Offer Letter

Change of Control Severance Agreement

 

 

 

 

 

 

 

EX-10.1 3 d637706dex101.htm EX-10.1

Exhibit 10.1

 

LOGO

    

Polycom, Inc.

6001 America Center Drive

San Jose, CA 95002

  

TEL 408-586-6000

  

www.polycom.com

November 20, 2013

Delivered by Email

Mr. Peter Leav

Dear Peter:

Thank you for your interest in joining Polycom, Inc. (“Polycom” or the “Company”). We are pleased to extend to you the following offer:

 

1.

Title and Position: Your title and position will be President and Chief Executive Officer of the Company. You will be employed on a full-time basis and will report to the Company’s Board of Directors (the “Board”). This is an exempt professional position located in San Jose, California.

 

2.

Board Membership: You will be appointed to serve as a director of the Company within thirty (30) days of your commencement of employment. Thereafter, for as long as you remain Chief Executive Officer of the Company, the Company will place your name on the list of nominations as a candidate to be elected as a member of the Board subject to stockholder vote and take such actions as may be necessary or appropriate to support your election to the Board. Notwithstanding the foregoing, you agree to resign immediately from the Board in the event that you cease to be the Chief Executive Officer of Polycom.

 

3.

Duties: Your duties will be consistent with your title and position as President and Chief Executive Officer of the Company, and any other duties reasonably assigned or requested by the Board.

 

4.

Salary: Your annualized base salary will be $700,000, which will be subject to applicable tax withholdings and payable in accordance with the Company’s payroll policy. Your base salary will be subject to annual review and adjustment by the Board, in its sole discretion.

 

5.

Annual Bonus. Beginning in 2014, you will be eligible to participate in any bonus plans or programs maintained from time to time by Polycom for its executive officers on such terms and conditions (including any applicable performance criteria) as determined by the Board, in its sole discretion, after consultation with you. For 2014, your target bonus opportunity will be equal to 125% of your annual base salary earned during the year. You will receive additional details regarding Polycom’s bonus plans and the applicable performance metrics upon your hire.


6.

Signing Bonus: The Company will pay you a signing bonus in an amount equal to $2,000,000, less applicable tax withholdings. This signing bonus will be provided as a lump sum cash payment within thirty (30) days following the date that your employment with the Company commences (such employment commencement date, the “Start Date”), provided that you are employed with the Company on such date. In the event that you voluntarily terminate your employment with Polycom without “Good Reason” or Polycom terminates your employment due to “Cause,” and (a) such termination occurs on or before the one (1) year anniversary of your Start Date, then you will be required to repay to Polycom one hundred percent (100%) of the after-tax amount of the signing bonus, or (b) if such termination occurs after the one (1) year anniversary of your Start Date but on or before the two (2) year anniversary of your Start Date, you will be required to repay to Polycom fifty percent (50%) of the after-tax amount of the signing bonus, in each case within fifteen (15) days following the date of your employment termination with Polycom.

For purposes of this Section 6, the term “Cause” will have the meaning as defined in Polycom’s Executive Severance Plan (the “Severance Plan”). “Good Reason” will have the meaning as defined in Section 12 herein or in the event that a termination of your employment with Polycom occurs during the period beginning on the date of Polycom’s Change of Control (as defined in the Severance Plan) and ending on the date twelve (12) months following the Change of Control (such period, the “Change of Control Period”), or as defined in the Change of Control Severance Agreement to be entered into between you and Polycom (the “Severance Agreement”) (see Section 10 below).

Notwithstanding the foregoing, for purposes of the signing bonus under this Section 6, a termination of your employment with Polycom as a result of your death or Disability (as that term is defined in the Severance Plan if your employment termination occurs other than during the Change of Control Period or in the Severance Agreement if your employment termination occurs during the Change of Control Period) will not require the repayment of your signing bonus under this offer letter.

 

7.

Equity: Effective as of your Start Date and subject to the Board’s approval, you will be granted full value awards covering 700,000 shares of Polycom common stock (“Shares”), consisting of 350,000 Shares subject to a time-based restricted stock unit award (the “RSU Award”) and 350,000 Shares subject to a performance share award (the “Performance Award”). The RSU Award will be scheduled to vest as to fifty percent (50%) of the underlying Shares on the one (1) year anniversary of your Start Date, and as to twenty-five percent (25%) of the underlying Shares on each of the two (2) and three (3) year anniversaries of your Start Date, subject to your continued employment with the Company through each relevant vesting date or as otherwise expressly provided for herein. The Performance Award will be eligible to vest in accordance with the terms and conditions as determined by the Board, in its sole discretion and subject to continued employment with the Company through any applicable vesting dates or as otherwise expressly provided for herein. The maximum payout opportunity under the Performance Award will be one hundred fifty percent (150%) of the target number of Shares subject thereto. Each of the RSU Award and Performance Award will be granted under the Company’s existing equity incentive plan or other plan (e.g., an inducement plan) established by the Company, and subject

 

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to an award agreement thereunder, as determined by the Board in its sole discretion. You will be considered for eligibility to receive additional yearly equity awards commencing in 2015, as determined by the Board, in its sole discretion.

 

8.

Benefits: Polycom provides a competitive benefits package to all full-time, regular employees. You will be eligible to participate in Polycom’s existing generally available benefit plans at the same levels as Polycom’s other executive officers, subject to eligibility and other requirements of such plans, as determined by the Company. You also are eligible for flexible time off pursuant to Polycom’s flexible time off policy applicable to Vice Presidents and above. The Company may modify or terminate its benefits programs and arrangements from time to time as necessary or appropriate.

 

9.

Relocation Benefits: Polycom will handle the physical relocation of household goods; please contact Elisa Gilmartin at Elisa.Gilmartin@polycom.com to make arrangements for your relocation. You also will receive two round-trip coach tickets for you and your companion to travel to San Jose, California, for a house hunting/area familiarization trip. If needed, Polycom will arrange for up to six (6) months of your temporary living and storage of your household goods. All relocation benefits provided to you will be subject to the terms and conditions of Polycom’s existing relocation policy and guidelines. In the event that you voluntarily terminate your employment with Polycom without “Good Reason” or Polycom terminates your employment due to “Cause,” and (a) such termination occurs on or before the one (1) year anniversary of your Start Date, you will be required to repay to Polycom one hundred percent (100%) of the after-tax amount of the relocation benefits that Polycom provided to you within fifteen (15) days following the date of your employment termination with Polycom.

For purposes of this Section 9, the term “Cause” will have the meaning as defined in Polycom’s Executive Severance Plan (the “Severance Plan”). For purposes of this Section 9, “Good Reason” will have the meaning as defined in Section 12 herein or in the event that a termination of your employment with Polycom occurs during the period beginning on the date of Polycom’s Change of Control (as defined in the Severance Plan) and ending on the date twelve (12) months following the Change of Control (such period, the “Change of Control Period”) as defined in the Change of Control Severance Agreement to be entered into between you and Polycom (the “Severance Agreement”) (see Section 10 below).

Notwithstanding the foregoing, for purposes of the relocation benefits under this Section 9, a termination of your employment with Polycom as a result of your death or Disability (as that term is defined in the Severance Plan if your employment termination occurs other than during the Change of Control Period or in the Severance Agreement if your employment termination occurs during the Change of Control Period) will not require the repayment of your relocation benefits under this offer letter.

 

10.

Change of Control Severance Agreement: You will be eligible to receive severance benefits under certain circumstances pursuant to the Severance Agreement to be entered into between you and Polycom, in substantially the form attached as Exhibit A to this offer letter, as determined by the Board in its sole discretion. If your employment with Polycom is terminated due to your death or Disability (as defined in the Severance Agreement) or by Polycom other than for Cause (as defined in the Severance Agreement), or you terminate your employment with Polycom for Good Reason (as defined in the Severance Agreement) and in each case your employment

 

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termination occurs during the Change of Control Period, you will receive (a) a lump sum cash payment in an aggregate amount equal to two (2) times your base salary plus two (2) times your target bonus (less applicable tax withholdings), (b) a lump sum cash payment in an amount equal to twenty-four (24) months of continued medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) under Polycom’s health plans based on your plan elections in effect immediately prior to your termination of employment with Polycom (less applicable tax withholdings), and (c) accelerated vesting of all of your then-outstanding and unvested equity awards, with any performance goals subject to such equity awards deemed achieved at the target levels. The specific terms of these severance benefits will be subject to and set forth in the Severance Agreement to be entered into between you and Polycom. These severance benefits are subject to your entering into a release of claims in favor of Polycom and such other conditions as set forth in the Severance Agreement.

 

11.

Executive Severance Plan Participation: You will be eligible to participate in the Severance Plan, a copy of which is attached as Exhibit B to this offer letter, subject to the terms and conditions of the Severance Plan. The Severance Plan will be amended to provide (i) that for purposes of this Section 11 that Good Reason will be defined as set forth in Section 12 herein and (ii) that while you are Polycom’s Chief Executive Officer, if your employment with the Company is terminated by Polycom other than for Cause (as defined in the Severance Plan) and other than due to your death or Disability (as defined in the Severance Plan), or you terminate your employment with Polycom for Good Reason (as defined in Section 12 herein) and in each case your employment termination occurs other than during the Change of Control Period, your severance benefits under the Severance Plan will consist of the following: (a) a lump sum cash payment in an aggregate amount equal to eighteen (18) months of your base salary plus one and one-half (1.5) times your target bonus (less applicable tax withholdings), (b) a lump sum cash payment in an amount equal to eighteen (18) months of continued medical coverage pursuant to COBRA under Polycom’s health plans based on your plan elections in effect immediately prior to your termination of employment with Polycom (less applicable tax withholdings), and (c) with respect to any of your then-outstanding and unvested equity awards covering Shares that are subject only to time-based vesting, the accelerated vesting of the portion of such equity awards as if you otherwise had remained employed with the Company through the date eighteen (18) months following the date of your termination of employment with the Company. These severance benefits are subject to your entering into a release of claims in favor of Polycom and such other conditions as set forth in the Severance Plan.

 

12.

Good Reason: “Good Reason” means the occurrence of one or more of the following, without your express written consent: (i) a material reduction of the Employee’s duties, title, authority or responsibilities, relative to the Employee’s duties, title, authority or responsibilities as in effect immediately prior to such reduction, (ii) while you remain Chief Executive Officer of the Company, the Board’s failure to nominate or take such commercially reasonable actions as may be necessary or appropriate to support your election to the Board; (iii) a substantial reduction of the facilities and perquisites (including office space and location) available to you immediately prior to such reduction, other than any such reduction that also applies to substantially all other executive officers of the Company; (iv) a reduction by the Company of your base compensation or target annual bonus opportunity as in effect immediately prior to such reduction, other than a reduction of not more than fifteen percent (15%) of your base compensation or target annual bonus opportunity that also applies to substantially all other executive officers of the Company; (v) a material reduction by the Company in the kind or level of benefits to which you were

 

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entitled immediately prior to such reduction with the result that your overall benefits package is significantly reduced, other than any such reduction that also applies to substantially all other executive officers of the Company; or (vi) your relocation to a facility or a location more than thirty-five (35) miles from your present location.

 

13.

Attorneys’ Fees: Upon your Start Date, the Company will reimburse you reasonable attorneys’ fees incurred in the negotiation, preparation, and execution of this offer letter in an amount not to exceed $35,000, which will be paid within thirty (30) days following your submission of proper documentation of the fees to be reimbursed, but in no event later than March 15, 2014.

 

14.

Business Expenses. Polycom will reimburse you for reasonable travel, entertainment or other expenses incurred by you in the furtherance of or in connection with the performance of your duties hereunder, in accordance with Polycom’s expense reimbursement policy as may be in effect from time to time.

 

15.

Indemnification and Insurance. Subject to applicable law, you will be provided indemnification pursuant to Polycom’s Bylaws and standard form of Indemnification Agreement, including defending you in an action or proceeding brought against you in your capacity as an executive or director of Polycom, and coverage under any directors and officers insurance policies (so long as the Company maintains such coverage for its executive officers), in each case as determined by the Board, but on terms no less favorable than as provided to other executive officers and Board members of the Company.

 

16.

Non-solicitation. During your employment with the Company and for a period of twelve (12) months following your termination of employment with the Company (the “Obligation Period”), you agree not to directly or indirectly solicit, induce, recruit, or encourage any of the Company’s employees to leave their employment, or take away such employees, either for your benefit or on behalf of another entity; provided, however, this provision is not enforceable with respect to your administrative assistant.

 

17.

Non-disparagement. You will not knowingly disparage, criticize, or otherwise make any derogatory statements regarding the Company, its directors, or its officers during the Obligation Period. The Company will instruct its officers and directors not to knowingly disparage, criticize, or otherwise make any derogatory statements regarding you during the same period. However, nothing in this offer letter will be deemed to restrict you from providing truthful information to any governmental or regulatory agency or body (or in any way limit the content of any such information) to the extent you are required to provide such information pursuant a subpoena, applicable law or regulation, or any governmental investigation or audit relating to the Company or any parent or subsidiary of the Company. Similarly, nothing in this offer letter will be deemed to restrict the Company, its directors, and/or its officers from providing truthful information to any governmental or regulatory agency or body (or in any way limit the content of any such information) to the extent the Company, its directors, and/or its officers are required to provide such information pursuant a subpoena, applicable law or regulation, or any governmental investigation or audit relating to you, the Company or any parent or subsidiary of the Company.

 

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18.

Arbitration.

 

 

a.

Arbitration. In consideration of your service to the Company, its promise to arbitrate all employment related disputes and your receipt of the compensation, any pay raises and any other benefits paid to you by the Company, at present and in the future, you agree that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) arising out of, relating to, or resulting from your service to the Company under this offer letter or otherwise or the termination of your service with the Company, including any breach of the terms of this offer letter, will be subject to binding arbitration under the Arbitration Rules set forth in California Code of Civil Procedure Section 1280 through 1294.2, including Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which you agree to arbitrate, and thereby agree to waive any right to a trial by jury, include any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment and Housing Act, the California Labor Code, claims of harassment, discrimination or wrongful termination and any statutory claims. Executive further understands that your agreement to arbitrate also applies to any disputes that the Company may have with you.

 

 

b.

Procedure. You agree that any arbitration will be administered by the Judicial Arbitration and Mediation Services (“JAMS”) and that a neutral arbitrator will be selected in a manner consistent with its National Rules for the Resolution of Employment Disputes. All arbitration proceedings will be held in Santa Clara County, California. The arbitration proceedings will allow for discovery according to the rules set forth in the Employment Arbitration Rules and Procedures of JAMS (the “JAMS Rules”) or California Code of Civil Procedure. You agree that the arbitrator will have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. You agree that the arbitrator will issue a written decision on the merits. You also agree that the arbitrator will have the power to award any remedies, including attorneys’ fees and costs, available under applicable law. You understand the Company will pay for any administrative or hearing fees charged by the arbitrator or JAMS except that with respect to any arbitration you initiate, you will pay the amount you otherwise would have been required to pay to file a claim in court. You agree that the arbitrator will administer and conduct any arbitration in a manner consistent with the Rules and that to the extent that the Rules conflict with the Rules, the Rules will take precedence.

 

 

c.

Remedy. Except as provided by the Rules, arbitration will be the sole, exclusive and final remedy for any dispute between you and the Company. Accordingly, except as provided for by the Rules, neither you nor the Company will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator will not order or require the Company to adopt a policy not otherwise required by law which the Company has not adopted. The prevailing party in any arbitration proceeding will be entitled to recover from the losing party all costs that it has incurred as a result of such proceeding, including but not limited to, all reasonable travel costs and reasonable attorneys’ fees.

 

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d.

Availability of Injunctive Relief. In addition to the right under the Rules to petition the court for provisional relief, you agree that any party also may petition the court for injunctive relief where either party alleges or claims a violation of this offer letter or the Proprietary Information and Invention Agreement or any other agreement regarding trade secrets, confidential information, non-solicitation or Labor Code §2870. In the event either party seeks injunctive relief, the prevailing party will be entitled to recover reasonable costs and attorneys’ fees.

 

 

e.

Administrative Relief. You understand that this offer letter does not prohibit you from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the workers’ compensation board. This offer letter does, however, preclude you from pursuing court action regarding any such claim.

 

 

f.

Voluntary Nature of Offer Letter. You acknowledge and agree that you are executing this offer letter voluntarily and without any duress or undue influence by the Company or anyone else. You further acknowledge and agree that you have carefully read this offer letter and that you have asked any questions needed for you to understand the terms, consequences and binding effect of this offer letter and fully understand it, including that YOU ARE WAIVING YOUR RIGHT TO A JURY TRIAL. Finally, you agree that you have been provided an opportunity to seek the advice of an attorney of your choice before signing this offer letter.

 

19.

Governing Law. The validity, interpretation, construction and performance of this offer letter will be governed by the laws of the State of California (with the exception of its conflict of laws provisions). The Superior Court of Santa Clara County and/or the United States District Court for the Northern District of California will have exclusive jurisdiction and venue over all controversies in connection with the Agreement.

 

20.

Prevailing Party Attorneys’ Fees. In the event that either party brings an action to enforce or effect its rights under this offer letter, the prevailing party will be entitled to recover any reasonable attorneys’ fees incurred in connection with such an action.

You hereby represent to Polycom that you are under no obligation or agreement that would prevent you from becoming an employee of Polycom or that would adversely impact your ability to perform the expected services, including without limitation any non-solicitation and non-competition agreement.

Adherence to Company rules and regulations also is a condition of employment. Polycom is an equal opportunity employer.

This offer is contingent upon the following: (1) your execution of Polycom’s Proprietary Information and Invention Agreement, which, among other things, requires that you will not, during your employment with Polycom, improperly use or disclose any proprietary information or trade secrets of any former employer and will not bring onto Polycom premises any confidential or proprietary information of any former employer unless that employer has consented to such action in writing; (2) your execution of Polycom’s Proprietary Information Obligations Checklist concerning your obligation to protect and not bring to Polycom the proprietary information of any other company between the date of this offer letter and the date you begin employment with Polycom;

 

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(3) your ability to provide the Company with the legally required proof of your identity and authorization to work in the United States; (4) the satisfactory results of the background investigation and reference checks; and (5) understanding of, and commitment to, the standards and policies contained in Polycom’s Code of Business Ethics and Conduct.

This offer letter sets forth the terms of your employment with us and supersedes any prior representations or agreements, whether written or oral. Your employment relationship with the Company will be considered “at will,” which means that either you or the Company may terminate your employment with the Company at any time and for any reason or for no reason.

 

Sincerely,

/s/ Kevin

Kevin T. Parker

Chairman of the Board of Directors and Interim Chief Executive Officer Polycom, Inc.

 

Accepted by:

 

/s/ Peter Leav

 

Peter Leav

Date:

 

11-22-2013

Start Date:

 

 

 

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EX-10 2 plcm-ex10_20131231264.htm EXHIBIT 10.36

Exhibit 10.36

POLYCOM, INC.

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “Agreement”) is made and entered into by and between Peter Leav (the “Employee”) and Polycom, Inc., a Delaware corporation (the “Company”), effective as of December 2, 2013 (the “Effective Date”).

RECITALS

1. 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 transaction. 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 stockholders 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 herein) of the Company.

2. The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his or her employment and to motivate the Employee to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.

3. The Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control. These benefits will provide the Employee with enhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Change of Control.

4. Certain capitalized terms used in the Agreement are defined in Section 7 below.

AGREEMENT

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

1. Term of Agreement. This Agreement shall terminate upon the date that all of the 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, except as may otherwise be specifically provided under the terms of any written formal employment agreement between the Company and the Employee (an “Employment Agreement”). 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 under his or her Employment Agreement.

3. Agreement to Remain with the Company for 6 Months Following a Change of Control. Employee agrees to remain employed with the Company (or its successor corporation) for a period of six (6) months following a Change of Control unless his or her employment terminates due to Employee’s death, “Disability” (as defined herein), for “Good Reason” (as defined herein), or is terminated involuntarily by the Company during such six (6) month period.

4. Termination of Employment. In the event Employee’s employment with the Company terminates for any reason governed by this Agreement, Employee will be entitled to any: (a) unpaid base salary accrued up to the effective date of termination, (b) unpaid, but earned and accrued annual incentive for any completed fiscal year as of his or her termination of employment, (c) pay for accrued but unused vacation, (d) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Employee, (e) unreimbursed business expenses required to be reimbursed to Employee, and (f) rights to indemnification Employee may have under the Company’s Articles of Incorporation, Bylaws, or separate indemnification agreement, as applicable.  In addition, if the termination is by the Company other than for “Cause” (as defined herein), Employee terminates his or her employment with the Company (or any parent or subsidiary of the Company) for Good Reason or Employee dies or terminates employment due to Disability, Employee may be entitled to the amounts and benefits specified in Section 5.

5. Severance Benefits.

(a) Involuntary Termination Other than for Cause or Voluntary Termination for Good Reason Following a Change of Control. If within twenty-four (24) months following a Change of Control (i) the Employee terminates his or her employment with the Company (or any parent or subsidiary of the Company) for Good Reason or (ii) the Company (or any parent or subsidiary of the Company)


terminates the Employee’s employment for other than Cause, or (iii) the Employee dies or terminates employment due to Disability, and, in all cases except the Employee’s death, he or she signs and does not revoke a standard release of claims with the Company in a form reasonably acceptable to the Company within the period required by the release and in no event later than sixty (60) days following the Employee’s termination of employment, inclusive of any revocation period set forth in the release of claims (collectively, the “Release Deadline Date”), then the Employee shall receive from the Company the severance payments and benefits described in this Section 5(a). If the release does not become effective by the Release Deadline Date, the Employee will forfeit any rights to severance payments and benefits in Section 5(a) and under this Agreement.  No severance will be paid or provided until the release becomes effective. The Company must provide the form of release to the Employee in a reasonable period of time following termination of employment so that the Employee has a reasonable opportunity to have the release become effective before the Release Deadline Date.

(i) Severance Payment. The Employee shall be entitled to receive a lump-sum severance payment (less applicable withholding taxes) equal to 200% of the Employee’s annual base salary (as in effect immediately prior to (A) the Change of Control, or (B) the Employee’s termination, whichever is greater) plus 200% of the Employee’s target bonus for the fiscal year in which the Change of Control or the Employee’s termination occurs, whichever is greater.

(ii) Options; Restricted Stock. All of the Employee’s then outstanding options to purchase shares of the Company’s Common Stock (the “Options”) shall immediately vest and became exercisable. Additionally, all of the shares of the Company’s Common Stock then held by the Employee subject to a Company repurchase right (the “Restricted Stock”) shall immediately vest and the Company’s right of repurchase with respect to such shares of Restricted Stock shall lapse. The Options shall remain exercisable following the termination for the period prescribed in the respective option agreements.

(iii) Performance Shares. The Employee will vest in one hundred percent (100%) of the performance shares subject to his or her performance share awards, if any, and the payment of such vested performance shares shall be made as soon as practicable following the date of termination in accordance with the provisions of the applicable performance share award, except as otherwise provided herein. For this purpose, if the Change of Control occurs during the performance period applicable to a performance share award, the “performance shares subject to his or her performance share awards” shall be deemed to be one hundred percent (100%) of the Target Number of Performance Shares (as set forth in the applicable performance share award). Notwithstanding any provision in this Agreement or the applicable performance share award to the contrary and to the extent required to avoid imposition of any additional tax or income recognition under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), prior to actual payment to the Employee, the performance shares for which the vesting would not have otherwise been accelerated under the terms of the applicable performance share award shall be paid at the same time or times as if such performance shares had vested in accordance with the vesting schedule and provisions set forth in the applicable performance share award.

(iv) Other Awards. With respect to outstanding awards issued under the Company’s stock plans other than award types addressed in Sections 5(a)(ii) and (iii) above, the Employee will immediately vest in and have the right to exercise such awards, all restrictions will lapse, and all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. Such awards will be paid or otherwise settled as soon as administratively practicable following the date of termination or, if later, the date of exercise. Notwithstanding the foregoing, to the extent required to avoid imposition of any additional tax or income recognition under Section 409A of the Code, such awards shall be paid or settled at the same time or times that the awards otherwise would have been paid or settled in the absence of this Section 5(a)(iv).

(v) Additional Cash Payment. The Employee shall be entitled to receive an additional lump-sum severance payment (less applicable withholding taxes) equal to the result of (A) times (B).  For this purpose, “A” will equal 24, and “B” will equal the amount of the monthly premium that would be required for the first month of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and all applicable regulations (referred to collectively as “COBRA”), with the premium calculated on the assumption that the Employee in fact elects coverage for himself or herself, and any eligible spouse and/or dependents of the Employee that were enrolled in the applicable Company health plan immediately prior to the Change of Control.  However, the Employee will be eligible for this taxable payment without regard to whether he or she actually elects COBRA continuation coverage.

(b) Timing of Severance Payments. If the release agreement required by Section 5(a) becomes effective by the Release Deadline Date, severance payments and benefits under this Agreement will be paid in a lump sum payment (less any applicable withholding taxes) on the first business day after the Release Deadline Date, but in no event later than March 15th of the year following the year of the Employee’s termination of employment, except as required by Section 5(f).  If the Employee should die before all amounts have been paid, such unpaid amounts shall be paid in a lump sum payment (less any applicable withholding taxes) to the Employee’s designated beneficiary, if living, or otherwise to the personal representative of the Employee’s estate, as described in Section 5(f) below.

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(c) Voluntary Resignation; Termination for Cause. If the Employee’s employment with the Company terminates (i) voluntarily by the Employee other than for Good Reason or due to Disability or (ii) for Cause by the Company, 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 written agreements with the Company, including, without limitation, any Employment Agreement.

(d) 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 twenty-four (24)–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 written severance and benefits plans and practices or pursuant to other written agreements with the Company, including, without limitation, any Employment Agreement.

(e) Exclusive Remedy. In the event of a termination of Employee’s employment within twenty-four (24) months following a Change of Control, the provisions of this Section 5 are intended to be and are exclusive and in lieu of any other rights or remedies to which the Employee or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under this Agreement. The Employee shall be entitled to no benefits, compensation or other payments or rights upon termination of employment following a Change in Control other than those benefits expressly set forth in this Section 5.

(f) Section 409A.

(i) Six-Month Delay. Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation Separation Benefits (as defined below) payable under this Agreement will be considered due or payable until the Employee has incurred a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended and the final regulations and any guidance promulgated thereunder (together, “Section 409A”).  In addition, if the Employee is a “specified employee” within the meaning of Section 409A at the time of the Employee’s separation from service (other than due to death), then the severance benefits payable to the Employee under this Agreement, if any, and any other severance payments or separation benefits that may be considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) otherwise due to the Employee on or within the six (6) month period following the Employee’s separation from service will accrue during such six (6) month period and will become payable in a lump sum payment (less any applicable withholding taxes) on the date six (6) months and one (1) day following the date of the Employee’s separation from service. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if the Employee dies following his or her separation from service but prior to the six (6) month anniversary of his or her date of separation, then any payments delayed in accordance with this paragraph will be payable in a lump sum (less any applicable withholding taxes) to the Employee’s estate as soon as administratively practicable after the date of the Employee’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.

(ii) Amendments to this Agreement to Comply with Section 409A. This provision is intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and the Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions, which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Employee under Section 409A.

6. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (a) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (b) but for this Section 6, would be subject to the excise tax imposed by Section 4999 of the Code, then the Employee’s severance benefits under Section 5(a) shall be either:

(i) delivered in full, or

(ii) 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. 

In the event of a reduction in accordance with Section 6(ii), the reduction will occur, with respect to such severance and other benefits considered “parachute payments” within the meaning of Section 280G of the Code, in the following order:

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·

First, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is treated as “contingent” under Section 280G of the Code, (ii) are assumed or substituted by the surviving corporation or its parent, and (iii) are “underwater” or “at-the-money”;

 

·

Second, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is not treated as “contingent” under Section 280G of the Code, (ii) accelerate vesting under Section 5(a) above or otherwise, (iii) are assumed or substituted by the surviving corporation or its parent, and (iv) are “underwater” or “at-the-money”;

 

·

Third, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is treated as “contingent” under Section 280G of the Code, (ii) are assumed or substituted by the surviving corporation or its parent, and (iii) are “in-the-money”;

 

·

Fourth, restricted stock, restricted stock units, performance shares or other outstanding equity awards (other than stock options or stock appreciation rights) that meet all of the following: (i) the grant of which is treated as “contingent” under Section 280G of the Code and (ii) either are assumed or substituted by the surviving corporation or its parent or “cashed-out” in connection with the Change of Control;

 

·

Fifth, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is treated as “contingent” under Section 280G of the Code and (ii) are “cashed-out” in connection with the Change of Control;

 

·

Sixth, cash severance, bonus, retention and other similar pay (including such cash severance pay provided pursuant to Section 5(a)(i) above) that are treated as “contingent” under Section 280G of the Code;

 

·

Seventh, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is not treated as “contingent” under Section 280G of the Code, (ii) accelerate vesting under Section 5(a) above or otherwise, (iii) are assumed or substituted by the surviving corporation or its parent, and (iv) are “in-the-money”;

 

·

Eighth, stock options or stock appreciation rights that meet all of the following: (i) the grant of which is not treated as “contingent” under Section 280G of the Code, (ii) accelerate vesting under Section 5(a) above or otherwise, (iii) are “cashed-out” in connection with the Change of Control, and (iv) are “in-the-money”;

 

·

Ninth, restricted stock, restricted stock units, performance shares or other outstanding equity awards (other than stock options or stock appreciation rights) that meet all of the following: (i) the grant of which is not treated as “contingent” under Section 280G of the Code, (ii) accelerate vesting under Section 5(a) above or otherwise, and (iii) either are assumed or substituted by the surviving corporation or its parent or “cashed-out” in connection with the Change of Control;

 

·

Tenth, the acceleration in the timing of any “vested” payment in cash or in kind.  For this purpose, a payment will be considered “vested” if the payment is vested at the time the payment acceleration occurs and any vesting of the payment that has occurred is not considered "contingent" under Section 280G of the Code;

 

·

Eleventh, Company-Paid Coverage under the long-term disability and life insurance plans provided pursuant to Section 5(a) and any other taxable benefits provided or paid for by the Company; and

 

·

Twelfth, Company-Paid Coverage under the health, dental, and vision plans provided pursuant to Section 5(a) and any other tax-free benefits provided or paid for by the Company.

For purposes of this Section 6, the following rules will apply:

·

In the first and second categories above, if there are multiple grants of stock options or stock appreciation rights, the most “underwater” award will be reduced first with each subsequent reduction applying to the next most “underwater” award;

 

·

In the third and seventh categories above, if there are multiple grants of stock options or stock appreciation rights, the least “in-the-money” award will be reduced first with each subsequent reduction applying to the next most “in-the-money” award;

 

·

In the fourth, fifth, eighth, and ninth categories, if there are multiple grants of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or other equity awards, each grant within each category will be reduced on a pro-rata basis; and

 

·

In the sixth and tenth categories, if there are multiple types of cash or in-kind payments, each payment within each category will be reduced on a pro-rata basis.

For clarification purposes, these rules do not change the order described above but rather provide ordering rules that apply within each category in the event of multiple equity grants or payments.

For purposes of this Section 6, the following terms used herein will mean:

·

Whether an equity award will be treated as “contingent” will be determined in accordance with Treasury Regulation Section 1.280G-1 A-22.

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·

An equity award will be “cashed-out” in connection with a Change of Control if the award is cancelled after payment to the Employee of an amount in cash or cash equivalents equal to (A) the fair market value of the shares of Company Common Stock subject to the equity award at the time of the Change of Control (as determined in accordance with the applicable equity award agreement) minus (B) the exercise or purchase price, if any, of the shares of Company Common Stock subject to the equity award at the time of the Change of Control.

 

·

A stock option or stock appreciation right will be considered “underwater” if: (A) the award accelerates or is valued for purposes of Section 280G on the date of the Change of Control and the per share exercise price of the award is greater than the per share consideration provided to holders of shares of Company Common Stock pursuant to the Change of Control, or (B) the award accelerates or is valued for purposes of Section 280G of the Code on any date after the Change of Control and the per share exercise price of the award, as adjusted pursuant to the Change of Control, is greater than the fair market value of a share of common stock with respect to which the award may be exercised.

 

·

A stock option or stock appreciation right will be considered “at-the-money” if: (A) the award accelerates or is valued for purposes of Section 280G on the date of the Change of Control and the per share exercise price of the award is equal to the per share consideration provided to holders of shares of Company Common Stock pursuant to the Change of Control, or (B) the award accelerates or is valued for purposes of Section 280G of the Code on any date after the Change of Control and the per share exercise price of the award, as adjusted pursuant to the Change of Control, is equal to the fair market value of a share of common stock with respect to which the award may be exercised.

A stock option or stock appreciation right will be considered “in-the-money” if: (A) the award accelerates or is valued for purposes of Section 280G on the date of the Change of Control and the per share exercise price of the award is less than the per share consideration provided to holders of shares of Company Common Stock pursuant to the Change of Control, or (B) the award accelerates or is valued for purposes of Section 280G of the Code on any date after the Change of Control and the per share exercise price of the award, as adjusted pursuant to the Change of Control, is less than the fair market value of a share of common stock with respect to which the award may be exercised.

Unless the Company and the Employee otherwise agree in writing, any determination required under this Section 6 shall be made in writing by the Company’s independent public accountants immediately prior to Change of Control (the “Accountants”), whose determination shall be conclusive and binding upon the Employee and the Company for all purposes.  For purposes of making the calculations required by this Section6, 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 the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.

7. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) Cause. “Cause” shall mean (i) an act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee and intended to result in substantial personal enrichment of the Employee, (ii) Employee being convicted of a felony, (iii) a willful act by the Employee which constitutes gross misconduct and which is injurious to the Company, or (iv) following delivery to the Employee of a written demand for performance from the Company which describes the basis for the Company’s reasonable belief that the Employee has not substantially performed his or her duties, continued violations by the Employee of the Employee’s obligations to the Company which are demonstrably willful and deliberate on the Employee’s part.

(b) Change of Control. “Change of Control” means the occurrence of any of the following:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d–3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

(ii) Any action or event 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 (A) are directors of the Company as of the date hereof, or (B) 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); or

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(iii) 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 sixty percent (60%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

(iv) The consummation of the sale, lease or other disposition by the Company of all or substantially all the Company’s assets.

(c) Disability. “Disability” shall mean that the Employee has been unable to perform his or her Company duties as the result of his or her incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee’s legal representative (such determination as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected after at least thirty (30) days’ written notice by the Company of its intention to terminate the Employee’s employment. In the event that the Employee resumes the performance of substantially all of his or her duties hereunder before the termination of his or her employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.

(d) Good Reason. “Good Reason” means without the Employee’s express written consent (i) a material reduction of the Employee’s duties, title, authority or responsibilities, relative to the Employee’s duties, title, authority or responsibilities as in effect immediately prior to such reduction, or the assignment to Employee of such reduced duties, title, authority or responsibilities; (ii) a substantial reduction of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a reduction by the Company in the base compensation or target annual bonus opportunity of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of benefits to which the Employee was entitled immediately prior to such reduction with the result that such Employee’s overall benefits package is significantly reduced; or (v) the relocation of the Employee to a facility or a location more than thirty-five (35) miles from such Employee’s then present location.

8. Successors.

(a) The Company’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 an agreement pursuant to a purchase, merger, consolidation, liquidation or otherwise as described in this Section 8(a) or which becomes bound by the terms of this Agreement by operation of law.

(b) The Employee’s Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

9. Notice.

(a) General. All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given upon receipt or, if earlier, (i) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid or (iv) one (1) business day after the business day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed (A) if to Employee, at his or her last known residential address and (B) if to the Company, at the address of its principal corporate offices (attention: Secretary), or in any such case at such other address as a party may designate by ten (10) days’ advance written notice to the other party pursuant to the provisions above.

(b) Notice of Termination. Any termination by the Company for Cause or by the Employee for Good Reason or due to Disability or as a result of any voluntary resignation shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 9(b) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be not more than thirty (30) days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a

6


showing of Good Reason or Disability shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his or her rights hereunder.

10. Miscellaneous Provisions.

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

(b) Waiver. 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 Employee and by an authorized officer of the Company (other than the Employee). 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.

(c) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

(d) Entire Agreement. This Agreement, together with any equity award agreement, constitutes the entire agreement of the parties hereto and supersedes in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof. With respect to equity awards granted on or after the date hereof, the acceleration of vesting provided herein will apply to such awards except to the extent otherwise explicitly provided in the applicable equity award agreement.

(e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. The Superior Court of Santa Clara County and/or the United States District Court for the Northern District of California shall have exclusive jurisdiction and venue over all controversies in connection with this Agreement.

(f) Severability. 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.

(g) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.

(h) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

 

 

 

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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.

 

COMPANY

POLYCOM, INC.

 

 

 

 

By:

/s/ Sayed Darwish

 

 

Sayed M. Darwish

 

 

 

Title: 

 

Chief Legal Officer and Executive Vice President, Corporate Development

 

Date: 

1/20/2014

 

 

 

 

EMPLOYEE

 

By:

 

/s/ Peter Leav

 

 

Peter Leav

 

 

 

Title:

 

President and Chief Executive Officer

 

Date:

January 20, 2014

 

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