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Exhibit 10.1
[PICTURETEL LOGO]
July 13, 1998
Xx. Xxxxxxx X. Xxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Dear Dick:
Reference: (1.) The Employment Agreement (the "Employment Agreement") by and
between you and PictureTel Corporation (the "Company") dated
December 5, 1997; and (2.) Your letter to Xxxxx Xxxx (the "Letter")
dated June 22, 1998; copies of which are attached hereto as Exhibits
A and B, respectively.
This letter will hereinafter set forth and reduce to writing the
Amendment to the Employment Agreement between you and the Company concerning
your employment with the Company and the cessation of such employment.
As you are aware, the terms of your employment with the Company and
your Proprietary Information and Inventions Agreement ("Confidentiality
Agreement"), a copy of which is attached hereto as Exhibit C, obligate you,
among other things, not to disclose or use any confidential or proprietary
information of the Company ("Confidential Information") acquired as a result
of your employment with the Company. By way of illustration, but not limitation,
Confidential Information includes trade secrets, processes, formulae, data and
know-how, improvements, inventions, techniques, marketing plans, strategies,
forecasts, customer lists, and employee lists, except to the extent the same are
publicly known from sources who have neither misappropriated such information
nor breached any obligation of confidentiality to the Company. Further, such
information, knowledge and know-how possessed by you prior to your entering
employment with the Company shall be excluded from the definition of
Confidential Information.
You hereby confirm that you have complied and will continue to comply
with the foregoing provisions of the Confidentiality Agreement.
In addition to its confidentiality provisions, the Confidentiality
Agreement provides that for a period of one year after termination, you will not
directly or indirectly solicit or cause others to solicit Company employees for
competitive employment. The Confidentiality Agreement provides that you will
return to the Company all documents and data of any nature pertaining to your
work, and that you will take no copies of Confidential Information with you upon
your departure. You hereby confirm that you have complied and will continue to
comply with these provisions of the Confidentiality Agreement.
The complete terms and conditions of your separation are set forth in
the Employment Agreement, as amended by this Agreement. The employment provided
for under the Employment Agreement shall terminate September 11, 1998 (the
"Separation Date") and you shall cease your employment with the company as of
that date (the "Separation Date"). In exchange for the release contained in
Paragraph 10., your departure on the Separation Date will be considered to be
for "Good Reason" pursuant to Section 4.2 (a.) of the Employment Agreement and
the Company will provide certain Enhanced Separation Benefits provided below. If
prior to the Separation Date you are terminated by the Company for a reason
other than cause, death or disability, the Company will provide you with the
same Enhanced Separation Benefits commencing on the Separation Date and will
prior thereto, continue to pay to you your current bi-weekly base salary of
$7,692.31 (equal to $200,000.00 annualized at twenty-six (26) pay periods per
year) ("Base Salary") up through the Separation Date. If prior to the
Separation Date you terminate your employment for Good Reason pursuant to
Section 4.2 (a.) (it being understood that the change in your responsibilities
prior to the date hereof, as discussed in the Letter, shall not constitute "Good
Reason" for a termination prior to the Separation Date) ("New Good Reason
Separation Date"), the Company will
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provide you with the same Enhanced Separation Benefits commencing on the New
Good Reason Separation Date. If you terminate your employment for some other
reason prior to the Separation Date ("Voluntary Separation Date"), the Company
shall pay to you your current Base Salary and shall maintain the benefits
provided under Section 3.4 of the Employment Agreement in each case for the
period up to and inclusive of the Voluntary Separation Date, except that no
bonus not previously paid will be payable to you in respect to service by prior
to such Voluntary Separation Date.
1. You agree to resign as an Officer of the Company and your position
as Vice President, Chief Financial Officer effective as of the Separation Date
or, if applicable, New Good Reason Separation Date or Voluntary Separation Date.
From the date of this Agreement through the Separation Date or, if applicable,
New Good Reason Separation Date or Voluntary Separation Date (the "Transition
Employment Period"), you will continue to be paid your Base Salary. In return
for the compensation provided to you during the Transition Employment Period,
you agree to assist me in effecting an orderly transfer of your job
responsibilities.
2. Notwithstanding Section 5.5 of the Employment Agreement and in lieu
thereof, from and after the Separation Date or, if applicable, New Good Reason
Separation Date, you will continue to be paid, as severance, your Base Salary
for a consecutive 32.2 bi-weekly period ("Severance Period"). This is
equivalent to fifteen (15) months pay. In addition, notwithstanding Section
5.5 of the Employment Agreement and in lieu thereof, from and after the
Separation Date or, if applicable, New Good Reason Separation Date, you will
receive $40,000 (equal to fifty (50) percent of your target 1998 Management
Incentive Bonus of $80,000) paid in $1,242.24 bi-weekly increments over the
Severance Period (the "Enhanced Separation Benefits").
3. Vacation hours will not be accrued beyond the Separation Date or, if
applicable, New Good Reason Separation Date or Voluntary Separation Date.
However, the hours which accrued pursuant to Company Policy and which remain
unused at the Separation Date or, if applicable, New Good Reason Separation Date
or Voluntary Separation Date will be paid to you in a lump sum as soon as
possible following the Separation Date or, if applicable, New Good Reason
Separation Date or Voluntary Separation Date.
4. With respect to the stock options granted to you under the
PictureTel Corporation Equity Incentive Plan, all vesting will cease as of the
Separation Date or, if applicable, New Good Reason Separation Date or Voluntary
Separation Date and the rights to exercise those option shares vested as of the
Separation Date or, if applicable, New Good Reason Separation Date or Voluntary
Separation Date will terminate three (3) months after such Separation Date or,
if applicable, New Good Reason Separation Date or Voluntary Separation Date.
5. All outstanding claims for business expenses incurred should be
submitted to me immediately prior to the Separation Date or, if applicable, New
Good Reason Separation Date or Voluntary Separation Date. Immediately prior to
the Separation Date or, if applicable, New Good Reason Separation Date or
Voluntary Separation Date, you will return all Company office keys, access
cards, credit cards and other Company property in your possession to Xxxxx
Xxxxxxxxx.
6. Effective as of the Separation Date or, if applicable, New Good
Reason Separation Date or Voluntary Separation Date, your participation and
eligibility for life, disability and accident insurance benefits under Company
plans will cease. During the Severance Period, the Company will maintain your
eligibility to participate in the Company's group medical and dental plans and
will continue to contribute its share of the costs for participation in such
plans at the same levels as active employees. If you wish to continue your
medical and dental insurance coverage beyond the Separation Date or, if
applicable, New Good Reason Separation Date or Voluntary Separation Date and the
Severance Period, you may do so for up to a total of eighteen (18) months (
inclusive of the Severance Period) pursuant to your rights under the
Consolidated Budget Reconciliation Act ("COBRA"). During the month immediately
following the Separation Date or, if applicable, New Good Reason Separation Date
or Voluntary Separation Date, you will receive the materials and information
necessary to enroll in the COBRA coverage. If you elect to continue coverage
beyond the Severance Period or your Voluntary Separation Date, you will be
responsible for paying the full cost of the coverage.
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7. Effective as of the Separation Date or, if applicable, New Good
Reason Separation Date or Voluntary Separation Date, your participation in the
PictureTel 401(k) Retirement Plan will cease. During the month following the
Separation Date or, if applicable, New Good Reason Separation Date or Voluntary
Separation Date, you will receive detailed information relative to the
distribution of your current fund balances.
8. Effective as of the Separation Date or, if applicable, New Good
Reason Separation Date or Voluntary Separation Date, pursuant to the provisions
of the PictureTel Corporation Employee Stock Purchase Plan ("ESPP"), your
participation in the ESPP will cease. If the Separation Date or, if applicable,
New Good Reason Separation Date or Voluntary Separation Date is prior to the
close of an Option Period, all your withholdings up to the Separation Date or,
if applicable, New Good Reason Separation Date or Voluntary Separation Date
shall be returned to you, without interest, immediately following the Separation
Date or, if applicable, New Good Reason Separation Date or Voluntary Separation
Date. For purposes of the ESPP, an "Option Period" is any of the six month
periods beginning any September 1 or March 1.
9. As part of the Enhanced Separation Benefits, the Company will make
available the services of an approved Outplacement Consultant. The fees incurred
shall not exceed $10,000.00.
10. The provision of the Enhanced Separation Benefits is expressly
conditioned upon your signing this letter agreement, which includes the
following general release, and upon your continued compliance with all of the
provisions of this letter agreement:
In consideration of the Enhanced Separation Benefits, the adequacy of
which you hereby acknowledge, you hereby fully, forever, irrevocably and
unconditionally release, remise and discharge the Company, its officers,
directors, shareholders, agents, current and former employees (the "Releasees")
from any and all claims, charges, complaints, demands, actions, causes of
action, suits, rights, debts, sums of money, accounts, contracts, promises,
agreements, doings, omissions, damages, executions, liabilities, obligations,
and expenses including attorneys' fees and costs, of every kind and nature which
you ever had or now have against the Releasees arising out of or relating to
your employment, and its termination, including but not limited to all
employment discrimination claims under Title VII of the Civil Rights Act of
1964, 42 U.S.C. ss. 2000e et seq., the Age Discrimination in Employment Act, 29
U.S.C. ss. 621 et seq. and M.G.L.C. 151B ss. 1 et seq., the Employee Retirement
Income Security Act, and any and all damages arising out of all employment -
related claims or other wrongful discharge claims and damages, and claims under
the Age Discrimination in Employment Act.
11. Your termination does not impair or otherwise limit your rights
following the Separation Date or, if applicable, New Good Reason Separation Date
or Voluntary Separation Date to indemnification under the terms of the Indemnity
Agreement between you and the Company, the Company's articles of incorporation
or its bylaws.
12. Notwithstanding the provisions of paragraph 10., the release
contained herein shall not impair or otherwise limit your rights to enforce the
Company's agreements contained in this letter.
13. You have, and are entitled to, up to twenty-one (21) days
following the provision of this letter agreement to you to accept it, although
you need not use this period if in your sole and unlimited discretion you choose
not to do so. The Company encourages you to consult with an attorney before
signing this letter agreement. You are also entitled to rescind your acceptance
of the terms of this letter agreement by written notice to the Company at any
time within the seven day (7) period after you execute it.
14. Upon the expiration of seven (7) days after your execution of
this letter agreement, the Company will become contractually obligated to
provide the Separation Benefits, and you will be contractually bound to adhere
to the terms of this Agreement.
15. It is understood and agreed by the parties hereto that this letter
is a release agreement and does not constitute an admission of liability or
wrongdoing on the part of either party.
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16. This letter is executed in duplicate and shall be binding upon the
parties, and may not be abandoned, supplemented, changed, or modified in any
manner, except by an instrument in writing signed by a duly authorized
representative of the parties hereto.
17. Should any provision of this letter be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of
the remaining parts, terms, or provisions shall not be affected thereby and such
illegal and invalid part, term, or provision shall be deemed not to be part of
this letter.
18. Both parties understand and agree that the terms and contents of
this letter, and the contents of the discussions and negotiations resulting in
this letter, shall be maintained as confidential. You further agree that you,
your agents and representatives shall maintain such confidentiality, and none of
the above shall be admissible for any purpose in any litigation in any forum,
nor shall it be disclosed to anyone except to the extent required by federal or
state law. Nothing contained herein shall prevent or restrict you from
disclosing such information to professionals who advise you with respect to
legal or financial matters, or to your spouse. You agree that in the event of
any breach by you of this letter, the Company may elect to terminate the
Separation Benefits, and seek damages or injunctive relief for any such breach
of confidentiality, or both.
19. You affirm that this letter contains and constitutes the entire
understanding and agreement between the parties hereto with respect to your
departure from the Company, and supersedes all other oral and written
negotiations, agreements, representations, commitments and writings in
connection therewith.
20. You affirm that no other promises or agreements of any kind have
been made to or with you by any person or entity whatsoever to cause you to sign
this letter, and that your signature indicates your full agreement with and
understanding of its terms. You acknowledge that you have had adequate
opportunity to review these terms and that you have been encouraged by the
Company to seek the benefit of legal counsel regarding the effect of same, and
that whether or not you have done so has been your decision. You further state
and represent that you have carefully read this letter, understand the contents
herein, freely and voluntarily assent to all of the terms and conditions hereof,
and sign your name of your own free act and deed.
If the above is acceptable to you, kindly sign the original and a copy
of this Agreement where indicated, and return the copy to me within twenty-one
(21) days of the provision of this Agreement to you. If you have any questions
regarding the this letter, please feel free to call me.
Sincerely,
PICTURETEL CORPORATION
/s/ Xxxxx Xxxx
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Xxxxx Xxxx
President and Chief Executive Officer
Accepted: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Date: 7/14/98
