Click on Contacts then select the contacts that you want to transfer. Click Bulk Actions and select Transfer Contacts.
Now select the Sales Rep in the drop down you want to transfer to and Confirm Transfer. This will remove contacts from scheduled activites including SmartPaths and Tasks. Then select Transfer.
When the contacts are transfered, the Sales Rep will receive an Alert stating the transfer under Tracking. A new Group will be created with the new contacts under People.
A Manager or Admin can also transfer a Sales Rep's entire Contact list. Just select the Sales Rep under Admin then User and select the Edit Pencil to the right and click Transfer All Contacts.
Then select the new Sales Rep you want to transfer them too.