Exhibit 10.34


 


September 16, 2003


 


Jim H. Grady


 


Subject:  Employment Offer


 


Dear Jim,


 


I am pleased to offer you
employment as Vice President, Worldwide Sales reporting directly to me.   This offer is contingent upon the approval
of Ditech’s Board of Directors – Compensation Committee, the terms and
conditions described below, and your agreement with individual Sales Targets
and Quota to be developed within the first 30 days of your hire date.


 


Your compensation package
consists of the following:


•                  Base salary of
$16,250 per month, equivalent to $195,000 annualized.


•                  Subject to the
terms of the Ditech Commission Plan, commissions of up to $100,000 at 100%
attainment of quota, paid quarterly.  We
will guarantee 100% of your commission, pro rata, for the remainder of the
fiscal year ended April 30, 2004. 
Thereafter, we will provide you a non-recoverable draw against
commission at 80% of your annualized commission rate (approximately $6,666/mo)
for the first 5 months of fiscal ‘05 through September 2004. From October 2004,
we will not pay you a draw.     The draw
will be netted against commissions earned.


 


Subject to the approval of the
Company’s Board of Directors or its Compensation Committee, you will be granted
stock options to purchase 250,000 shares of the Company’s Common Stock. The
exercise price per share will be equal to the fair market value per share on
the date the option is approved by Ditech’s Board of Directors.  The option will be subject to the terms and
conditions applicable to options granted under Ditech’s  1998 Stock Plan, as described in that Plan
and the applicable stock option agreement. 
The options may be immediately exercisable and are Non-qualified options
unless otherwise noted.  The purchased
shares will be subject to repurchase by the Company at the exercise price or
fair market value, whichever is lower in the event that your service terminates
before you vest in the shares.  You will
vest in 25% of the option shares after 12 months of continuous service and the
balance will vest in monthly installments over the next 36 months of continuous
service.


 


Executive cash compensation is
reviewed at the beginning of our fiscal year on May 1st.


 


The company will employ you on
an “at will” basis, described below. 
However, if the company terminates your employment for any reason other
than cause during your first year of service or if there is a change of control
in the company and you are not offered an equivalent position, then the Company
will continue to pay your base salary for six months from the notification of
intent to separate or until your one year anniversary, whichever is
shorter.  “Cause” means (i) gross
negligence or willful misconduct in the performance of your duties; (ii)
commission of any act of fraud; or (iii) conviction of a felony or a crime
involving moral turpitude causing actual or potential harm to the business of
the company.  This severance benefit
will be in lieu of any other severance policy of general application to company
employees.  After the first year, you will
only be entitled to severance under any severance policy of general
application, if any. The same salary continuation period will be credited as
continuous service for purposes of the stock options described.  However, the maximum vesting continuation is
capped at one year from start date and the minimum vesting continuation is up
to one year from date of hire.  The
applicability of this is described above, based on termination of employment
for any reason other than cause (see definition of “cause” above), and
applicable to your first year of service only. 
This paragraph will not apply unless you (a) have executed a general
release (in a form prescribed by the Company) of all known and unknown claims
that you may then have against the Company or persons affiliated with the
Company and (b) have agreed not to prosecute any legal action for other
proceedings based on those claims.  This
paragraph is subject to Board approval.  
The normal exercise period for stock options pursuant to the plan is 90
days from date of termination.


 

















 


Your benefit package with
Ditech Communications Corporation will include Health insurance coverage (with
partial premium due if for family coverage) beginning the first of the month
after date of employment, Life and Long Term Disability insurance with option
for additional coverage, Flexible Spending Program participation, Employee
Stock Purchase Program (ESPP) and 401(k) participation.  Eligibility for 401(k) is effective after 90
days of employment.  Your eligibility
for ESPP participation is subject to the terms of the plan.


 


Relocation:  As we are currently unfamiliar with the
specific costs you anticipate a general statement is perhaps best.  Therefore we will provide you with an
Allowance for Relocation in the amount of $65,000.00 to be utilized in the
manner appropriate for your move.   Any
tax implications will be your responsibility. 
Additionally, if you choose to leave Ditech’s employment within the
first year you will be required to repay the entire Allowance of Relocation.    If you are terminated by the Company for
any reason other than Cause, as defined above, then you will not have to repay
the Allowance of Relocation.


 


Your employment with Ditech
Communications Corporation is at-will. 
This means that either you or the company may terminate the employment
relationship at any time, with or without cause, and with or without prior
notice.  This at-will provision is only
subject to change in a writing signed by the CEO of the company.  You will be asked to sign the statement of
your acceptance and a confidentiality agreement when you report to work.


 


This offer letter constitutes
the entire terms of the offer of employment with the company, and supersedes
all prior negotiations and agreements, whether written or oral, relating to the
subject matter of the offer.


 


By signing this letter, you and
Ditech Communications Corporation, agree to submit to mandatory and exclusive
binding arbitration any controversy or claim arising out of or relating to this
matter, or any breach hereof or your employment relationship, provided,
however, that the parties retain their right to and shall not be prohibited,
limited or in any way restricted from, seeking or obtaining injunctive relief
from a court having jurisdiction over the parties.  Such arbitration shall be conducted through the American
Arbitration Association in the State of California, Santa Clara County, before
a single arbitrator, in accordance with the National Rules for Resolution of
Employment Disputes of the American Arbitration Association in effect at that
time.  The arbitrator must decide all
disputes in accordance with California Law and shall have power to decide all
matters, including arbitrability.  The
arbitrator shall allow limited, essential discovery to enable each of us to
present our cases, but shall be mindful of our mutual desire to avoid the
expense of broad discovery typically allowed in civil litigations.  The arbitrator shall issue a written
decision that contains the essential findings and conclusions on which the
decision is based.  You shall bear only
those  costs of arbitration you would
otherwise bear had you brought a claim covered by this Agreement in court.  Judgment upon the determination of award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.  We each understand and agree
that we are waiving a trial by jury.


 


I look forward to working with
you and having you as a part of our valuable and dynamic team!  Please indicate your acceptance by signing
and returning this letter on or before September 26, 2003.  You may fax your acceptance to (650)
564-9593. We would like your employment, even part-time, to commence as soon as
possible with full responsibilities based on opportunities in your geographic
region. We anticipate your full time start to begin on or before October 6,
2003.


 


	
  Sincerely,

  	
  Accepted by:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Timothy
  K. Montgomery

  	
   

  	
  /s/ Jim H.
  Grady

  	
   

  	
  September
  25, 2003

  	
   

  
	
  Timothy K.
  Montgomery

  	
  Jim H. Grady

  	
  Date

  
	
  President,
  CEO & Chairman of the Board