Document:

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.

 

 

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.

-3-

 

(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

-4-

 

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.

-6-

 

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

  	
   

  

 

-7-EXHIBIT 10.19

 

2003
Executive Incentive Compensation Package

Latitude
Communications

 

 

This
announces your 2003 Executive Incentive Compensation Package, an integral part
of your total compensation for the year. 
This package has 2 key elements

•                  Executive
Bonus Plan

•                  Executive
Expense Reimbursement

 

These
plans are summarized below.

 

Executive Bonus Plan

 Each executive of the Company is eligible on
a quarterly basis for a cash-based incentive bonus payout on an individualized
target amount.

 

Target
Payout for the bonuses are defined as follows:

 

	
  Quarter

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Total

  
	
  Target Payout

  	
   

  	
  10%

  	
   

  	
  20%

  	
   

  	
  30%

  	
   

  	
  40%

  	
   

  	
  100%

  

 

Payout, in the Corporate
Bonus Plan is based on quarterly pre-tax profit.

 

If the Company:

Meets pre-tax
profitability target, the Company will pay out 100% of the quarterly target
payout.  In order to meet pre-tax
profitability, the total costs of the bonuses for the Company must be included
in the cost structure.

 

Exceeds pre-tax
profitability target,
the Company will pay out 50% of above-plan pre-tax profits to the bonus
pool.  Bonus plan participants will
share proportionally in the increased pool amount based on target bonus.  The total bonus payout is capped at 300%.

 

Does not meet pre-tax
profitability target,
the bonus pool will be reduced by the amount necessary for the Company to meet
the target profitability and any remaining amounts will be shared by bonus plan
participants as described above.

 

** Pre-tax profitability
excludes special charges or income as such as restructuring charges.

 

Bonus Plan Summary

Bonus Payout

Bonus Plan calculations will be performed following the end of each
Quarter and paid to you in the next possible payroll cycle, usually one
month after Quarter end.

 

 

 

 

Employee Terminations

If an employee leaves the
company before the end of a complete Quarter, regardless of whether the
departure is a voluntary resignation or involuntary termination, all bonus
amounts that would have been earned will be forfeited.  If an employee leaves after a complete
Quarter, but before bonuses are paid out, he/she will receive any earned bonus
amount once payments have been done.

 

Changes to Bonus Plans

The company reserves the
right to change your bonus plan, including the factors and targets, or
eliminate it in its entirety, after notice to you.  Additionally, your annual target incentive, listed above, may be
modified based on business conditions, market salary data, a change in your
position or other reason the company deems appropriate.

 

 

Expense Reimbursement

As an additional part of
your 2003 Executive Compensation Package, you will be eligible to receive up to
$1,500 in reimbursed expenses.  Expenses
eligible for this reimbursement include the cost of income tax preparation or
estate planning and an annual physical examination.  You are free to choose your own tax preparation, estate planning
or medical service providers.  To
receive reimbursement, simply submit an expense report to Julie Paulsen for
approval.  Expenses exceeding $1,500
will be your personal responsibility.

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