Exhibit 10.18
By Hand Delivery
CONFIDENTIAL
March 30, 1998
Xx. Xxxxxx X. Xxxx
00000 Xxxxxxx
Xxxx Xxxxx Xxxxxxx, XX 00000
Dear Xxx:
This letter will confirm the agreement reached between you and
Cabletron Systems, Inc. (the "Company") concerning your resignation as an
officer and employee (but not a director) of the Company. Your employment with
the Company will terminate as of today, March 30, 1998 (the "Separation Date").
Reference is made to the Employment Agreement dated August [ ], 1997 between you
and the Company (the "Employment Agreement"). Unless otherwise defined herein,
capitalized terms used herein shall have the same meaning as defined in the
Employment Agreement. Provided that you accept it, this letter contains the
agreement between you and the Company concerning your severance arrangements, as
follows:
1. As soon as practicable after the date hereof, to the extent not
already paid, the Company will (i) pay you, at your current base rate of pay,
for all work performed for the Company from the end of the last payroll period
through the Separation Date, (ii) pay you for all vacation time you had earned,
but not used, as of the Separation Date, as reflected on the books of the
Company, and (iii) reimburse you for all business expenses incurred through the
Separation Date in accordance with Section 4 of the Employment Agreement.
2. In consideration for your acceptance of this agreement and subject
to your fully meeting your obligations under it, on the effective date of this
agreement, the Company will provide you the following severance pay and
benefits:
a. As severance pay, the Company will pay you, within five business
days of the effective date of this agreement, a lump sum cash payment of $
1,125,000 (the amount equal to your Base Salary for the remainder of the Term of
the Employment Agreement).
b. If you currently participate in the Company's medical and life
insurance plans (the "Plans"), you may elect to continue participation for a
period of time under the federal law known as COBRA. If you elect to continue
participation in the Plans under COBRA and do so in a timely manner, the Company
will pay the premium cost of your coverage, and that of your eligible
dependents, until you cease to be eligible for participation under COBRA. In
addition, if the Company is able to continue your participation in the Plans
thereafter until the Term of Employment would have ended under the Employment
Agreement, you may so continue to participate and the Company will continue to
pay the premium cost of coverage. If you are unable to so participate in the
Plans, the Company will pay you a lump sum cash payment equal to the then
present value of the amounts the Company would have paid had you continued to be
enrolled in such Plans through the date the Term of Employment would have ended.
The lump sum payment referred to above will be made within five business days of
the date you are no longer eligible to participate in the Plans. If you elect
not to continue your participation in the Plans or if you are not currently
enrolled in the Plans and therefore have no right to continue participation
under COBRA, the Company will pay you a lump sum cash payment equal to the
present value of the amounts the Company would have paid, had you been enrolled
in such Plans, to continue your participation and that of your eligible
dependents until the date the Term of Employment would have ended. The lump sum
payment referred to above will be made within five business days of the
effective date of this agreement, of if later, within five business days of the
date you make your election with respect to participation in the Plans.
c. The Company will provide until the later of one year from the date
hereof or the date you secure employment, if earlier, out placement services
through a mutually agreeable firm. The Company will also provide you with an
office and administrative support in the West Palm Beach, Florida area or
another mutually agreeable location for a period of six months from the date
hereof.
d. Your options to purchase a total of 800,000 shares (consisting of
two separate options, one to purchase 600,000 shares and one to purchase 200,000
shares) of the Company's Common Stock shall become immediately exercisable in
full and shall remain exercisable for a period of three years from the date
hereof notwithstanding anything to the contrary in the Employment Agreement or
the option forms.
e. The Company will reimburse you for all travel and relocation
expenses incurred by you within six months of the date hereof for the reasonable
out-of-pocket costs of your move from New Hampshire to the location of your
subsequent employment, plus an additional payment (the "additional payment") to
compensate you for any federal and state income taxes attributable to such
reimbursements and payments and federal and state income taxes attributable to
the additional payment. The Company will also reimburse you for all related
furniture storage expenses, including furniture currently stored in New Jersey
and will assume responsibility for the balance of your lease payments relating
to the current term of the lease of your residence in Rochester, New Hampshire.
3. The Company hereby waives your compliance with Section 7(a) of the
Employment Agreement. You agree to abide by the terms of Section 7(b) of the
Employment Agreement.
4. The Company will reimburse you for costs incurred by you for first
class air travel to all board meetings.
5. You will use reasonable efforts to provide consulting services to
the Company by telephone or in a mutually agreeable location from time to time,
for a period of six months from the date hereof. Such services shall consist of
advice to the Chief Executive Officer of the Company. The performance by you of
consulting services shall be at the request of the Chief Executive Officer of
the Company upon reasonable notice to you from time to time. In consideration of
your agreement to provide such consulting services, the Company agrees to pay
you a retainer of $8,334.00 per month, payable in advance on the first business
day of each month beginning April 1, 1998, plus any reasonable travel expenses
incurred by you in providing any such consulting services. It is understood that
the failure of the Company to request consulting services shall not relieve the
Company of its obligation to make required payments hereunder.
6. All payments by the Company under this agreement will be reduced by
all taxes and other amounts that the Company is required to withhold under
applicable law and all other deductions authorized by you.
7. You agree that the payments provided under paragraph 1 of this
agreement are in complete satisfaction of any and all compensation due to you
from the Company through the Separation Date whether under the Employment
Agreement or otherwise. You will not continue to earn vacation or other paid
time off after the Separation Date and, except as expressly provided in
paragraph 2.b, your participation in all employee benefit plans and programs of
the Company will end as of the Separation Date, in accordance with the terms of
those plans and programs.
8. You agree that you will continue to protect Confidential Information
as provided in Section 6 of the Employment Agreement.
9. 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.
10. You agree that you will continue to use your best efforts to
support and promote the interests and reputation of the Company; that you will
not disparage the Company or any of the people or organizations connected with
it; and that you will not otherwise do or say anything that could disrupt the
good morale of the employees of the Company or otherwise harm its interests or
reputation.
11. You agree to cooperate with the Company hereafter 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.
12. In order to be certain that this agreement will resolve any and all
concerns that you might have, the Company requests that you carefully consider
its terms, including the release of claims set forth below and, in that regard,
encourages you to seek the advice of an attorney before signing this agreement.
13. This letter contains the entire agreement between you and
the Company and replaces all prior and contemporaneous agreements,
communications and understandings, whether written or oral, with respect to your
employment and its termination and all related matters excluding only your
obligations under Section 6 and 7 of the Employment Agreement and your
resignation dated March 30, 1998. This agreement will be governed by and
interpreted in accordance with the laws of the State of New Hampshire.
14. In exchange for the special severance pay and benefits provided you
under this Agreement, to which you would not otherwise be entitled, you agree
that this agreement shall be in complete and final settlement of any and all
causes of action, rights or claims 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,
any other federal, state or local employment law, regulation or other
requirement and you hereby release and forever discharge the Company, its
subsidiaries and other affiliates and all of their respective past and present
shareholders, directors, officers, employees, agents, successors and assigns and
all others connected with them, both individually and in their official
capacities, from any and all such causes of action, rights or claims.
15. In consideration of your acceptance of this agreement and your
meeting in full your obligations under it, the Company hereby releases and
forever discharges you, your heirs, executors, administrators and
representatives, and all others connected with you, from any and all causes of
action, rights or claims which the Company has had in the past or now has
against you in any way related to, arising out of or connected with your
employment by the Company.
16. In signing this agreement, you give the Company assurance that you
have signed it voluntarily and with a full understanding of its terms and that
you have had sufficient opportunity to consider this agreement and to consult
with anyone described in Section 9 before signing it.
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 do so, 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,
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Chairman of the Board
Accepted and agreed:
Signature: /s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX
In accordance with Section 2(b) hereof, I hereby elect not to participate in the
Plans and instead to receive a lump sum cash payment.
Signature: /s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX
Date: March 30, 1998
