Exhibit #10.1
HARMONIC INC.
ANTHONY LEY TRANSITION AGREEMENT
     THIS AGREEMENT is effective as of May 5, 2006 (the “Effective Date”), by
and between Harmonic Inc. (the “Company”) and Anthony Ley (“Executive”).
RECITALS
     A. Executive is employed by the Company and is a member of the Board of
Directors of the Company (the “Board”).
     B. On the Effective Date, Executive will resign his officer positions with
the Company but remain as Executive Chairman and employee.
     C. On July 1, 2006 (the “Transition Date”), Executive will assume the role
of Non-Executive Chairman of the Board (“Chairman”) and consultant and shall
cease to be an employee of the Company.
     D. Executive has agreed to serve as Chairman until the Company’s 2007
annual meeting of stockholders or such other time as is determined by the Board
(the “Transition Term”).
     E. Executive has agreed to provide consulting services to the Company from
the Transition Date and for period of two years thereafter (the “Consulting
Term”).
     F. Accordingly, pursuant to this Agreement, the Company desires to retain
Executive’s services as Executive Chairman and employee through the period
ending June 30, 2006, (the “Employment Term”), and afterwards as non-Executive
Chairman through the Transition Term and as a consultant through the Consulting
Term, upon the terms set forth herein.
     NOW THEREFORE, the parties agree as follows:
     1. Term. The term of this Agreement shall commence on the Effective Date
and shall continue until all the payments due and all other obligations of the
parties hereunder have been made or satisfied.
     2. Duties of Executive.
          a. Employment Term. From the Effective Date through June 30, 2006 (the
“Employment Term”), Executive will remain as Executive Chairman and employee of
the Company. During the Employment Term, Executive’s compensation and other
benefits shall be as provided in Section 3(a).
          b. Transition Term. During the Transition Term, Executive agrees to
serve as Chairman and shall receive no additional cash compensation for such
services, including retainers and meeting fees, equity compensation and other
compensation scheduled to be paid to the Company’s non-employee members of the
Board (except he shall be reimbursed for the expenses of attending Board
meetings), but shall receive a stock option for such services as set forth in
Section 3(b).
          c. Consulting Term. During the Consulting Term, Executive agrees to
perform services as a consultant on an as-needed basis. During the Consulting
Term, Executive shall also comply with his obligations under Section 4 hereof.
During the Consulting Term, Executive’s compensation shall be as provided in
Section 3(c). Executive shall be reimbursed for reasonable business expenses
incurred in discharging his consulting duties.

 

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     3. Compensation.
          a. Employment Term.
               i. Cash Compensation. While employed by the Company during the
Employment Term, Executive shall be paid at his current base salary rate.
Executive shall also receive, promptly following the termination of the
Employment Term, full payment for all accrued wages, including but not limited
to, unused vacation days to which he is entitled pursuant to Company policy.
               ii. Benefits. While employed by the Company during the Employment
Term, Executive shall be eligible to participate in the employee benefit plans
maintained by the Company applicable to other key executives of the Company,
including (without limitation) retirement plans, savings or profit sharing
plans, life, disability, health, accident and other insurance programs, paid
vacations, and similar plans or programs, subject, in each case, to the
generally applicable terms and conditions of the applicable plan or program in
question and to the determination of any committee administering such plan or
program.
               iii. 2006 Executive Compensation Plan. Subject to Executive
signing and not revoking a release of claims substantially in the form attached
hereto as Exhibit A (the “Release”), Executive shall be entitled to receive any
payments under the Company’s 2006 Executive Compensation Plan based upon the
achievement of the performance milestones set forth in such plan, pro-rated to
reflect Executive’s employment through June 30, 2006, and payable when other
participants are paid pursuant to such plan.
          b. Transition Term. In consideration of his performing services as
Consultant, and subject to his signing a Release on the Effective Date and not
thereafter revoking such Release, Executive shall be granted, effective on the
Transition Date, a stock option covering 100,000 shares of Company common stock,
which shall vest as to 1/12th of the covered shares on a monthly basis, so as to
be 100% vested on June 30, 2007, subject to Executive continuing to perform
services as Chairman and Consultant through each applicable vesting date. The
stock option will have a term of four years from the grant date, shall be
granted with an exercise price equal to 100% of the Fair Market Value (as such
term is defined in the Company’s 1995 Stock Plan) of the underlying shares on
the grant date, and will accelerate vesting 100% in the event of a Change of
Control or Executive’s death or Disability, as such terms are defined in the
Change of Control Severance Agreement by and between Executive and the Company
dated March 11, 2004 (the “Change of Control Agreement”).
          c. Consulting Term. In consideration of his rendering consulting
services to the Company during the Consulting Term, and subject to his signing a
Release on the Effective Date and not thereafter revoking such Release,
Executive shall be paid at a rate of $225,000 per annum for his services as a
Consultant hereunder. Executive shall be responsible for payment of all federal,
state and local taxes with respect to such Consultant compensation. Subject to
Executive timely electing coverage under COBRA and Cal-COBRA, the Company will
reimburse Executive for COBRA and Cal-COBRA premiums for Executive and his
eligible dependents through the lesser of (i) 36 months following the Transition
Date, or (ii) such time as Executive ceases to be a Consultant. Following
Executive’s vacating his offices at the Company’s headquarters, the Company will
provide Executive, at its reasonable expense (but not to exceed $25,000 per
year), with off-site executive office space and part-time secretarial
assistance.
          d. Change of Control Agreement Amendments. Subject to Executive
signing a Release on the Effective Date and not thereafter revoking such
Release, Executive’s Change of Control Agreement shall be amended and restated
in its entirety on the Transition Date as set forth in Exhibit A hereto.
          e. Outstanding Option Agreements. Consistent with their terms,
Executive’s outstanding stock option agreements with the Company shall continue
to vest and remain exercisable while Executive remains a Consultant, and shall
remain exercisable for such time following termination of his consulting
relationship as is specified in such agreements.

 

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     4. Covenants Not to Compete and Not to Solicit.
          a. Covenant Not to Compete. Executive agrees that, during the
Employment Term, the Transition Term and the Consulting Term, Executive will not
directly engage in (whether as an employee, consultant, proprietor, partner,
director or otherwise), or have any ownership interest in, or participate in the
financing, operation, management or control of, any company whose business
competes with the Company’s business. Ownership of less than 1% of the
outstanding voting stock of any such competing company will not constitute a
violation of this provision.
          b. Covenant Not to Solicit. Executive agrees that, during the
Employment Term, the Transition Term and the Consulting Term, he will not
directly or indirectly solicit any individuals to leave the Company’s employ for
any reason or interfere in any other manner with the employment relationships at
the time existing between the Company and its current or prospective employees.
          c. Representations. The parties intend that the covenants contained in
Section 4(a) and (b) shall be construed as a series of separate covenants, one
for each county, city and state (or analogous entity) and country of the world.
If, in any judicial proceeding, a court shall refuse to enforce any of the
separate covenants, or any part thereof, then such unenforceable covenant, or
such part thereof, shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants, or portions thereof, to be enforced.
          d. Reformation. In the event that the provisions of this Section 4
should ever be deemed to exceed the time or geographic limitations, or scope of
this covenant, permitted by applicable law, then such provisions shall be
reformed to the maximum time or geographic limitations, as the case may be,
permitted by applicable laws.
     5. Reasonableness of Covenants. Executive represents that he (i) is
familiar with the covenant not to compete and the covenant not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.
     6. Arbitration.
          a. Executive agrees that any dispute or controversy arising out of,
relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
finally settled by binding arbitration to be held in Santa Clara County,
California under the Commercial Arbitration Rules, supplemented by the
Supplemental Procedures for Large Complex Disputes, of the American Arbitration
Association as then in effect (the “Rules”). The arbitrator(s) may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator(s) shall be final, conclusive and binding on the parties to the
arbitration, and judgment may be entered on the decision of the arbitrator(s) in
any court having jurisdiction.
          b. The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to rules of conflicts of law, and the
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law.
          c. The Company shall pay the costs and expenses of such arbitration,
and each party shall pay its own counsel fees and expenses.
          d. EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION 6, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO EXECUTIVE’S RELATIONSHIP WITH THE
COMPANY.

 

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     7. Indemnification and Insurance. The standard form of indemnification
agreement for officers and directors that Executive has entered into and any
fiduciary insurance maintained by the Company shall remain in effect to the same
extent that said indemnification or fiduciary insurance remains in effect for
all officers and directors of the Company.
     8. General Provisions.
          a. Entire Agreement. This Agreement (including Exhibits A and B
hereto), the stock option agreements by and between the Company and Executive
and the Proprietary Information Agreement previously entered into by and between
the Company and Executive represents the entire agreement and understanding
between the parties with respect to Executive’s performance of services for the
Company following the Effective Date, and supersede all prior or contemporaneous
agreements, whether written or oral. No waiver, alteration, or modification, if
any, of the provisions of this Agreement shall be binding unless in writing and
signed by duly authorized representatives of the parties hereto.
          b. Successors.
               i. Company Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, 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
“the Company” shall include any successor to the Company’s business and/or
assets that agrees to assume the Company’s obligations hereunder or which
becomes bound by the terms of this Agreement by operation of law.
               ii. Executive’s Successors. The terms of this Agreement and all
rights of Executive hereunder shall inure to the benefit of, and be enforceable
by, Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
          c. Conflicting Obligations. Executive represents that he has not
entered into, and will not enter into, any oral or written agreement in conflict
herewith.
          d. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
          e. Governing Law; Consent to Personal Jurisdiction. This Agreement
shall be governed by and construed in accordance with the internal substantive
laws, but not the choice of law rules, of the State of California. Executive
hereby consents to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the parties are
participants.
          f. Code Section 409A. Notwithstanding any contrary provision of the
Agreement, if the Company determines, in its good faith judgment, that
Section 409A of the Code shall result in the imposition of additional tax to an
earlier payment of any payment or benefit otherwise due to the Executive under
this Agreement during the six (6) month period following the Executive’s
“Separation From Service,” as such term is defined under Section 409A and the
proposed or final Treasury Regulations thereunder, such payments or benefits
shall accrue during the six (6) month period and shall become payable in a lump
sum payment on the date six (6) months and one (1) day following the Executive’s
separation from service date. All subsequent payments or benefits, if any, shall
be paid as provided in the Agreement. In addition, and notwithstanding any
contrary provision of the Agreement, the Company reserves the right to amend the
Agreement as it deems necessary or advisable, in its sole discretion and without
the consent of the Executive, to comply with Section 409A of the Code or to
otherwise avoid income recognition or imposition of income tax under
Section 409A of the Code, provided that to the extent reasonably practicable,
any such amendments shall be designed not to result in a material diminution of
the benefits provided by the Agreement.

 

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     IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date set forth above.

     
HARMONIC INC.
  ANTHONY LEY
 
   
/s/ Robin Dickson
  /s/ Anthony Ley
 
   
 
   
Date:  May 5, 2006
  Date:  May 5, 2006

 

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EXHIBIT A
HARMONIC INC./ANTHONY LEY
RELEASE OF CLAIMS
     This Release of Claims (“Agreement”) is made by and between Harmonic Inc.
(the “Company”), and Anthony Ley (“Employee”), (together, the “Parties”).
     WHEREAS, Employee has agreed to enter into a release of claims in favor of
the Company upon certain events specified in the transition agreement by and
between Company and Employee (the “Transition Agreement”) to which this is
attached as Exhibit A.
     NOW THEREFORE, in consideration of the mutual promises made herein, the
Parties hereby agree as follows:
          1. Termination. Employee’s employment from the Company terminated on
June 30, 2006.
          2. Confidential Information. Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the Proprietary
Information Agreement between Employee and the Company. Employee shall return
all the Company property and confidential and proprietary information in his
possession to the Company on the Effective Date of this Agreement, except as is
necessary to discharge his duties as Consultant and Chairman.
          3. Payment of Salary. Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee.
          4. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company. Employee, on behalf of himself, and his respective heirs, family
members, executors and assigns, hereby fully and forever releases the Company
and its past, present and future officers, agents, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
parents, predecessor and successor corporations, and assigns, from, and agrees
not to sue or otherwise institute or cause to be instituted any legal or
administrative proceedings concerning any claim, duty, obligation or cause of
action relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that he may possess arising from any omissions, acts
or facts that have occurred up until and including the Effective Date of this
Agreement including, without limitation,
               • any and all claims relating to or arising from Employee’s
employment relationship with the Company and the termination of that
relationship;
               • any and all claims relating to, or arising from, Employee’s
right to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for fraud, misrepresentation, breach
of fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law;
               • any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

 

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               • any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, the California Fair Employment and
Housing Act, and Labor Code section 201, et seq. and section 970, et seq. and
all amendments to each such Act as well as the regulations issued thereunder;
               • any and all claims for violation of the federal, or any state,
constitution;
               • any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and
               • any and all claims for attorneys’ fees and costs.
          Employee agrees that the release set forth in this section shall be
and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations due Employee
under Sections 3 and 7 of the Transition Agreement. Nothing in this Agreement
waives Employee’s rights to indemnification or any payments under any fiduciary
insurance policy, if any, provided by any act or agreement of the Company, state
or federal law or policy of insurance.
          5. Acknowledgment of Waiver of Claims under ADEA. Employee
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
the ADEA after the Effective Date of this Agreement. Employee acknowledges that
the consideration given for this waiver and release Agreement is in addition to
anything of value to which Employee was already entitled. Employee further
acknowledges that he has been advised by this writing that (a) he should consult
with an attorney prior to executing this Agreement; (b) he has at least
twenty-one (21) days within which to consider this Agreement; (c) he has seven
(7) days following the execution of this Agreement by the parties to revoke the
Agreement; (d) this Agreement shall not be effective until the revocation period
has expired; and (e) nothing in this Agreement prevents or precludes Employee
from challenging or seeking a determination in good faith of the validity of
this waiver under the ADEA, nor does it impose any condition precedent,
penalties or costs for doing so, unless specifically authorized by federal law.
Any revocation should be in writing and delivered to the Vice-President of Human
Resources at the Company by close of business on the seventh day from the date
that Employee signs this Agreement.
          6. Civil Code Section 1542. Employee represents that he is not aware
of any claims against the Company other than the claims that are released by
this Agreement. Employee acknowledges that he has been advised by legal counsel
and is familiar with the provisions of California Civil Code 1542, below, which
provides as follows:
               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.
               Employee, being aware of said code section, agrees to expressly
waive any rights he may have thereunder, as well as under any statute or common
law principles of similar effect.
          7. No Pending or Future Lawsuits. Employee represents that he has no
lawsuits, claims, or actions pending in his name, or on behalf of any other
person or entity, against the Company or any other person or entity referred to
herein. Employee also represents that he does not intend to bring any claims on
his own behalf or on behalf of any other person or entity against the Company or
any other person or entity referred to herein.

 

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          8. Application for Employment. Employee understands and agrees that,
as a condition of this Agreement, he shall not be entitled to any employment
with the Company, its subsidiaries, or any successor, and he hereby waives any
right, or alleged right, of employment or re-employment with the Company.
          9. No Cooperation. Employee agrees that he will not counsel or assist
any attorneys or their clients in the presentation or prosecution of any
disputes, differences, grievances, claims, charges, or complaints by any third
party against the Company and/or any officer, director, employee, agent,
representative, shareholder or attorney of the Company, unless under a subpoena
or other court order to do so.
          10. No Admission of Liability. Employee understands and acknowledges
that this Agreement constitutes a compromise and settlement of disputed claims.
No action taken by the Company, either previously or in connection with this
Agreement shall be deemed or construed to be (a) an admission of the truth or
falsity of any claims heretofore made or (b) an acknowledgment or admission by
the Company of any fault or liability whatsoever to the Employee or to any third
party.
          11. Costs. The Parties shall each bear their own costs, expert fees,
attorneys’ fees and other fees incurred in connection with this Agreement.
          12. Arbitration. The Parties agree that any and all disputes arising
out of the terms of this Agreement, their interpretation, and any of the matters
herein released, including any potential claims of harassment, discrimination or
wrongful termination shall be subject to binding arbitration, to the extent
permitted by law, as specified in the Transition Agreement.
          13. Authority. Employee represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through
him to bind them to the terms and conditions of this Agreement.
          14. No Representations. Employee represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
          15. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
          16. Entire Agreement. This Agreement, along with the Transition
Agreement, the Proprietary Information Agreement and Employee’s written stock
option agreements with the Company, represents the entire agreement and
understanding between the Company and Employee concerning Employee’s separation
from the Company.
          17. No Oral Modification. This Agreement may only be amended in
writing signed by Employee and the Compensation Committee of the Board of
Directors of the Company.
          18. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.
          19. Effective Date. This Agreement is effective eight (8) days after
it has been signed by both Parties.
          20. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
          21. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

 

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               • They have read this Agreement;
               • They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;
               • They understand the terms and consequences of this Agreement
and of the releases it contains;
               • They are fully aware of the legal and binding effect of this
Agreement.
          22. Non-Disparagement. The Parties hereto agree to refrain from
disparagement, criticism, defamation or slander of each other or of the
Company’s employees, officers, directors, agents, products or services to
anyone, including, but not limited to, other employees and past, present or
prospective customers and/or employees of the Company and prospective employers
of Employee.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

              Harmonic Inc.
 
       
Dated:  May 5, 2006
  By   /s/ Robin Dickson
 
       
 
       
Dated:  May 5, 2006
  By   /s/ Anthony Ley
 
       
 
      Anthony Ley, an individual

 

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EXHIBIT B
HARMONIC INC.
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
     This Amended and Restated Change of Control Agreement (the “Agreement”) is
made and entered into by and between Anthony Ley, (the “Consultant”) and
Harmonic, Inc. (the “Company”), effective as of the latest date set forth by the
signatures of the parties hereto below.
RECITALS
     A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other Change of Control. The
Board of Directors of the Company (the “Board”) recognizes that such
consideration can be a distraction to the Consultant and can cause the
Consultant to consider alternative opportunities. The Board has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication and objectivity of the
Consultant, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company.
     B. The Board believes that it is in the best interests of the Company and
its shareholders to provide the Consultant with an incentive to continue his
consulting relationship and to motivate the Consultant to maximize the value of
the Company upon a Change of Control for the benefit of its shareholders.
     C. The Board believes that it is imperative to provide the Consultant with
certain benefits upon the Company entering into a definitive agreement
contemplating a Change of Control which provides the Consultant with enhanced
financial security and provides incentive and encouragement to the Consultant to
remain with the Company notwithstanding the possibility of a Change of Control.
     D. Certain capitalized terms used in the Agreement are defined in Section 6
below.
     The parties hereto agree as follows:
     1. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied.
     2. Change of Control Benefits.
          (a) Benefits Upon Entering into a Definitive Agreement Regarding a
Change of Control. If the Company enters into a Definitive Change of Control
Agreement prior to July 1, 2007, and Consultant has remained as a consultant to
the Company through such date, then Consultant shall receive the following
benefits:
          (i) Severance Payment. A cash payment in an amount equal to two
hundred percent (200%) of the Consultant’s Annual Compensation;
          (ii) Bonus Payment. For a Definitive Change of Control Agreement
entered into by the Company on or prior to December 31, 2006 only, a cash
payment in an amount equal to twice either: a) 50% of the established annual
target bonus for 2006, or b) the average of the actual bonuses paid in each of
the two prior years, whichever is greater.
          (iii) Continued Consultant Benefits. One hundred percent (100%)
Company-paid health, dental and life insurance coverage at the same level of
coverage as was provided to Consultant immediately prior to entering into the
Definitive Change of Control Agreement (the “Company-Paid Coverage”). If such
coverage

 

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included the Consultant’s dependents immediately prior to the Change of Control,
such dependent shall also be covered at Company expense. Company-Paid Coverage
shall continue until the earlier of (i) two years from the date of entering into
the Definitive Change of Control Agreement, or (ii) the date that the Consultant
and his dependents become covered under another employer’s group health, dental
or life insurance plans.
               (iv) Option and Restricted Stock Accelerated Vesting. One hundred
percent (100%) of the unvested portion of any outstanding stock option or
restricted stock held by the Consultant shall automatically be accelerated in
full so as to become completely vested and all such outstanding stock options
shall become exercisable for a period equal to the greater of (i) December 31 of
the year in which the stock option would otherwise terminate, or (ii) two and
one-half months after the stock option would otherwise terminate (or such
greater period as is provided for in such stock option agreements), but in no
event longer than the original maximum term of the stock options.
               (v) Outplacement Assistance. If desired by Consultant, Company
will pay up to five thousand dollars ($5,000.00) for outplacement assistance
selected by Company and approved by Consultant.
          (b) Timing of Payments. Any payment to which Consultant is entitled
under Section 3(a)(i) shall be paid by the Company to the Consultant (or to the
Consultant’s successors in interest pursuant to Section 7(b)) in cash and in
full, not later than thirty (30) calendar days following the date upon which the
Definitive Change of Control Agreement is entered into by the Company.
     3. Attorney Fees; Costs and Expenses. The Company shall promptly reimburse
Consultant, on a monthly basis, for the reasonable attorney fees, costs and
expenses incurred by the Consultant in connection with any action brought by
Consultant to enforce his rights hereunder, regardless of the outcome of the
action.
     4. Limitation on Payments. In the event that the benefits provided for in
this Agreement or otherwise payable to the Consultant (i) constitute “parachute
payments” within the meaning of Section 280G of the Internal Revenue Code of
1986 as amended (the “Code”) and (ii) but for this Section 5, would be subject
to the excise tax imposed by Section 4999 of the Code, then the Consultant’s
benefits under Section 3(a)(i) shall be either
          (a) delivered in full, or
          (b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts taking into account
the applicable federal, state and local income taxes and the excise tax imposed
by Section 4999, results in the receipt by the Consultant on an after-tax basis,
of the greatest amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Consultant otherwise agree in writing, any
determination required under this Section 5 shall be made in writing by the
Company’s Accountants immediately prior to Change of Control, whose
determination shall be conclusive and binding upon the Consultant and the
Company for all purposes. For purposes of making the calculations required by
this Section 5, 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 Consultant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 5.
     5. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
          (a) Annual Compensation. “Annual Compensation” means (i) with respect
to a Definitive Change of Control Agreement entered into by the Company on or
prior to December 31, 2006, Employee’s annual base salary as in effect on May 5,
2006, and (ii) with respect to a Definitive Change of Control Agreement that was
entered into by the Company on or after January 1, 2007 and prior to July 1,
2007, $225,000.

 

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          (b) Change of Control. “Change of Control” means the occurrence of any
of the following events, which is pursuant to and contemplated by a definitive
agreement entered into by the Company prior to July 1, 2007:
               (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;
               (ii) A change in the composition of the Board occurring on or
prior to July 1, 2007, 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);
               (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 fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation;
               (iv) The consummation of the sale or disposition by the Company
of all or substantially all the Company’s assets.
          (c) Definitive Change of Control Agreement. “ Definitive Change of
Control Agreement” means an agreement binding on the Company and the acquirer
that contemplates a Change of Control of the Company by the acquirer or its
affiliates.
     6. Successors.
          (a) 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 the assumption agreement described in this Section 7(a) or which
becomes bound by the terms of this Agreement by operation of law.
          (b) Consultant’s Successors. The terms of this Agreement and all
rights of the Consultant hereunder shall inure to the benefit of, and be
enforceable by, the Consultant’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
          (c) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Consultant, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices
directed shall be to the attention of its Secretary.

 

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     7. Miscellaneous Provisions.
          (a) No Duty to Mitigate. The Consultant 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 Consultant 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 Consultant and by an authorized officer of the Company
(other than the Consultant). 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) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement and the Transition Agreement entered into by an
between the Company and Executive (the “Transition Agreement”) have been made or
entered into by either party with respect to the subject matter hereof. This
Agreement and the Transition Agreement represent the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior arrangements and understandings regarding same.
          (d) Choice of Law. This Agreement shall be deemed to have been
executed and delivered within the State of California and the validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California, without regard to choice of law
principles.
          (e) 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..
          (f) 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.
          (g) Code Section 409A. Notwithstanding any contrary provision of the
Agreement, if the Company determines, in its good faith judgment, that
Section 409A of the Code shall result in the imposition of additional tax to an
earlier payment of any payment or benefit otherwise due to the Executive under
this Agreement during the six (6) month period following the Executive’s
“Separation From Service,” as such term is defined under Section 409A and the
proposed or final Treasury Regulations thereunder, such payments or benefits
shall accrue during the six (6) month period and shall become payable in a lump
sum payment on the date six (6) months and one (1) day following the Executive’s
separation from service date. All subsequent payments or benefits, if any, shall
be paid as provided in the Agreement. In addition, and notwithstanding any
contrary provision of the Agreement, the Company reserves the right to amend the
Agreement as it deems necessary or advisable, in its sole discretion and without
the consent of the Executive, to comply with Section 409A of the Code or to
otherwise avoid income recognition or imposition of income tax under
Section 409A of the Code, provided that to the extent reasonably practicable,
any such amendments shall be designed not to result in a material diminution of
the benefits provided by the Agreement.

 

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IN WITNESS WHEREOF, each of the parties has executed this amended and restated
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year set forth below.

          COMPANY   HARMONIC, INC.
 
       
 
  By:   /s/ Robin Dickson
 
       
 
       
 
  Title:   Chief Financial Officer
 
       
 
            Date:   May 5, 2006
 
       
CONSULTANT
  Name:   /s/ Anthony Ley
 
       
 
            Date:   May 5, 2006