EXHIBIT 10.18

 

 

LATITUDE COMMUNICATIONS, INC.

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement (the “Agreement”) is made and entered
into by and between Luis Buhler (the “Employee”) and Latitude Communications,
Inc., a Delaware corporation (the “Company”), effective as of December 19, 2002.

RECITALS

A.            It is expected that the Company from time to time will consider
the possibility of an acquisition by another company or other change of
control.  The Board of Directors of the Company (the “Board”) recognizes that
such consideration can be a distraction to the Employee and can cause the
Employee to consider alternative employment opportunities.  The Board has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication and objectivity of
the Employee, notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined below) of the Company.

B.            The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
or her employment and to motivate the Employee to maximize the value of the
Company upon a Change of Control for the benefit of its stockholders.

C.            The Board believes that it is imperative to provide the Employee
with certain benefits upon Employee’s Involuntary Termination (as defined below)
of employment following a Change of Control that provide the Employee with
enhanced financial security and incentive and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.

D.            Certain capitalized terms used in the Agreement are defined in
Section 6 below.

The parties hereto agree as follows:

1.             TERM OF AGREEMENT.  This Agreement shall terminate upon the date
that all obligations of the parties hereto with respect to this Agreement have
been satisfied.

2.             AT-WILL EMPLOYMENT.  The Company and the Employee acknowledge
that the Employee’s employment is and shall continue to be at-will, as defined
under applicable law.  If the Employee’s employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any benefits, damages, awards or compensation
other than as may otherwise be available in accordance with the Company’s
established employee plans and practices or pursuant to other agreements with
the Company.

 

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3.             SEVERANCE BENEFITS.

(a)           Termination Following A Change of Control.  If the Employee’s
employment terminates as a result of Involuntary Termination other than for
Cause at any time at or within 24 months following a Change of Control, then,
subject to Section 5, the Company (or its successor in interest) will pay to
Employee a lump sum payment equal to one year of his then current base salary,
payable not later than 10 days following the effective date of such Involuntary
Termination.  In addition, in lieu of the benefit of Section 14(d) of the
Company’s 1999 Stock Plan and any similar provisions in any other equity
incentive plans or other stock option or restricted stock purchase agreements
between the Company and Employee, if the Employee’s employment terminates as a
result of Involuntary Termination other than for Cause at any time at or within
24 months following a Change of Control (as such terms are defined in this
Agreement), then, subject to Section 5, the unvested shares under each stock
option granted to Employee pursuant to the Company’s 1999 Stock Plan shall
automatically be accelerated such that an additional 50% of the total number of
unvested shares as of the effective date of such Involuntary Termination shall
automatically become vested.

(b)           Voluntary Resignation; Termination For Cause.  If the Employee’s
employment terminates by reason of the Employee’s voluntary resignation (and is
not an Involuntary Termination), or if the Employee is terminated for Cause,
then the Employee shall not be entitled to receive any benefits except for those
(if any) as may then be established under the Company’s then existing severance
and benefits plans and practices or pursuant to other agreements with the
Company or required by law.

(c)           Disability; Death.  If the Company terminates the Employee’s
employment as a result of the Employee’s Disability, or such Employee’s
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive any benefits except for those (if any) as may
then be established under the Company’s then existing severance and benefits
plans and practices or pursuant to other agreements with the Company.

(d)           Termination Apart from Change of Control.  In the event the
Employee’s employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the 24-month period following a
Change of Control, then the Employee shall be entitled to receive severance and
any other benefits only as may then be established under the Company’s existing
severance and benefits plans and practices or pursuant to other agreements with
the Company or required by law.

4.             ATTORNEY FEES, COSTS AND EXPENSES.  The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable attorney fees, costs
and expenses incurred by the Employee in connection with any action brought by
Employee to enforce his or her rights hereunder.  In the event Employee is not
the prevailing party, determined without regard to whether or not the action
results in a final judgment, Employee shall repay such reimbursements. 
Notwithstanding California Civil Code Section 1717 (or any successor statute or
judicial interpretation), under no circumstances shall Employee be liable for
any of the Company’s attorney fees, costs or expenses.

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5.             LIMITATION ON PAYMENTS.  In the event that the severance and
other benefits provided for in this Agreement or otherwise payable to the
Employee (i) constitute “parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for
this Section 5, would be subject to the excise tax imposed by Section 4999 of
the Code (or any corresponding provisions of state income tax law), then the
Employee’s severance benefits under Section 3(a) shall be either

(a)           delivered in full, or

(b)           delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax under Section
4999 of the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed by
Section 4999, results in the receipt by the Employee on an after-tax-basis, of
the greater amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code.  Unless the Employee otherwise requests in writing (in which event the
Company and the Employee shall mutually agree upon a third party to make the
determination), any determination required under this Section 5 shall be made in
writing by the Accountants, whose determination shall be conclusive and binding
upon the Employee and the Company for all purposes.  For purposes of making the
calculations required by this Section 5, the determining party shall make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code.  The Company and the Employee shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section.  The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 5.  In the event that
subsection (a) above applies, then Employee shall be responsible for any excise
taxes imposed with respect to such severance and other benefits.  In the event
that subsection (b) above applies, then each benefit provided hereunder shall be
proportionately reduced to the extent necessary to avoid imposition of such
excise taxes.

6.             DEFINITION OF TERMS.  The following terms used in this Agreement
shall have the following meanings:

(a)           Cause. “Cause” shall mean (i) gross negligence or willful
misconduct in the performance of the Employee’s duties to the Company; (ii)
repeated unexplained or unjustified absence from the Company, which continue for
30 days after written notice to Employee; (iii) refusal or failure to act in
accordance with any specific lawful and ethical direction or order of the
Company on a material matter given to the Employee in writing; (iv) commission
of any material act of fraud with respect to the Company; or (v) conviction of
or plea of no contest to a felony or a crime involving moral turpitude causing
material harm to the standing and reputation of the Company, in each case (I) as
determined by the Board of Directors of the Company in good faith at a meeting
after providing Employee with a reasonable opportunity to be heard at the
meeting; and (II) provided that, for matters in case (iii), if Employee
requests, Company shall have provided Employee with a reasonable legal opinion
of the Company’s counsel that the matter is legal under applicable state and
federal law.

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(b)           Change of Control.  “Change of Control” means (i) a sale of all or
substantially all of the Company’s assets, (ii) any merger or consolidation of
the Company with or into another corporation other than a merger or
consolidation in which the holders of more than 50% of the shares of capital
stock of the Company outstanding immediately prior to such transaction continue
to hold (either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than 50% of the
total voting power represented by the voting securities of the Company, or such
surviving entity, outstanding immediately after such transaction, or (iii) any
transaction or series of related transactions (other than an equity financing)
in which the holders of the shares of capital stock of the Company outstanding
immediately prior to such transaction hold less than 50% of the total voting
power represented by the voting securities of the Company outstanding
immediately after such transaction.

(c)           Disability.  “Disability” shall mean that the Employee has been
unable to perform his or her Company duties as the result of his or her
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Employee or the Employee’s legal representative and
acceptable to the Company or its insurers (such Agreement as to acceptability
not to be unreasonably withheld).  Termination resulting from Disability may
only be effected after at least 30 days’ written notice by the Company of its
intention to terminate the Employee’s employment.  In the event that the
Employee resumes the performance of substantially all of his or her duties
hereunder before the termination of his or her employment becomes effective, the
notice of intent to terminate shall automatically be deemed to have been
revoked.

(d)           Involuntary Termination. “Involuntary Termination” shall mean
(i) without the Employee’s express written consent, the significant reduction of
the Employee’s duties, authority or responsibilities, relative to the Employee’s
duties, authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to the Employee of such reduced duties, authority
or responsibilities (a “Significant Reduction in Duties”); (ii) a material
reduction by the Company in the base salary of the Employee as in effect
immediately prior to such reduction; (iii) a material reduction by the Company
in the kind or level of employee benefits, including bonuses, to which the
Employee was entitled immediately prior to such reduction with the result that
the Employee’s overall benefits package is significantly reduced; (iv) the
relocation of the Employee to a facility or a location more than fifty miles
from the Employee’s then present location, without the Employee’s express
written consent; (v) any act or set of facts or circumstances which would, under
California case law or statute, constitute a constructive termination of the
Employee; or (vi) actual termination by the Company (or successor in interest)
other than for Cause.

(e)           For purposes of clarification, to the extent the Employee holds
the position of Chief Financial Officer of the Company immediately prior to the
Change of Control, the following events shall not be deemed to constitute a
“Significant Reduction in Duties”:

i.              the assignment of the Employee to the position of Chief
Financial Officer of the surviving entity or successor following such Change of
Control if such surviving entity has a class of equity securities that is
publicly traded; or

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ii.             the assignment of the Employee to the position of Chief
Financial Officer of the surviving entity or successor following such Change of
Control, if such surviving entity or successor is an “ultimate parent entity” as
defined in the Federal Trade Commission’s Rule 801 pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and successors thereto;
provided, however, that, if there is a substantial change to the nature of the
Company’s business (other than such changes attributable to the fact that the
surviving entity or successor may no longer have a class of equity securities
that is publicly traded, if applicable) following such an assignment described
in this subdivision ii. that results in a significant reduction in the duties,
authority or responsibilities of the Employee, then a Substantial Reduction in
Duties shall be deemed to have occurred.

7.             SUCCESSORS.

(a)           Company’s Successors.  Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company’s business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession.  For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets
which executes and delivers the assumption agreement described in this Section
7(a) or which becomes bound by the terms of this Agreement by operation of law.

(b)           Employee’s Successors.  The terms of this Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

8.             NOTICE.

(a)           General.  Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or five (5) days after being mailed by U.S. 
registered or certified mail, return receipt requested and postage prepaid.  In
the case of the Employee, mailed notices shall be addressed to him or her at the
home address which he or she most recently communicated to the Company in
writing.  In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

(b)           Notice of Termination.  Any termination by the Company for Cause
or by the Employee as a result of a voluntary resignation and any Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 8(a) of this Agreement.  Such notice
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated, and shall
specify the termination date (which shall be not more than 30 days after the
giving of such notice).  The failure by the Employee to include in the notice
any fact or circumstance which contributes to a

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showing of Involuntary Termination shall not waive any right of the Employee
hereunder or preclude the Employee from asserting such fact or circumstance in
enforcing his or her rights hereunder.

9.             MISCELLANEOUS PROVISIONS.

(a)           No Duty to Mitigate.  The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.

(b)           Waiver.  No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee).  No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

(c)           Whole Agreement.  This Agreement represents the entire agreement
between the Employee and the Company with respect to the matters set forth
herein.  No agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter hereof.

(d)           Choice of Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California as applied to agreements entered into and performed within California
solely by residents of that state.

(e)           Severability.  The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.

(f)            Withholding.  All payments made pursuant to this Agreement will
be subject to withholding of applicable income and employment taxes, if
applicable.

(g)           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the date set forth above.

 

COMPANY:

LATITUDE COMMUNICATIONS, INC.

 

 

 

 

 

By: 

/s/  Rick McConnell

 

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

EMPLOYEE:

LUIS BUHLER

 

 

 

 

 

Signature:

/s/  Luis Buhler

 

 

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