Severance Agreement made to induce employee to remain with employer
Category: Employment Agreements
July 3, 2007
Joseph Ferrara
[Address]
Dear Joe:
Tollgrade Communications, Inc. (“Tollgrade”) considers the stability of its executive management team to be essential to Tollgrade’s best interests. In order to induce you to accept and to remain in Tollgrade’s employment, this severance agreement (the “Agreement”) describes the severance compensation which Tollgrade agrees will be provided to you in the event your employment with Tollgrade is terminated under the circumstances described below. This Agreement will remain in effect for a period of three (3) years from the date your employment with Tollgrade commences (the “Term”).
1. At-will Employment. Notwithstanding any provisions of this Agreement, any offer letter, confidentiality agreement, or other document that you sign in connection with your employment, your employment at Tollgrade is and continues to be “at-will” employment and may be terminated at any time with or without cause or notice.
2. Scope of Agreement. This Agreement is not intended to supersede the terms of any offer letter, confidentiality agreement, or other document which you sign in connection with your employment with Tollgrade, except insofar as such document deals with severance pay (e.g., in the event the terms of any offer letter conflict with the terms of this Agreement the terms of this Agreement shall control).
3. Severance Payment if Termination Occurs Without Cause. Except as provided in Section 4 of this Agreement, if your employment is terminated by Tollgrade without Cause (as defined in Section 5 hereof) during the Term, then Tollgrade shall, subject to your execution and delivery (and non-revocation of) a release of claims in form and substance acceptable to Tollgrade, continue your Base Salary for a period of twelve (12) months, less applicable withholding and payable in accordance with Tollgrade’s normal payroll practices. For purposes of this Agreement, the term “Base Salary” means the highest annual base salary you received while employed by Tollgrade, excluding bonuses, commissions and other similar amounts. Notwithstanding the foregoing, if you become employed during such twelve month period, then from and after such time, Tollgrade shall only be obligated to continue your Base Salary to the extent that (and only in such amount as) it exceeds the gross salary that you are paid from such new employment.
4. Termination in Connection with a Change in Control. Contemporaneously with this Agreement, you and Tollgrade are entering into an agreement which provides for certain payments in the event of termination of your employment under certain defined circumstances related to a change in control (the “Change in Control Agreement”). This Agreement provides you with certain assurances in circumstances that the Change in Control Agreement does not cover, and in no way supersedes or nullifies the Change in Control Agreement. Nevertheless, it is possible that a termination of your employment may fall within the scope of both agreements. In such event, you will be entitled to receive the higher of the amount payable to you under Section 3 hereof and any amount payable to you under Section 4 of the Change in Control Agreement, but not the aggregate of such amounts.
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5. Payment if Termination Occurs Other than by Tollgrade Without Cause. If your employment is terminated other than by Tollgrade without Cause, Tollgrade shall have no obligations to you under this Agreement.
6. Definition of “Cause.” For purposes of this Agreement, termination of your employment shall be for “Cause” if it is for any of the following:
(a) After receipt of written notice and a reasonable opportunity to cure, refusal to carry out any of your material lawful duties in your position with Tollgrade or any directions or instructions of Tollgrade’s Board or senior management reasonably consistent with those duties;
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