how do I reset username and password for an employee no longer with us

Click your name -> setup -> Administration Setup -> Users -> click on the user you need to change and uncheck the "Active" option in general information. This will stop the user from being able to login.

Next click on the leads tab -> at the bottom of the window under Tools you will see Transfer leads.

Simply enter the Transfer From as the employee who was terminated, and the transfer to the employee you want to move the leads to.

Click Find at the bottom, click the checkbox for all or the individual leads to transfer then click the transfer button.