Document:

exv10w3

Exhibit 10.3

ESCROW AGREEMENT

     ESCROW AGREEMENT, dated as of May 5, 2011 (the “Agreement”) by and among (i) 57th Street
General Acquisition Corp., a Delaware corporation (“Parent”), (ii) Crumbs Holdings LLC, a Delaware
limited liability company (the “Company”), (iii) Jason Bauer, Victor Bauer, Mia Bauer, EHL Holdings
LLC, a Delaware limited liability company (“EHL”), and John Ireland (collectively the “Members”),
(iv) Jason Bauer, in his capacity as Member Representative and Edwin Lewis, in his capacity as
Member Representative, and (v) Continental Stock Transfer & Trust Company, a New York corporation
(the “Escrow Agent”).

     WHEREAS, Parent, 57th Street Merger Sub LLC, a Delaware limited liability company
(“Merger Sub”), the Company, the Members of the Company and the Member Representatives have entered
into that certain Business Combination Agreement, dated as of January 9, 2011, as amended or
modified on February 18, 2011, March 17, 2011, April 7, 2011, and May 5, 2011 (as may be further
amended or modified from time to time in accordance with its terms, the “BCA”), pursuant to which,
among other matters, Merger Sub shall be merged with and into the Company with the Company becoming
a non wholly-owned subsidiary of Parent (the “Merger”);

     WHEREAS, it is a condition to the closing of the Merger under the BCA that the parties hereto
enter into this Agreement with terms and conditions reasonably satisfactory to the parties thereto;

     WHEREAS, pursuant to the BCA, the parties to the BCA have agreed that certificates for Six
Hundred Fifty Thousand (650,000) New Crumbs Class B Exchangeable Units and Sixty-Five Thousand
(65,000) shares of Parent Series A Voting Preferred Stock (collectively, the “Claim Shares” and as
adjusted pursuant to this Agreement, the “Escrow Securities”) shall be placed into escrow as
hereinafter provided;

     WHEREAS, the Claim Shares may potentially be forfeited and canceled as remedy of Parent and
Parent Indemnified Parties for the indemnification obligations of the Company and the Members as
set forth in the BCA, subject to the Members’ rights to substitute cash in lieu of forfeiture of
Claim Shares pursuant Section 1.6(b) of the BCA, but shall otherwise be released to the applicable
Members of the Company following expiration of the claim periods set forth in the BCA or as
otherwise provided by the BCA; and

     WHEREAS, Parent, the Company, the Members and the Member Representatives desire that the
Escrow Agent accept the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.

     NOW, THERFORE, in consideration of the premises set forth above, which are incorporated in
this Agreement as if fully set forth below, and the representations, warranties, covenants and
agreements contained in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:

     1. Capitalized Terms. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in the BCA.

 

 

     2. Appointment of Escrow Agent. Parent, the Company, the Members and the Member
Representatives hereby appoint the Escrow Agent to act in accordance with and subject to the terms
of this Agreement and the BCA and the Escrow Agent hereby accepts such appointment and agrees to
act in accordance with and subject to such terms.

     3. Deposit of Escrow Securities. On or before the Closing Date, Parent and the
Company shall deliver to the Escrow Agent certificates representing their respective Escrow
Securities, in proper transfer order with guaranteed stock powers, to be held and disbursed subject
to the terms and conditions of this Agreement and the BCA. Parent, the Company and the Members
acknowledge and agree that the certificates representing the Escrow Securities will bear legends to
reflect the deposit of such Escrow Securities under this Agreement.

     4. Disbursement of the Escrow Securities. The Escrow Agent shall cancel or disburse,
as the case may be, the Escrow Securities (i) within ten (10) days after receipt of written notice
executed by Parent, the Company and the Member Representatives (a “Letter of Direction”) or (ii)
pursuant to directions set forth in a final non-appealable judgment of a court having competent
jurisdiction over the matters contemplated hereby and only up to the amount set forth in such
Letter of Direction or judgment, as applicable. Each of Parent, the Company and the Member
Representatives agree to promptly deliver a Letter of Direction any time such Escrow Securities are
required to be cancelled or released under the terms of the BCA, including without limitation
pursuant to Sections 1.6(b) and 5.3 thereof, or this Agreement, including without limitation upon
the occurrence of the Claim Termination Date (as defined below). Unless released earlier pursuant
to this Section 4, the Escrow Agent shall hold each of the Escrow Securities until the expiration
of the Claim Shares Escrow Period (as defined below) applicable to such Escrow Securities. In the
case of the Claim Shares, the escrow period (the “Claims Share Escrow Period”) shall be the period
beginning on the date the certificates representing the Claim Shares are deposited with the Escrow
Agent and ending no later than one (1) month after the audited financial statements of Parent for
fiscal year 2011 shall have been completed (the “Claim Termination Date,” which unless tolled with
respect to specified Escrow Securities pursuant to the following proviso shall be deemed the date
upon which all Claims Share Escrow Periods expire), provided, however, that to the
extent a Claim Reservation Notice (as defined below) is timely delivered with respect to any Parent
Claims that remain unresolved at the time of the Claim Termination Date and notice of which was
properly and timely delivered pursuant to the BCA, the Claims Share Escrow Period shall be tolled
with respect to the Claim Shares specified in such Claim Reservation Notice, and the Escrow Agent
shall continue to hold the Claim Shares specified in such Claim Reservation Notice until the Parent
Claim applicable to any portion of such Claim Shares has been resolved pursuant to the BCA at which
time each of Parent, the Company and the Member Representatives shall promptly deliver a Letter of
Direction directing the Escrow Agent to cancel or release the applicable Claim Shares, as
appropriate, in accordance with such resolution. Parent, the Company and the Member
Representatives shall promptly deliver a written notice to the Escrow Agent (a “Claim Reservation
Notice”) to the extent any Parent Claims remain unresolved at the time of the Claim Termination
Date and notice of which was properly and timely delivered pursuant to the BCA specifying for each
such Parent Claim the number of such Claim Shares (which shall be a portion of the Claim Shares
reasonably necessary to satisfy such Parent Claims) that are to remain in

 

 

escrow until the
applicable Parent Claim is resolved. The Escrow Agent shall have no further duties hereunder after
the expiration of the Claim Shares Escrow Period applicable to all Escrow Securities and the
disbursement and/ or cancellation of the Escrow Securities in accordance with this Section 4.

     5. Rights of Members in Escrow Securities.

          5.1. Voting Rights

          (a) Subject to the terms and conditions of the BCA, each Member of the Company (or its
Permitted Family Transferee to the extent applicable) shall (i) retain title to its allocable
portion of the Claim Shares, (ii) remain as the holder of record of the portion of the Claim Shares
registered on the books of Parent and Company, respectively, in the name of such Member (or its
Permitted Family Transferee to the extent applicable) or its respective nominees, and (iii) retain
all of its rights as a member of the Company and as a stockholder of Parent during the Claim Shares
Escrow Period including, without limitation, the right to vote the Claim Shares. Each of the
Escrow Agent (as directed by Parent and the Company in writing), the Company and Parent shall, upon
request, provide reasonable cooperation in facilitating such rights.

          5.2. Dividends and Other Distributions in Respect of the Escrow Securities. Each of
the parties hereto agrees and acknowledges that during the Claim Shares Escrow Period, all
dividends or other distributions, whether payable in cash or otherwise, with respect to the Escrow
Securities shall be delivered by the Company and Parent, as applicable, directly to each Member to
whom such Escrow Securities are allocated (or their Permitted Family Transferees to the extent
applicable) and shall not constitute property subject to the terms of this Agreement.

          5.3. Restrictions on Transfer. During the Claim Shares Escrow Period, no sale,
transfer or other disposition may be made of any or all of the Escrow Securities except as
permitted by the BCA; provided, however, that such transfers may be implemented only
pursuant to the terms and conditions of the BCA and upon the respective transferee’s written
agreement to be bound by the terms and conditions of this Agreement. Even if transferred in
accordance with this Section 5.3, the Escrow Securities will remain subject to this Agreement and
may be released from escrow only in accordance with Section 4 hereof. Each of Parent, the Company
and the Escrow Agent (as directed by Parent and the Company in writing) shall cooperate to replace
any relevant certificates representing applicable Escrow Securities to effect any such permitted
transfers. Furthermore, to the extent that Parent or the Company, as applicable, is required to
equitably adjust any Escrow Securities, each of Parent, the Company
and the Escrow Agent (as directed by Parent and the Company in writing) shall cooperate to
replace any relevant certificates representing applicable Escrow Securities to reflect any such
adjustments. In furtherance of the foregoing, the Company and Parent shall provide the Escrow
Agent with duly executed certificates for such purposes.

 

 

     6. Concerning the Escrow Agent.

          6.1. Good Faith Reliance. The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and in the exercise of its own best judgment, and may rely
conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion
or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report
or other paper or document (not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information therein contained)
which is believed by the Escrow Agent in good faith to be genuine and to be signed or presented by
the proper party or parties. The Escrow Agent shall not be bound by any notice or demand, or any
waiver, modification, termination or rescission of this Agreement unless evidenced by a writing
delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of
the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

          6.2. Indemnification. Except as set forth in Section 7.6, the Escrow Agent shall be
indemnified and held harmless by Parent, the Company, and the Members from and against any
expenses, including reasonable counsel fees and disbursements, or loss suffered by the Escrow Agent
in connection with any action taken by it hereunder, action, suit or other proceeding involving any
claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other than
expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent.
Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement
of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in
writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court of competent jurisdiction
to determine ownership or disposition of the Escrow Securities or it may deposit the Escrow
Securities with the clerk of any appropriate court of competent jurisdiction or it may retain the
Escrow Securities pending receipt of a final, non-appealable order of a court having competent
jurisdiction over all of the parties hereto directing to whom and under what circumstances the
Escrow Securities are to be canceled and/ or disbursed and delivered. The provisions of this
Section 6.2 shall survive in the event the Escrow Agent resigns or is discharged pursuant to
Sections 6.5 or 6.6 below.

          6.3. Compensation. The Escrow Agent shall be entitled to reasonable compensation from
Parent and the Company for all services rendered by it hereunder, as set forth on Exhibit A
hereto. The Escrow Agent shall also be entitled to reimbursement from Parent and the Company for
all expenses paid or incurred by it in the administration of its duties hereunder including, but
not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other
governmental charges.

          6.4. Further Assurances. From time to time on and after the date hereof, each of
Parent, the Company, the Members and the Member Representatives shall deliver or cause to be
delivered to the Escrow Agent such further documents and instruments and shall do or cause to be
done such further acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself
that it is protected in acting hereunder.

 

 

          6.5. Resignation. The Escrow Agent may resign at any time and be discharged from its
duties as escrow agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation shall become effective
at such time that the Escrow Agent shall turn over to a successor escrow agent appointed by the
other parties hereto, which approval will not be unreasonably withheld, conditioned or delayed, the
Escrow Securities held hereunder. If no new escrow agent is so appointed within the 60 day period
following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow
Securities with a court of competent jurisdiction that the Escrow Agent reasonably deems
appropriate.

          6.6. Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from
its duties as escrow agent hereunder if so requested in writing at any time by the other parties
hereto, jointly, provided, however, that such resignation shall become effective only upon
acceptance of appointment by a successor escrow agent as provided in Section 6.5.

          6.7. Liability. Notwithstanding anything herein to the contrary, the Escrow Agent
shall not be relieved from liability hereunder for its own gross negligence or its own willful
misconduct or bad faith.

     7. Miscellaneous.

          7.1. Governing Law. This Agreement shall for all purposes be deemed to be made under
and shall be construed in accordance with the laws of the State of Delaware without giving effect
to the principals of conflicts of law. Each of the parties hereby agrees that any action,
proceeding or claim against it arising out of or relating in any way to this Agreement shall be
brought and enforced in the courts of the State of Delaware or the United States District Court for
the District of Delaware, and irrevocably submits to such personal jurisdiction, which jurisdiction
shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum.

          7.2. Entire Agreement. This Agreement, the exhibits hereto and the BCA and the
agreements contemplated thereby contain the entire agreement of the parties hereto with respect to
the subject matter hereof and, except as expressly provided herein, may not be changed or modified
except by an instrument in writing signed by the party or parties to be bound thereby. In
connection with any proposed amendment, the Escrow Agent may request an opinion of Parent’s or the
Company’s counsel as to the validity of the proposed amendment as a condition to its execution of
said amendment and upon such request the party shall use commercially reasonable efforts to obtain
and deliver such legal opinion. Waivers of this Agreement or any of the terms and conditions
hereunder shall only be effective if in writing and
executed by the party or parties to be bound therewith. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or subsequent waiver of the same term
or condition, or a waiver of any other term or condition, of this Agreement.

          7.3. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation thereof.

 

 

          7.4. Binding Effect; Assignment. This Agreement shall be binding upon and inure to
the benefit of the respective parties hereto and their legal representative, successors and
permitted assigns. Neither this Agreement nor any right or interest hereunder may be assigned in
whole or in part by any party without the prior consent of the other
parties hereto; provided,
however, that a Member may assign its rights hereunder in whole or part in connection with a
transfer of its allocable portion of the Escrow Securities in accordance with the BCA.

          7.5. Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and either be delivered personally or by private national courier
service, or be mailed, certified or registered mail, return receipt requested, postage prepaid, and
shall be deemed given when so delivered personally or, if sent by private national courier service,
on the next business day after delivery to the courier, or, if mailed, two business days after the
date of mailing, as follows:

     if to the Escrow Agent, to:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, NY 10004

Attention: Frank DiPalo

if to Parent, to:

57th Street General Acquisition Corp.

c/o Crumbs Holdings LLC

110 West 40th Street, Suite 2100

New York, New York 10018

Attention: Jason Bauer

and a copy, which shall not constitute notice, to:

Ellenoff, Grossman & Schole LLP

150 East 42nd Street, 11th Floor

New York, New York 10017

Attention: Douglas Ellenoff, Esq.

if to the Company, to:

Crumbs Holdings LLC

110 West 40th Street, Suite 2100

New York, New York 10018

Attention: Jason Bauer

and a copy, which shall not constitute notice, to:

Akin Gump Strauss Hauer & Feld LLP

 

 

One Bryant Park

New York, New York 10036

Attention: Bruce Mendelsohn

if to a Member (as the case may be), to:

the notice address set forth on Exhibit B hereto

and a copy, which shall not constitute notice, to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Attention: Bruce Mendelsohn

Facsimile: (212) 872-1002

if to a Member Representative (as the case may be), to:

Jason Bauer

Crumbs Holdings LLC

110 West 40th Street, Suite 2100

New York, New York 10018

Edwin Lewis

220 S. Morris St. Box 8

Oxford, MD 21654

and a copy, which shall not constitute notice, to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Attention: Bruce Mendelsohn

Facsimile: (212) 872-1002

     The parties may change the persons and addresses to which the notices or other communications
are to be sent by giving written notice to any such change in the manner provided herein for giving
notice.

     7.6. Trust Account Waiver. For and in consideration of the Escrow Agent entering into
this Agreement and for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Escrow Agent hereby agrees it does not now and shall not at any time
hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust
Fund, or Distributions therefrom, or make any claim against the Trust Fund and/ or Distributions,
regardless of whether such claim arises as a result of, in connection with or relating in any way
to, any proposed or actual business relationship between Parent and the

 

 

Escrow Agent, this
Agreement or any other matter, and regardless of whether such claim arises based on contract, tort,
equity or any other theory of legal liability. The Escrow hereby irrevocably waives any claims it
may have against the Trust Fund and/ or Distributions now or in the future as a result of, or
arising out of, any negotiations, contracts or agreements with Parent and will not seek recourse
against the Trust Fund for any reason whatsoever (including, without limitation, for an alleged
breach of this Agreement). To the extent the Escrow Agent commences any action or proceeding based
upon, in connection with, relating to or arising out of any matter relating to Parent, which
proceeding seeks, in whole or in part, monetary relief against Parent, the Escrow Agent hereby
acknowledges and agrees its sole remedy shall be against funds held outside of the Trust Fund and
Distributions and that such claim shall not permit the Escrow Agent (or any person or entity
claiming on behalf of the Escrow Agent) to have any claim against the Trust Fund, Distributions
and/ or any amounts contained therein. In the event that the Escrow Agent commences any action or
proceeding based upon, in connection with, relating to or arising out of any matter relating to
Parent, which proceeding seeks, in whole or in part, relief against the Trust Fund or the Public
Stockholders, whether in the form of money damages or injunctive relief, Parent shall be entitled
to recover from the Escrow Agent, as the case may be, the associated legal fees and costs in
connection with any such action, in the event Parent prevails in such action or proceeding.

     7.7. Counterparts. This Agreement may be executed in several counterparts each
one of which shall constitute an original and may be delivered by facsimile transmission and
together shall constitute one instrument.

     7.8 Termination. This Agreement shall terminate on the date on which there are no
Escrow Securities held by the Escrow Agent, subject to the survival of provisions which expressly
survive the termination of this Agreement.

     7.9 No Third Party Beneficiaries. Except as otherwise expressly provided herein,
nothing contained in this Agreement or any instrument or document executed by any party in
connection with the transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or thereto or a
permitted assign of such a party.

[remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused the execution of this Agreement as of
the date first above written.

	 	 	 	 	 
	 	57TH STREET GENERAL ACQUISITION CORP.

 	 
	 	By:  	/s/ Paul Lapping
 	 
	 	 	Name:  	Paul Lapping 	 
	 	 	Title:  	CFO, Secretary and Treasurer 	 
	 
	 	CRUMBS HOLDINGS LLC

 	 
	 	By:  	/s/Jason Bauer
 	 
	 	 	Name:  	Jason Bauer 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	 	    /s/ Jason Bauer
 	 
	 	 	Jason Bauer 	 
	 
	 	 	    /s/ Edwin Lewis
 	 
	 	 	Edwin Lewis 	 
	 
	 	CONTINENTAL STOCK TRANSFER

& TRUST COMPANY

 	 
	 	By:  	/s/ John W. Conner, Jr.
 	 
	 	 	Name:  	John W. Comer, Jr. 	 
	 	 	Title:  	Vice President 	 
	 

 

 

	 	 	 	 	 
	 	MEMBERS:

 	 
	 	 	/s/ Jason Bauer
 	 
	 	 	Jason Bauer 	 
	 
	 	 	                                                 /s/ Mia Bauer
 	 
	 	 	Mia Bauer 	 
	 
	 	 	                                                 /s/ Victor Bauer
 	 
	 	 	Victor Bauer 	 
	 
	 	CRUMBS, INC.

 	 
	 	By:  	/s/ Jason Bauer
 	 
	 	 	Name:  	Jason Bauer 	 
	 	 	Title:  	President 	 
	 
	 	EHL HOLDINGS LLC

 	 
	 	By:  	/s/ Edwin Lewis
 	 
	 	 	Name:  	Edwin Lewis 	 
	 	 	Title:  	Chairman 	 
	 
	 	 	                                                          /s/ John D. Ireland
 	 
	 	 	John D. Ireland 	 
	 	 	 	 
	 

 

 

	 	 	 	 	 

EXHIBIT A

Escrow Agent Fees

$2,500 for the first year and $200 for each month after the first year for acting as escrow agent.

First year agent fee to be paid at closing.

 

 

EXHIBIT B

Member Notices

	 	 	 
	Name	 	Address
	Jason Bauer

	 	Crumbs Holdings LLC

110 West 40th Street

Suite 2100

New York, New York 10018

Attention: Jason Bauer 

Facsimile: (212) 221-7107
	 
	 	 
	Mia Bauer

	 	c/o Jason Bauer

Crumbs Holdings LLC

110 West 40th Street

Suite 2100

New York, New York 10018

Attention: Jason Bauer 

Facsimile: (212) 221-7107
	 
	 	 
	Victor Bauer

	 	254 East 68th Street

Apt 26B 

New York, NY 10065

Facsimile: (646) 619-4878
	 
	 	 
	Crumbs, Inc.

	 	c/o Crumbs Holdings LLC

110 West 40th Street 

Suite 2100

New York, New York 10018

Attention: Jason Bauer

Facsimile: (212) 221-7107
	 
	 	 
	EHL Holdings LLC

	 	220 S. Morris St. Box 8

Oxford, MD 21654

Facsimile: (410) 673-1385

Attention: Edwin Lewis
	 
	 	 
	John D. Ireland

	 	c/o Crumbs Holdings LLC 

24764 Pealiquor Rd 

Denton, MD 21629

Facsimile: (410) 673-1385exv10w1

Exhibit 10.1

Harmonic Inc. 

Change of Control Severance Agreement

     This Change of Control Severance Agreement (the “Agreement”) is made and entered into by
and between Mark Carrington, (the “Employee”) 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 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 shareholders 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 below) of the Company.

     B. The Board believes that it is in the best interests of the Company and its shareholders to
provide the Employee with an incentive to continue his employment and to motivate the Employee 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 Employee with certain severance
benefits upon Employee’s termination of employment following a Change of Control which provides the
Employee with enhanced financial security and provides incentive and encouragement to the Employee
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. 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. 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 as may otherwise be available in
accordance with the Company’s established employee plans and practices or pursuant to other
agreements with the Company.

     3. Severance Benefits.

          (a) Termination Following a Change of Control. If the Employee’s employment terminates
at any time within eighteen (18) months following a Change of Control, then, subject to Section 5,
the Employee shall be entitled to receive the following severance benefits:

               (i) Involuntary Termination. If the Employee’s employment is terminated as a result of
Involuntary Termination other than for Cause, then the Employee shall receive the following
severance benefits from the Company:

                    (1) Severance Payment. A cash payment in an amount equal to one hundred percent (100%)
of the Employee’s Annual Compensation;

 

 

                    (2) Bonus Payment. A cash payment in an amount equal to either: a) 50% of the established
annual target bonus or b) the average of the actual bonuses paid in each of the two prior years,
whichever is greater.

                    (3) Continued Employee Benefits. One hundred percent (100%) Company-paid health, dental and
life insurance coverage at the same level of coverage as was provided to such employee immediately
prior to the Change of Control (the “Company-Paid Coverage”). If such coverage included the
Employee’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) one year
from the date of the Change of Control, or (ii) the date that the Employee and his dependents
become covered under another employer’s group health, dental or life insurance plans that provide
Employee and his dependents with comparable benefits and levels of coverage. For purposes of Title
X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying
event” for Employee and his dependent shall be the date upon which the Company-Paid Coverage
terminates.

                    (4) Equity Compensation Accelerated Vesting. One hundred percent (100%) of the unvested
portion of any outstanding stock option, restricted stock or other equity compensation award held
by the Employee shall automatically be accelerated in full so as to become completely vested and
all such outstanding non-statutory stock options and stock appreciation rights shall be exercisable
for a period of one year (or such greater period of time as specified in the applicable stock
option or stock appreciation right agreement, but in no event longer than the original maximum
term) after such termination.

                    (5) Outplacement Assistance. A cash payment in the amount of five thousand ($5,000)
for outplacement assistance to Employee.

                    (6) Life Insurance Benefits. A cash payment in an amount equal to one hundred percent
(100%) of Company-paid life insurance coverage cost at the same level of coverage as was provided
to Employee immediately prior to the Change of Control, had Employee continued life insurance
coverage until the date that is one year from the date of the Change of Control.

          (b) Timing of Severance Payments. Any severance payment to which Employee is entitled
under Sections 3(a)(i)(1), 3(a)(i)(2), 3(a)(i)(5) and 3(a)(i)(6) shall be paid by the Company to
the Employee (or to the Employee’s successors in interest pursuant to Section 7(b)) in cash and in
full, not later than thirty (30) calendar days following the Termination Date, subject to any delay
required under Section 10.

          (c) Voluntary Resignation; Termination For Cause. If the Employee’s employment
terminates by reason of the Employee’s voluntary resignation (and is not an Involuntary
Termination), or if the Employee is terminated for Cause, 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
agreements with the Company.

          (d) Disability; Death. If the Company terminates the Employee’s employment as a result
of the Employee’s Disability or such Employee’s employment is terminated due to the death of the
Employee 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 agreements with the Company.

          (e) 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
eighteen (18) -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 severance and benefits plans and practices or pursuant to other agreements with the
Company.

2

 

     4. Attorney Fees; Costs and Expenses. The Company shall promptly reimburse Employee,
on a monthly basis, for the reasonable attorney fees, costs and expenses incurred by the Employee
in connection with any action brought by Employee to enforce his rights hereunder, regardless of
the outcome of the action.

     5. Limitation on Payments. In the event that the severance and other benefits provided
for in this Agreement or otherwise payable to the Employee (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 Employee’s severance 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 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. If a reduction in amounts to be paid must
be made so that benefits are delivered to a lesser extent, any cash amounts will be reduced or
modified prior to the reduction of any non-cash amounts. Unless the Company and the Employee
otherwise agree in writing, any determination required under this Section 5 shall be made in
writing by a nationally recognized “Big Four” accounting firm selected by the Company (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 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 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. The Company shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section 5. Any reduction in payments and/or benefits required
by this Section 5 will occur in the following order: (1) reduction of cash payments; (2) reduction
of vesting acceleration of equity awards; and (3) reduction of other benefits paid or provided to
Employee. In the event that acceleration of vesting of equity awards is to be reduced, such
acceleration of vesting will be cancelled in the reverse order of the date of grant for Employee’s
equity awards. If two or more equity awards are granted on the same date, each award will be
reduced on a pro-rata basis.

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

          (a) Annual Compensation. “Annual Compensation” means an amount equal to Employee’s
Company base salary for the twelve months preceding the Change of Control.

          (b) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the Employee
in connection with his responsibilities as an employee and intended to result in substantial
personal enrichment of the Employee, (ii) the conviction of a felony) (iii) a willful act by the
Employee which constitutes gross misconduct and which is injurious to the Company, and (iv)
following delivery to the Employee of a written demand for performance from the Company which
describes the basis for the Company’s belief that the Employee has not substantially performed his
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.

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

               (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;

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               (ii) A change in the composition of the Board 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);

               (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.

          (d) Disability. “Disability” shall mean that the Employee has been unable to perform
his Company duties as the result of his incapacity due to physical or mental illness, and such
inability, at least 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 Agreement as to acceptability not to be unreasonably withheld).
Termination resulting from Disability may only be effected after at least 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 duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall automatically be deemed to
have been revoked.

          (e) Involuntary Termination. “Involuntary Termination” shall mean (i) without the
Employee’s express written consent, the significant reduction of the Employee’s duties authority or
responsibilities relative to the Employee’s duties, authority or responsibilities as in effect
immediately prior to such reduction, or the assignment to Employee of such reduced duties,
authority or responsibilities; (ii) without the Employee’s express written consent, a substantial
reduction, without good business reasons, 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 salary of the Employee as in effect immediately prior to such reduction;
(iv) a material reduction by the Company in the kind or level of employee benefits, including
bonuses, to which the Employee was entitled immediately prior to such reduction with the result
that the Employee’s overall benefits package is significantly reduced; (v) the relocation of the
Employee to a facility or a location more than twenty-five (25) miles from the Employee’s then
present location, without the Employee’s express written consent; (vi) any purported termination of
the Employee by the Company which is not effected for Disability or for Cause, or any purported
termination for which the grounds relied upon are not valid; (vii) the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in Section 7(a) below; or
(viii) any act or set of facts or circumstances which would, under California case law or statute
constitute a constructive termination of the Employee.

          (f) Termination Date. “Termination Date” shall mean (i) if this Agreement is
terminated by the Company for Disability, thirty (30) days after notice of termination is given to
the Employee (provided that the Employee shall not have returned to the performance of the
Employee’s duties on a full-time basis during such thirty (30)-day period), (ii) if the Employee’s
employment is terminated by the Company for any other reason, the date on which a notice of
termination is given, provided that if within thirty (30) days after the Company gives the Employee
notice of termination, the Employee notifies the Company that a dispute exists concerning the
termination or the benefits due pursuant to this Agreement, then the Termination Date shall be the
date on which such dispute is finally determined, either by mutual written agreement of the
parties, or by a final judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected), or (iii) if the Agreement is
terminated by the Employee, the date on which the Employee delivers the notice of termination to
the Company.

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     7. 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) 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.

     8. Notice.

          (a) General. 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 Employee, 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.

          (b) Notice of Termination. Any termination by the Company for Cause or by the Employee
as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a
notice of termination to the other party hereto given in accordance with Section 8(a) 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 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 showing of Involuntary
Termination shall not waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.

     9. 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) 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 have
been made or entered into by either party with respect to the subject matter hereof. This Agreement
represents 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.

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

          (g) 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.

     10. Section 409A.

          (a) Notwithstanding anything to the contrary in this Agreement, no severance payments or
benefits payable to Employee, if any, pursuant to this Agreement that, when considered together
with any other severance payments or separation benefits, is considered deferred compensation under
Section 409A (together, the “Deferred Payments”) will be payable until Employee has a “separation
from service” within the meaning of Section 409A. Similarly, no severance payable to Employee, if
any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to
Treasury Regulation Section 1.409A-1(b)(9) will be payable until Employee has a “separation from
service” within the meaning of Section 409A.

          (b) Further, if Employee is a “specified employee” within the meaning of Section 409A at the
time of Employee’s separation from service (other than due to death), any Deferred Payments that
otherwise are payable within the first six (6) months following Employee’s separation from service
will become payable on the first payroll date that occurs on or after the date six (6) months and
one (1) day following the date of Employee’s separation from service. All subsequent Deferred
Payments, if any, will be payable in accordance with the payment schedule applicable to each
payment or benefit. Notwithstanding anything herein to the contrary, in the event of Employee’s
death following Employee’s separation from service but prior to the six (6) month anniversary of
Employee’s separation from service (or any later delay date), then any payments delayed in
accordance with this paragraph will be payable in a lump sum as soon as administratively
practicable after the date of Employee’s death and all other Deferred Payments will be payable in
accordance with the payment schedule applicable to each payment or benefit. Each payment and
benefit payable under the Agreement is intended to constitute a separate payment for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.

          (c) Any severance payment that satisfies the requirements of the “short-term deferral” rule
set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute Deferred
Payments for purposes of the Agreement. Any severance payment that qualifies as a payment made as a
result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the
Treasury Regulations that does not exceed the Section 409A Limit shall not constitute Deferred
Payments for purposes of the Agreement. For purposes of this subsection (c), “Section 409A Limit”
will mean the lesser of two (2) times: (i) Employee’s annualized compensation based upon the annual
rate of pay paid to Employee during Employee’s taxable year preceding Employee’s taxable year of
Employee’s separation from service as determined under Treasury Regulation Section
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or
(ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section
401(a)(17) of the Code for the year in which Employee’s employment is terminated.

          (d) The foregoing provisions are intended to comply with the requirements of Section 409A so
that none of the severance payments and benefits to be provided under the Agreement will be subject
to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to
so comply. Employee and the Company agree to work together in good faith to consider amendments to
the 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 Employee
under Section 409A.

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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	 	HARMONIC INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Hilliard
 

	 	 
	 	 	Title: SVP Human Resources	 	 
	 	 	Date: 5/10/11	 	 
	 
	 	 	 	 	 	 
	EMPLOYEE
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark Carrington
 

	 	 
	 	 	Title: SVP Worldwide Sales	 	 
	 	 	Date: 5/10/11

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