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EXHIBIT 10.2
KEY VICE PRESIDENT CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT dated as of June 22, 1998 is made by and between PictureTel
Corporation, a Delaware Corporation, (the "Company") and Xxxxxx Xxxxxxxx, 00
Xxxxxx Xxxxx, Xxxx, Xxxxxxxxx, XX 00 0XX, Xxxxxx Xxxxxxx ("Executive").
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to xxxxxx the continuous
employment of key management personnel; and
WHEREAS the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control (as defined in the last Section hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among the
Company's management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to their assigned duties without
distraction in the face of potentially disrupting circumstances arising from the
possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1.0 DEFINED TERMS. The definition of capitalized terms used in this
Agreement is provided in the last Section hereof.
2.0 TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through November 30, 2000; provided, however, that
commencing on December 1, 1998 and each December 1st thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 30th preceding that December 1st, the Company or the
Executive shall have given notice not to extend this Agreement or a Change in
Control shall have occurred prior to such September 30th; provided, however, if
a Change in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than twenty-four
(24) months beyond the date on which such Change in Control occurred.
3.0 COMPANY'S COVENANTS SUMMARIZED. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4.0 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control and during the term of this Agreement. No amount
or benefit shall be payable under this Agreement unless there shall have been
(or, under the terms hereof, there shall be deemed to have been) a termination
of the Executive's employment with the Company following a Change in Control.
This Agreement shall not be construed as creating an express or implied contract
of employment prior to the date of a Change in Control and the Executive shall
not have any right to be retained in the employ of the Company.
4.0 THE EXECUTIVE'S COVENANTS. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the term of this Agreement, the Executive will remain in the
employ of the Company until the earliest of (A) a
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date which is six (6) months from the date of such Potential Change of Control,
(B) the date of a Change in Control, (C) the date of termination by reason of
death or Disability, or (D) the termination by the Company of the Executive's
employment for any reason.
5.0 COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 Following a Change in Control during the term of this Agreement,
during any period that the Executive fails to perform the Executive's full-time
duties with the Company as a result of incapacity due to physical or mental
illness, the Company shall pay the Executive's full salary to the Executive at
the rate in effect at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement maintained by PictureTel UK
Limited during such period, until the Executive's employment is terminated by
the Company for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control during the term of this Agreement, the Company
shall pay the Executive's full salary to the Executive through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by PictureTel UK Limited prior to the
Date of Termination.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control during the term of this Agreement, the Company
shall pay the Executive's normal post-termination compensation and benefits to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, PictureTel
UK Limited's retirement, insurance and other compensation or benefit plans,
programs and arrangements; provided however, that the Severance Payments under
Section 6.0 of this Agreement shall be the only severance paid following a
Change in Control during the term of this Agreement.
6.0 SEVERANCE PAYMENTS.
6.1 The Company shall pay the Executive the payments described in this
Section 6.1 ("Severance Payments") upon the termination of the Executive's
employment following a Change in Control during the term of this Agreement, in
addition to the payments and benefits described in Section 5.0 hereof, unless
such termination is (A) by the Company for Cause, or (B) by reason of Death or
Disability. The Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause if the Executive's
employment is terminated prior to a Change in Control without Cause at the
direction (or action which constitutes a direction) of a Person who has entered
into an agreement with the Company the consummation of which will constitute a
Change in Control.
(i) Subsequent to the Date of Termination, the Company shall make cash
severance payments to the Executive over a twelve (12) month period in
substantially equal monthly installments, in an amount equal to one
(1) times the sum of (a) the higher of the Executive's annual base
salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based or in
effect immediately prior to the Change in Control, and (b) the higher
of the highest annual bonus paid to the Executive in the three years
preceding the year in which the Date of Termination occurs or paid in
the three years preceding the year in which the Change in Control
occurs.
(ii) For a twelve- (12) month period after the Date of Termination,
the Company shall arrange to provide the Executive with medical and
dental insurance benefits substantially similar to those that the
Executive is receiving immediately prior to the Notice of Termination.
Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(ii) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without cost
during the twelve (12)
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month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive).
6.2 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive as a result of a termination which entitles
the Executive to the Severance Payments (including all such fees and expenses,
if any, incurred in disputing any such termination or in seeking in good faith
to obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to any
payment or benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7.0 TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the term
of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10.0 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean:
(A) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination (which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7.3), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally resolved, either by mutual written agreement of the parties by
arbitrator's award, or, to the extent permitted by Section 14.0, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the term of this Agreement and such
termination is disputed in accordance with Section 7.3 hereof, the Company shall
continue to pay the Executive the full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.2 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
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8.0 NO MITIGATION. The Company agrees that, if the Executive's employment
by the Company is terminated during the term of this Agreement, the Executive is
not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6.0 or
Section 7.4. Further, the amount of any payment or benefit provided for in
Section 6.0 (other than Section 6.1(ii) or Section 7.4 shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
9.0 SUCCESSORS; BINDING AGREEMENT.
9.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and / or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
In any event this agreement shall be binding upon the Company and any successors
or assignee.
9.2 This Agreement 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. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10.0 NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
PictureTel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
To the Executive:
Xx. Xxxxxx Xxxxxxxx
00 Xxxxxx Xxxxx
Xxxx
Xxxxxxxxx XX00 0XX
Xxxxxx Xxxxxxx
11.0 MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either
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party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The laws of the Commonwealth of Massachusetts shall
govern the validity, interpretation, construction and performance of this
Agreement and the Agreement shall be an instrument under seal. All references to
sections of the Exchange Act shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under United Kingdom or local law and
any additional withholding to which the Executive has agreed. The obligations of
the Company and the Executive under Sections 6.0, 7.0, 8.0 and 14.0 shall
survive the expiration of the term of this Agreement.
12.0 VALIDITY. The invalidity or unenforceability or any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13.0 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14.0 SETTLEMENT OF DISPUTES; ARBITRATION. All claims by the Executive for
benefits under this Agreement shall be directed to the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been denied. Any
further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Boston, Massachusetts
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement in such arbitration or by a proceeding in the
federal court in Boston or the Massachusetts state court in Essex County.
15.0 DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated below:
(A) "Beneficial Owner" shall have the meaning defined in Rule 13d-3 under
the Exchange Act.
(B) "Board" shall mean the Board of Directors of the Company.
(C) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.1) after a written demand for
substantial
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performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties,
or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of clauses (i) and (ii) of this definition, no act, or failure
to act, on the Executive's part shall be deemed "Willful" unless done, or
omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company.
(D) A "Change in Control", shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty-five (25)
percent or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person who
has entered into an agreement with the Company to effect a transaction
described in clause (i), (ii) or (iii) of this Section 15(D)) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(a) 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) sixty (60)
percent or more of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person acquires twenty-five (25) percent or
more of the combined voting power of the Company's then outstanding
securities; or
(iv)the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all the Company's assets.
(E) "Company" shall mean PictureTel Corporation and any successor to its
business and/or assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise (except in determining, under Section
15(D) hereof, whether or not any Change in Control of the Company has
occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the
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Company shall have given the Executive a Notice of Termination for
Disability, and, within thirty (30) days after such Notice of Termination
is given, the Executive shall not have returned to the full-time
performance of the Executive's duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(J) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(K) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
(L) "Potential Change in Control', shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute
a Change in Control;
(iii) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(M) "Severance Payments" shall mean those payments described in Section
6.1 hereof.
PictureTel Corporation
By ________________________________
Name: Xxxxx X. Xxxx
Title: Chairman of the Board of Directors,
President and
Chief Executive Officer
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Xxxxxx Xxxxxxxx
