EXHIBIT 10.24
October 29, 2002
Xx. Xxxxxx X. Xxxxxxx
c/o Enterasys Networks, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Re: Separation Agreement and Release
Dear Xxx:
As we have discussed, your employment with Enterasys Networks, Inc.
(the "Company") will terminate effective as of November 15, 2002 (the
"Separation Date"). The purpose of this letter is to confirm the agreement
between you and the Company concerning your severance arrangements, as follows:
1. RESIGNATION. You hereby resign your positions and offices as
Chief Financial Officer and Treasurer of the Company effective as of October 29,
2002. You hereby resign, as of the Separation Date, your employment and all
other positions, offices and directorships held with the Company or any of its
Affiliates (as defined below). Your resignations are hereby accepted by the
Company on its own behalf and on behalf of its Affiliates. You agree to sign and
return any additional documentation which the Company may request to effect or
confirm your resignations.
2. FINAL SALARY AND VACATION PAY AND OUTSTANDING BUSINESS
EXPENSES. You will be paid, at your current base rate, for all work you perform
for the Company from the date of this letter, above, through the Separation
Date, to the extent not previously paid, as well as pay, at your final base rate
of pay, for any Paid Time Off you had earned, but not used, as of the Separation
Date. If you have outstanding business expenses incurred prior to the Separation
Date which are eligible for reimbursement under Company policy, they will be
reimbursed, provided that you submit the required documentation and
substantiation on or before November 15, 2002.
3. SEVERANCE BENEFITS. In consideration of your acceptance of
this Agreement and subject to your meeting in full your obligations under it and
under the agreement between you and the Company captioned
Confidentiality/Non-Disclosure Agreement which you signed on June 26, 2001 (the
"Confidentiality Agreement"), a copy of which is attached, the Company will
provide you the following severance pay and benefits:
(a) The Company will pay you your salary, at your final
base rate of pay, for the period of twelve months following the Separation Date
(the "Severance Pay Period"). Payments will made in the form of salary
continuation and will begin on the next regular Company payday which is at least
five business days following the latest of Separation Date; the effective date
of this Agreement or the date this Agreement executed by you is received by the
Company. The first payment will be retroactive to the day following the
Separation Date.
(b) If you were enrolled in the Company's medical and
dental plans on the Separation Date, you may elect to continue your
participation and that of your eligible dependents in those plans for a period
of time under the federal law known as "COBRA." If you do so by signing and
returning the COBRA election form no later than the date you sign and return
this Agreement, then, until the conclusion of the Severance Pay Period or, if
earlier, until the date you become eligible for coverage under the health plan
of another employer, the Company will contribute to the premium cost of your
coverage and that of your eligible dependents under those plans the same amount
that it contributes to the premium cost of coverage of active employees and
their eligible dependents. To be eligible for these Company premium
contributions, however, you must pay the remainder of the premium cost by
payroll deduction. You agree to notify the Company immediately if you become
eligible for coverage under the health plan of another employer during the
Severance Pay Period and to repay promptly any excess contributions made by the
Company. After the Company's contributions end, you may continue coverage for
the remainder of the COBRA period, if any, by paying the full premium cost plus
a small administrative fee.
(c) On the effective date of this Agreement, the Company
will transfer ownership to you of the IBM X22 ThinkPad laptop computer and RIM
Blackberry pager which it previously provided for your business use. You agree
to provide to the Company an electronic copy of all documents related to the
business of the Company and its Affiliates on the computer and pager and to
return to the Company any non-electronic documents or other records related to
the business of the Company or its Affiliates in your possession; maintain such
documents or records until the conclusion of any and all governmental
investigations, litigations or regulatory or other proceedings in which you are
named as a party that have arisen relating to the exercise of your duties and
responsibilities as an employee of the Company; and then permanently remove
those documents from the devices and destroy or return to the Company any other
documents or other records related to the business of the Company or its
Affiliates, without retaining any copies thereof in whatever form after the
conclusion of such governmental investigations, litigations or regulatory or
other proceedings.
(d) The Company will pay the reasonable cost of services
to you, up to an aggregate of $15,000, by an outplacement firm selected by the
Company to which you have no reasonable objection, such services to be provided
from the
effective date of this Agreement until the earlier of the date you accept
full-time employment or the expiration of one year from the Separation Date.
4. WITHHOLDING. All payments made by the Company under this
Agreement shall be reduced by any tax or other amounts required to be withheld
by the Company under applicable law and all other deductions authorized by you.
5. ACKNOWLEDGEMENT OF FULL PAYMENT. You acknowledge and agree
that the payments to be provided in accordance with paragraph 2 of this
Agreement are in complete satisfaction of any and all compensation due to you
from the Company, whether for services provided to the Company or otherwise,
through the Separation Date and that, except as expressly provided under this
Agreement, no further compensation is owed to you. Further, it is agreed that
severance pay and other benefits to which you are entitled under Paragraph 3 of
this Agreement shall be reduced by any other payments or benefits to which you
may be entitled under applicable law as a result of termination of your
employment, including without limitation any federal, state or local law with
respect to plant closings, mass layoffs or group benefit plan continuation
following termination or the like, but exclusive of any unemployment benefits to
which you are eligible under applicable law.
6. STATUS OF EMPLOYEE BENEFITS, PAID TIME OFF AND STOCK OPTIONS.
Except as otherwise expressly provided in paragraph 3(b) of this Agreement, your
participation in all employee benefit plans of the Company will end as of the
Separation Date, in accordance with the terms of those plans. You will not
continue to earn paid time off after the Separation Date. Your rights and
obligations with respect to any stock options granted to you by the Company
which had vested as of the Separation Date shall be governed by the applicable
stock option plan and any agreements or other requirements applicable to those
options. All stock options which are unvested as of the Separation Date shall be
cancelled and shall terminate as of that date.
7. NON-COMPETITION, CONFIDENTIALITY AND NON-DISPARAGEMENT.
(a) You agree that the following restrictions on your
activities are necessary to protect the goodwill, Confidential Information (as
defined in the Confidentiality Agreement) and other legitimate business
interests of the Company :
(i) You agree that, except with the prior
written consent of the Board or its designee, for a period of one year
following the Separation Date, you will not, directly or indirectly,
compete, or undertake any planning to compete, with the Company or any
of its Affiliates, anywhere in the world, whether as an owner, partner,
investor, consultant, employee or otherwise. Specifically, but without
limiting the foregoing, you agree not to work or provide services, in
any capacity, whether as an employee, independent contractor or
otherwise, whether with or without compensation, to any person or
entity who is engaged in any business that is competitive with the
business of the Company or any of its Affiliates for which you have
provided services, as conducted or in active planning during your
employment. It is agreed that
the foregoing shall not prevent your passive ownership of five percent
(5%) or less of the equity securities of any publicly traded company.
It is further agreed that your obligations under this paragraph will
terminate upon the voluntary or involuntary filing by the Company of a
Chapter 7 or 11 bankruptcy petition.
(ii) You also acknowledge and agree that, were
you to breach the provisions of the paragraph set forth immediately
above, the harm to the Company would be irreparable. You therefore
agree that in the event of such a breach or threatened breach the
Company shall, in addition to any other remedies available to it, have
the right to obtain preliminary and permanent injunctive relief against
any such breach without having to post bond. You further agree that, in
the event that any provision of the paragraph immediately above shall
be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time,
too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to
the maximum extent permitted by law.
(b) You agree that you will not disclose this Agreement
or any of its terms or provisions, directly or by implication, except to members
of your immediate family and to your legal and tax advisors, and then only on
condition that they agree not to further disclose this Agreement or any of its
terms or provisions to others, and except as otherwise required by law. You also
agree that, during the Severance Pay Period and thereafter, you will not
disparage or criticize the Company or its Affiliates, their business, management
or products, and that you will not otherwise do or say anything that could
reasonably be expected to harm the business interests or reputation of the
Company or its Affiliates. The Company agrees that neither Xxxxxxx X. X'Xxxxx,
Xxxxxx X. Xxxxxx XX, Xxxxxxx X. Xxxx, Xx., Xxxxxxxx X. Xxxxxx nor any member of
the Board of Directors of the Company will disparage you or direct any other
person in the Company to disparage you to any third parties. The Company further
agrees that if Messrs. O'Brien, Haines, or Xxxx or Xx. Xxxxxx learns that any
officer or Director is disparaging or has disparaged you to a third party, the
Company will take reasonable steps to halt such disparagement. Notwithstanding
the foregoing, nothing in this paragraph shall be construed as preventing or
otherwise limiting you, the Company and/or its Affiliates and their respective
directors, officers, employees or other agents from testifying fully and
truthfully or otherwise providing full and truthful information, evidence or
testimony in connection with any litigation, governmental or regulatory
investigation or proceeding, or any other proceedings.
8. RETURN OF COMPANY DOCUMENTS AND OTHER PROPERTY. In signing
this Agreement, you represent and warrant that you have returned to the Company
any and all documents, materials and information (whether in hardcopy, on
electronic media or otherwise) related to business (whether present or
otherwise) of the Company or any of its Affiliates and all keys, access cards,
credit cards, computer hardware and software, telephones and telephone-related
equipment and all other property of the Company and its Affiliates in your
possession or control, other than as expressly provided in accordance with
paragraph 3(c) above. Further, you represent and warrant that you have not
retained any
copy of any Company documents, materials or information (whether in hardcopy, on
electronic media or otherwise), other than as expressly provided in accordance
with paragraph 3(c) above. You acknowledge that you have disclosed to the
Company all passwords necessary or desirable to enable the Company to access all
information which you have password-protected on any of its computer equipment
or on its computer network or system.
9. EMPLOYEE COOPERATION.
(a) You agree that, during the Severance Pay Period, and
without additional compensation except as provided in Paragraph (b) of this
Section 9, you will, upon reasonable request, provide advice and consultation to
the Company with respect to your former duties and responsibilities and
otherwise support the Company's management transition and that you will be
supportive of the Company's policies and operational and sales activities,
except where doing so would cause you to waive or derogate your rights and/or
privileges under applicable law.
(b) You also agree, during the Severance Pay Period and
thereafter, to cooperate with the Company with respect to all matters arising
during or related to your employment, including but not limited to all matters
in connection with any governmental investigation, litigation or regulatory or
other proceeding which may have arisen or which may arise following the signing
of this Agreement, except where doing so would cause you to waive or derogate
your rights and/or privileges under applicable law. As part of the cooperation
agreed to herein, you shall provide complete and truthful information to the
Company and its Affiliates and their attorneys with respect to any matter
arising during or related to your employment, except where doing so would cause
you to waive or derogate your rights and/or privileges under applicable law.
Specifically, you shall make yourself available to meet with the personnel and
attorneys of the Company and its Affiliates and shall provide to the Company and
its Affiliates and their attorneys any and all documentary or other physical
evidence pertinent to any such matter, except where doing so would cause you to
waive or derogate your rights and/or privileges under applicable law. Finally,
you shall promptly notify the Chief Legal Officer of the Company, within three
business days, of your receipt from any third party or governmental entity of a
request for testimony and/or documents, whether by legal process or otherwise,
relating to any matter arising during or in any way relating to your employment.
You will not be entitled to additional compensation for your compliance with
your obligations hereunder, except that the Company will (i) reimburse your
out-of-pocket expenses incurred in complying with Company requests hereunder
(provided such expenses are authorized by the Company in advance), and (ii)
compensate you at the rate of $150 per hour for time spent by you on compliance
with your obligations hereunder to the extent that such time is in excess of 5
hours in any single calendar week, excluding time spent providing testimony,
whether in a deposition or any other legal or regulatory proceeding.
10. RELEASE OF CLAIMS.
(a) In exchange for the special severance pay and
benefits provided you under this Agreement, to which you would not otherwise be
entitled, on your own behalf and that of your heirs, executors, administrators,
beneficiaries, personal representatives and assigns, you agree that this
Agreement shall be in complete and final settlement of any and all causes of
action, rights or claims of every type and description, whether known or
unknown, that you have had in the past, now have, or might now have, in any way
related to, connected with or arising out of your employment or its termination
or pursuant to Title VII of the Civil Rights Act, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the fair employment
practices statutes of the state or states in which you have provided services to
the Company or any of its Affiliates or any other federal, state or local law,
regulation or other requirement and you hereby release and forever discharge the
Company and its Affiliates and all of their respective past and present
directors, shareholders, officers, members, managers, partners, joint venturers,
employees, agents and representatives, their successors and assigns, and all
others connected with any of them, both individually and in their official
capacities, from any and all such causes of action, rights or claims, except
causes of action, rights or claims regarding any right to indemnification by the
Company and/or its Affiliates to which you may be entitled pursuant to and in
accordance with their respective certificates of incorporation, bylaws and/or
under applicable law. The parties acknowledge that, pursuant to a letter dated
February 19, 2002 from your attorney to Xxxxxx X. Xxxxxx, you have requested
indemnification and agreed to an undertaking to repay, under certain
circumstances, amounts advanced by the Company on your behalf.
(b) This Agreement, including the release of claims set
forth immediately above, creates legally binding obligations and the Company
therefore advises you to consult an attorney before signing this Agreement. In
signing this Agreement, you give the Company assurance that you have signed it
voluntarily and with a full understanding of its terms; that you have had
sufficient opportunity, before signing this Agreement, to consider its terms and
to consult with an attorney, if you wished to do so, or to consult with any
other of those persons to whom reference in made in the first sentence of
paragraph 7(b) above; and that, in signing this Agreement, you have not relied
on any promises or representations, express or implied, that are not set forth
expressly in this Agreement.
11. Definition. As used in this Agreement, the term "Affiliates"
means any and all persons and entities directly or indirectly controlling,
controlled by or under common control with the Company, where control may be by
management authority or equity interest.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement
between you and the Company and supersedes all prior and contemporaneous
communications, agreements and understandings, whether written or oral, with
respect to your employment, its termination and all related matters, excluding
only (i) the
Confidentiality Agreement and your obligations with respect to the securities of
the Company, and (ii) any right to indemnification to which you may be entitled
pursuant to and in accordance with the Company's and/or its Affiliates'
certificates of incorporation or bylaws and/or under applicable law, all of
which shall remain in full force and effect in accordance with their terms.
(b) This Agreement may not be modified or amended, and no
breach shall be deemed to be waived, unless agreed to in writing by you and the
Chief Executive Officer of the Company or his expressly authorized designee. The
captions and headings in this Agreement are for convenience only and in no way
define or describe the scope or content of any provision of this Agreement.
(c) The obligation of the Company to make payments to you
or on your behalf under this Agreement is expressly conditioned upon your
continued full performance of your obligations under this Agreement and under
the Confidentiality Agreement.
If the terms of this Agreement are acceptable to you, please sign, date
and return it to me within twenty-one days of the date you receive it. You may
revoke this Agreement at any time during the seven-day period immediately
following the date of your signing. If you do not revoke it, then, at the
expiration of that seven-day period, this letter will take effect as a legally
binding agreement between you and the Company on the basis set forth above. The
enclosed copy of this letter, which you should also sign and date, is for your
records.
Sincerely,
ENTERASYS NETWORKS, INC.
By: /s/ Xxxxxxx X. X'Xxxxx
----------------------------
Xxxxxxx X. X'Xxxxx
Chief Executive Officer
Accepted and agreed:
Xxxxxx X. Xxxxxxx
Signature: /s/Xxxxxx X. Xxxxxxx
----------------------------
Date: _________________________________
