the Employee on an after-tax basis, of the greatest
amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under
Section 4999 of the Code. Unless the Company and the Employee
otherwise agree in writing, any
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