Exhibit 10.1
TRANSITION
AGREEMENT
This Transition Agreement
(“Agreement”) is made by and between Polycom, Inc. (the
“Company”), and David R. Phillips
(“Employee”) (collectively referred to as the
“Parties” or individually referred to as a
“Party”), effective as of March 30, 2009 (the
“Effective Date”).
WHEREAS, Employee is employed with
the Company;
WHEREAS, Employee will continue to
provide services to the Company effective
February 17, 2009, through March 31, 2009, on a
part-time basis; and
WHEREAS, Employee’s employment
with the Company will terminate effective March 31, 2009
(the “Separation Date”).
NOW THEREFORE, in consideration of
the mutual promises made herein, the Company and Employee hereby
agree as follows:
1. Position and Duties . For
the period beginning February 17, 2009, and ending
March 31, 2009 (the “Transition Period”), Employee
will be employed by the Company on a part-time basis equal to fifty
percent (50%) of Employee’s regular full-time schedule,
reporting to Robert C. Hagerty, Chief Executive Officer, and
engaging in activities related to transitioning the Company’s
worldwide sales operations and other special projects as designated
by Mr. Hagerty.
2. Base Compensation . As
compensation for services that Employee will provide to the Company
during the Transition Period, Employee will receive from the
Company base compensation, pro-rated for the Transition Period, in
the amount of One Hundred Eighty One Thousand Seven Hundred Fifty
Dollars ($181,750) per annum (the “Transition Salary”)
(which is equal to fifty percent (50%) of Employee’s
current base compensation of Three Hundred Sixty-Three Thousand
Five Hundred Dollars ($363,500) per annum (the “Base
Salary”)). The Transition Salary will be paid in accordance
with the Company’s normal payroll practices and be subject to
the usual required withholdings.
3. Incentive Compensation .
During the Transition Period, Employee will continue to be eligible
to participate in the Company’s then applicable bonus plan to
the extent any amounts are earned under the plan pursuant to its
terms, as if Employee were still a full time employee.
4. Employee Benefits . During
the Transition Period, Employee will be entitled to participate in
the employee benefit plans and programs currently and hereafter
maintained by the Company of general applicability to other
executives of the Company. The Company reserves the right to cancel
or change the benefit plans and programs it offers to its employees
at any time.
5. Vacation . During the
Transition Period, Employee will be eligible to accrue paid time
off (“PTO”) under the Company’s PTO
policy.
6. Expenses . The Company
will reimburse Employee for reasonable travel, entertainment or
other expenses incurred by Employee in the furtherance of or in
connection with the performance of Employee’s duties
hereunder during the Transition Period, in accordance with the
Company’s expense reimbursement policy in effect from time to
time.
7. Resignation . On the
Separation Date, Employee will be deemed to have resigned
voluntarily from all Company positions held by him, without any
further required action by the Employee; provided however, if the
Company requests, Employee will execute any documents necessary to
reflect his resignation.
Assuming that this Agreement becomes
effective in accordance with its terms, including Employee’s
performance of services to the Company during the Transition Period
under the terms of Section A.1 (provided that the first time, if
any, that the Company believes that Employee is not performing such
services, its shall provide Employee with written notice of such
failure and five business days to cure such failure), and that the
provisions set forth in Section C are satisfied, the Company will
provide Employee with the following:
1. Severance . In
consideration for the execution by Employee of a Supplemental
Separation and General Release Agreement, the form of which is
attached hereto as Exhibit A (the “Supplemental
Agreement”), the Company shall pay Employee a total amount
equal to Four Hundred Twenty-Seven Thousand Five Hundred Dollars
($427,500) (the “Severance Payment”) less applicable
deductions and tax withholdings, payable in two installments, as
set forth and subject to the provisions of Section B.4.1. and
B.4.2..
2. Outplacement Services .
Employee will be eligible for outplacement services provided by
Right Management Consultants, as reasonably determined by the
Company, for six (6) months following the Separation
Date.
3. COBRA . The Company will
pay the cost, on behalf of Employee, for Employee’s cost of
continued group health insurance for Employee and/or
Employee’s eligible and covered dependents under Title X of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) for twelve (12) months following
the Separation Date so long as Employee timely elects such
continuation coverage. The Company’s obligation to pay for
such continuation coverage shall cease immediately if and to the
extent that Employee and/or Employee’s covered dependents (as
the case may be) are no longer entitled to receive COBRA
continuation coverage. Employee agrees to notify a duly authorized
officer of the Company, in writing, immediately upon
Employee’s and/or a covered dependent’s beginning to
receive health benefits from another source, or as otherwise
required by COBRA.
4. Section 409A
.
4.1. Separation from Service
. Notwithstanding anything to the contrary in this Agreement, any
severance payments or benefits payable to Employee upon a
termination of employment, pursuant to this Agreement and the
Supplemental Agreement, when considered together with any other
severance payments or separation benefits, that are considered
deferred compensation under Section 409A of the Internal
Revenue Code of 1986, as amended and the final regulations and any
guidance promulgated thereunder (together, “Section
409A”), and are
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not otherwise exempt therefrom,
shall not be payable until Employee has a “separation from
service” within the meaning of Section 409A (a
“Separation from Service”). It is intended and expected
that Employee will have a Separation from Service from the Company
on the Separation Date.
4.2. Delayed
Payments . The payment of severance benefits will be delayed
until the date that is six (6) months and one (1) day
following the Employee’s Separation from Service and will
become payable in two (2) separate installments as follows:
(a) the first installment of Three Hundred Twenty Thousand Six
Hundred Twenty-Five Dollars ($320,625) on the date that is six
(6) months and one (1) day following the Employee’s
Separation from Service (i.e., October 15
th
, 2009) and
(b) the second installment of One Hundred Six Thousand Eight
Hundred Seventy-Five Dollars ($106,875) on the date that is twelve
(12) months following the Employee’s Separation from
Service (i.e., April 1 st , 2010). No interest will be
accrued or paid on the delayed payments. Each payment and benefit
payable under the Agreement is intended to constitute a separate
payment for purposes of Section 409A.
1. Acknowledgments . Employee
agrees and acknowledges to the following:
1.1. Employee’s employment
with the Company will end on the Separation Date and the Company
has no future obligation to re-employ Employee.
1.2. No later than the Separation
Date, Employee will return to the Company all documents and
materials (in electronic, paper or other form) created or received
by Employee in the course of employment with the Company (to the
extent currently in his possession or control, it being
acknowledged that many of such documents or materials have been
discarded since the date of such creation or receipt), except
Employee’s personal copies of documents evidencing
(a) Employee’s hire, compensation rate and payments,
discipline (if any) and benefits (b) stock options and
documents received as a shareholder; (c) letter of
termination; (d) the Employee Proprietary Information and
Invention Agreement (the “Confidentiality Agreement”)
between Employee and the Company; and (e) any other agreements
between Employee and the Company signed by the Employee.
1.3. No later than the Separation
Date (but subject to the last sentence of this Section C.1.3.),
Employee will return to the Company all items of property,
including but not limited to, laptop computers, cell phones,
personal digital assistants, etc., provided by the Company for
Employee’s use during employment with the Company in good
condition and proper working order. To the extent Employee fails to
return all property provided by the Company in good condition and
proper working order on or before the Separation Date, Employee
understands and agrees that the Company may deduct from the
Severance Payment the dollar value of the property that the
Employee has failed to return or that Employee has returned in
damaged or non-working condition. Notwithstanding the foregoing,
Employee shall be permitted to retain Employee’s
Company-issued computer laptop (with proprietary Company and
Company licensed software removed), mobile phone, assigned
telephone number and PDA (respectively the “Company
Devices”) for the continued use of Employee (provided, that
any Company files on the laptop and PDA are deleted).
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1.4. Even if Employee does not sign
this Agreement, Employee would still have continuing obligations
under Employee’s Confidentiality Agreement, a copy of which
has been provided to Employee. This Agreement is not intended to,
and does not, alter, eliminate or supersede Employee’s
continuing obligations (other than obligations under paragraph C.7.
of the Confidentiality Agreement, which are superseded hereby)
under his Confidentiality Agreement.
1.5. Within seven (7) days of
issuance of Employee’s final paycheck by the Company,
Employee will confirm that he has received and reviewed his final
paycheck and the Company has paid all salary, wages, bonuses,
accrued vacation, and any and all other compensation due to
Employee through his final day of employment. No other amounts are
due to the Employee from the Company, except those amounts that may
become due under this Agreement.
2. Confidentiality . Employee
will not disclose to others the existence of this Agreement, the
contents or terms of this Agreement, or the consideration for this
Agreement (hereinafter collectively referred to as
“Settlement Information”), except that Employee may
disclose such information to Employee’s spouse or
domestic/civil union partner and to Employee’s attorney or
accountant (in order for such individuals to render personal
services to Employee), so long as such individuals agree to keep
such information confidential. In the event the prior agreement to
be bound by the terms of this confidentiality provision is not
obtained from such individuals, the disclosure may not be made
without breach of this Agreement. Nothing in this Section C.2., or
elsewhere in this Agreement, is intended to prevent or prohibit
Employee from (a) providing information regarding
Employee’s former employment relationship with the Company,
as may be required by law or legal process; or
(b) cooperating, participating or assisting in any government
entity investigation or proceeding. Notwithstanding the foregoing,
Employee’s obligations under the first two sentences of this
Section C.2. shall terminate in the event that the Company makes
public (through a securities filing or otherwise) the Settlement
Information.
3. Non-Compete;
Non-Solicitation .
3.1. Employee acknowledges that
during the course of the Employee’s involvement with the
Company, Employee has received and been privy to Company
confidential information and trade secrets and will continue to
receive Company confidential information and trade secrets during
the course of Employee’s employment with the Company, and
that Company has a legitimate interest in ensuring that such
confidential information and trade secrets remain confidential and
are not disclosed to third parties. Thus, to avoid the actual or
threatened misappropriation of such trade secrets and confidential
information, Employee agrees that the receipt of the Severance
Payment pursuant to Section B.1. will be subject to Employee
agreeing that beginning on the Effective Date and ending on the
first anniversary of the Separation Date (the
“Non-Competition Period”), Employee shall not, directly
or indirectly, without the prior written consent of Company:
(a) engage in, anywhere in the Restricted Territory (as
defined below), whether as an employee, agent, consultant, advisor,
independent contractor, proprietor, principal, partner,
stockholder, officer, director or otherwise, or have any ownership
interest in (except for ownership of one percent (1%) or less
of any publicly-held entity), or participate in or facilitate the
financing, operation, management or control of, any Competing
Person (as defined below) that directly or indirectly engages in a
Competing Business Purpose (as defined below);
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or (b) contact or solicit
Company’s customers in connection with a Competing Business
Purpose. “Competing Business Purpose” means any
business relating to (a) audio-conferencing, and (b) two
way or multi way video communications, including but not limited to
(1) videoconferencing, (2) telepresence conferencing,
(3) immersive room conferencing, (4) videoconferencing
desktop systems or videoconferencing software, (5) wired or
wireless videoconferencing (6) telephony videoconferencing
systems or applications, (7) classroom videoconferencing
systems, (8) auditorium videoconferencing systems,
(9) medical videoconferencing systems,
(10) videoconferencing infrastructure, including bridges and
management, and (11) any other wired or wireless
videoconferencing devices, videoconferencing consumer set-top boxes
or videoconferencing software client included therein, or any
similar means of videoconferencing communications. Competing
Business Purpose shall also include without limitation (i) the
ownership, design, development, engineering or licensing of any
intellectual property specifically targeted to the foregoing, or
(ii) the design, development or marketing of any product or
Service or engineering or manufacturing of any product, in each
case specifically targeted to the foregoing, and where
“Service(s)” is defined to include without limitation
maintenance, professional, hosting or installation service(s).
“Competing Person” means (i) any Person for which
the Competing Business Purpose constitutes the primary focus of
such Person’s business or (ii) with respect to Persons
that are not so primarily engaged in the Competing Business
Purpose, any division or segment of the Person that is primarily
engaged in the Competing Business Purpose. “Restricted
Territory” means worldwide.
3.2. Beginning on the Effective Date
and ending twelve (12) months from the Separation Date (the
“No Hire Period”), Employee shall not, directly or
indirectly, without the prior written consent of Company,
(a) solicit for hire (other than through general industry
solicitations of employment) any employee, officer, or director of
the Company or any subsidiary of Company, or any person known to
Employee to be an agent, consultant, advisor or independent
contractor of the Company or any subsidiary of Company, to the
extent that any such employee, officer, director or other such
person provided services to the Company or any subsidiary of the
Company within the one year period prior to the Separation Date
(each a “Covered Person” and collectively, the
“Covered Persons”) or (b) overtly induce or
encourage any Covered Person to terminate such employee’s
employment with the Company or such subsidiary of Company;
provided, however, that the foregoing is not intended to prohibit
the Employee from engaging independent accounting or independent
law firms (subject to issues relating to conflicts of interest,
which are not being waived herein) from providing services to such
entities.
3.3. The covenants contained in
Section C.3.1. and C.3.2. hereof shall be construed as a series of
separate covenants, one for each country, province, state, city or
other political subdivision of the Restricted Territory. Except for
geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenants contained in Section C.3.1. and
Section C.3.2. hereof. If, in any judicial proceeding, a court
refuses to enforce any of such separate covenants (or any part
thereof), then such unenforceable covenant (or such part) shall be
eliminated from this Agreement to the extent necessary to permit
the remaining sep
