November 17, 2004 Doug Sabella Re: Offer of Employment with Veraz Networks, Inc. Dear Doug:
Exhibit 10.18
November 17, 2004
Xxxx Xxxxxxx
Re: Offer of Employment with Veraz Networks, Inc.
Dear Xxxx:
Veraz Networks, Inc. (the “Company”) is pleased to offer you employment as the Company’s President
and Chief Executive Officer on the terms and conditions set forth in this letter agreement (the
“Agreement”). If you agree to the terms and conditions set forth herein, please initial the bottom
of each page and sign where indicated below. Your employment with the Company pursuant to this
Agreement will begin on December 1, 2004 (the “Commencement Date”).
1. Duties. You will be responsible for all aspects of the Company and shall perform such
duties as are ordinary, customary and necessary in your role as the President and Chief Executive
Officer. You will report directly to the Board of Directors of the Company (the “Board”). You
shall devote your best efforts and your full business time, skill and attention to the performance
of your duties. You will also be expected to adhere to the general employment policies and
practices of the Company that may be in effect from time to time, except that when the terms of
this Agreement conflict with the Company’s general employment policies or practices, this Agreement
will control.
2. Compensation. You will be paid an annual base salary of $250,000 per year, less applicable
deductions and withholdings, to be paid semi-monthly in accordance with the Company’s payroll
practices, as may be in effect from time to time.
3. Benefits. The Company will provide you with medical, dental, life, supplemental life,
disability benefits, sick leave, vacation and many other Company-sponsored programs on the same
terms and conditions as such benefits are generally available to its executive officers. The
Company may, from time to time, change these benefits. Additional information regarding these
benefits is available for your review upon request.
4. Stock Option. Upon Board approval, the Company will grant you a stock option to purchase a
number of shares of the Company’s common stock (the “Shares”) that is equal to four percent (4%) of
the capital stock of the Company calculated on a fully-diluted basis, which calculation shall mean
the number of outstanding shares of the Company’s common stock, the number of outstanding shares of
the Company’s preferred stock, and the number of shares issuable upon the exercise of all
outstanding options and warrants or available for issuance under the Company’s equity incentive
plans. The Shares shall be issued pursuant to the terms and conditions of the Company’s 2001
Equity Incentive Plan (the “Plan”) and the per share exercise
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price shall be the fair market value of the Company’s common stock on the date of grant as
determined by the Board. The Shares shall vest over a four-year period, with one quarter (1/4) of
the Shares vesting on the one year anniversary of your Commencement Date, and the remaining portion
of the Shares vesting equally over the next 36 months of continuous service thereafter. Except as
otherwise set forth herein, all terms, conditions and limitations of the Shares shall be governed
by the Plan and related documents.
5. Performance Bonuses. You will be eligible to receive an annual bonus of up to forty
percent (40%) of your annual base salary which shall become payable upon the achievement of certain
milestones mutually agreed upon by you and the Board. Such milestones shall be outlined in writing
and agreed upon within forty-five (45) days of your Commencement Date.
6. Board Seat. The Company shall cause you to be elected or appointed to the Board. You
agree to immediately resign your position on the Board upon the termination of your employment as
Chief Executive Officer for any reason, or upon the Company’s earlier request.
7. Change of Control Termination. Subject to the terms and conditions set forth in this
paragraph 7, if your employment with the Company is terminated by the Company without Cause (as
defined herein) or you resign for Good Reason (as defined herein), and either such event occurs
within twelve (12) months after a Change of Control (as defined herein), then, as of the date of
termination, the vesting of one hundred percent (100%) of the Shares that remain subject to vesting
shall be accelerated in full.
(a) Change of Control. “Change of Control” shall mean the consummation of any one of the
following events: (a) a sale, lease or other disposition of all or substantially all of the assets
of the Company; (b) a consolidation or merger of the Company with or into any other corporation or
other entity or person, or any other corporate reorganization, in which the shareholders of the
Company immediately prior to such consolidation, merger or reorganization, own less than 50% of the
Company’s outstanding voting power of the surviving entity (or its parent) following the
consolidation, merger or reorganization or (c) any transaction (or series of related transactions
involving a person or entity, or a group of affiliated persons or entities) in which in excess of
fifty percent (50%) of the Company’s outstanding voting power is transferred (excluding (i) any
consolidation or merger effected exclusively to change the domicile of the Company, or (ii) any
transaction or series of transactions principally for bona fide equity financing purposes in which
cash is received by the Company or any successor or indebtedness of the Company is cancelled or
converted or a combination thereof).
(b) Cause. For purposes of this Agreement, “Cause” shall mean one or more of the
following: (a) Executive’s conviction of a felony; (b) Executive commission of any act of fraud
with respect to the Company; (c) any intentional misconduct by Executive that has a materially
adverse effect upon the Company’s business that is not cured by Executive within thirty (30) days
of written notice given by the Company identifying such misconduct; (d) a breach by Executive of
any of Executive’s fiduciary obligations as an officer of the Company that has a materially adverse
effect upon the Company’s business that is not cured by Executive
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within thirty (30) days of written notice given by the Company identifying such breach; (e)
Executive’s willful misconduct or gross negligence in performance of his duties hereunder,
including Executive’s refusal to comply in any material respect with the legal directives of the
Board so long as such directives are not inconsistent with Executive’s position and duties, that
are not cured by Executive within thirty (30) days of written notice given by the Company
identifying such misconduct or negligence.
(c) Good Reason. For the purposes of this Agreement, “Good Reason” shall mean any
one of the following events which occurs on or after the commencement of Executive’s employment
without Executive’s consent: (i) any reduction of Executive’s then current annual base salary;
(ii) any material diminution of the Executive’s duties, responsibilities, or authority to a level
below that of an officer of the Company, excluding for this purpose (1) an isolated or inadvertent
action not taken in bad faith which is remedied by the Company immediately after notice thereof is
given by the Executive, and (2) any change in Executive’s title, duties, responsibilities or
authority if Executive is given or retains other officer level duties within the Company; or (iii)
any requirement that the Executive relocate to a work site more than twenty five (25) miles from
the Company’s current location.
(d) Release Requirements. To receive the Change of Control accelerated vesting
benefits set forth above, you must (i) first sign and deliver to the Company a general release of
claims, in a form acceptable to the Company, within sixty (60) days of the date your employment
with the Company ends; and (ii) not be in breach of the Proprietary Information and Inventions
Agreement at the time of the receipt of such benefits.
8. Severance
(a) Termination without Cause or Resignation for Good Reason. Subject to the terms and
conditions set forth in this paragraph 8, in the event that the Company terminates you without
Cause or you resign for Good Reason, the Company shall provide you with: (i) a lump sum payment
equal to six (6) months of your base salary then in effect; and (ii) the payment of any and all
bonuses that are due or payable at the time of such termination.
(b) Release Requirements. To receive the Severance benefits set forth in this Section 8, you
must (i) first sign and deliver to the Company a general release of claims, in a form acceptable to
the Company, within sixty (60) days of the date your employment with the Company ends; and (ii) not
be in breach of the Proprietary Information and Inventions Agreement at the time of such payment.
9. Confidentiality Obligations.
(a) Proprietary Information. As the President and Chief Executive Officer of the Company, you
will be privy to extremely sensitive, confidential and valuable commercial information and trade
secrets belonging to the Company, the use and disclosure of which information and secrets would
greatly harm the Company. Accordingly, as a condition of your
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employment, you must sign and abide by the Company’s Employee Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit A.
(b) Exclusive Property. You agree that all business procured by you and all Company-related
business opportunities and plans made known to you while you are employed by the Company, shall
remain the permanent and exclusive property of the Company.
(c) No Adverse Business Activities. Throughout the term of your employment with the Company,
you agree not to, directly or indirectly, without the prior written consent of the Company own,
manage, operate, join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as an officer, director, executive, partner, employee,
principal, agent, representative, consultant, licensor, licensee or otherwise with, any business or
enterprise engaged in any business which is competitive with or which is reasonably anticipated to
be competitive with the business of the Company (“Competitive Activity”). Notwithstanding the
above, you will not be deemed to be engaged directly or indirectly in any Competitive Activity if
you participate in any such business solely as a passive investor in up to one percent (1%) of the
equity securities of a company or partnership, the securities of which are publicly traded. During
your employment with the Company, you agree not to acquire, assume or participate in, directly or
indirectly, any position, investment or interest known to be adverse or antagonistic to the
Company, its business or prospects, financial or otherwise.
(d) Nonsolicitation. Throughout your employment with the Company and for one (1) year
thereafter, you agree not to, without first obtaining the prior written approval of the Company,
directly or indirectly solicit, induce, persuade or entice, or attempt to do so, or otherwise
cause, or attempt to cause, any employee, independent contractor, customer or prospective customer
of the Company to terminate his, her or its employment, contracting or other business relationship
with the Company to become an employee or independent contractor to, or customer of, any other
person or entity.
10. At-Will Employment. Your employment with Company will be “at-will.” This means that,
subject to complying with any severance or vesting acceleration provisions set forth herein, either
you or Company may terminate your employment at any time, with or without Cause or Good Reason, and
with or without advance notice.
11. Arbitration. Any dispute, controversy or claim arising out of or in respect of the terms
of this Agreement (or its validity, interpretation or enforcement), the subject matter hereof or
your employment relationship with the Company shall be settled by binding arbitration in the State
of California before JAMS, in accordance with JAMS’ then-governing rules and procedures applicable
to employment disputes. The JAMS arbitrator shall issue a written award setting forth his or her
decision and the basis therefor. The Company shall bear all arbitration forum costs.
Notwithstanding the foregoing, you or the Company shall each be free to seek injunctive relief in
court if necessary to prevent irreparable harm pending the completion of any arbitration.
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12. Miscellaneous. This Agreement is the complete and exclusive statement of all of the terms
and conditions of your employment with the Company, and supercedes and replaces any and all prior
agreements or representations with regard to the subject matter hereof, whether written or oral.
It is entered into without reliance on any promise or representation other than those expressly
contained herein, and it cannot be modified, amended or extended except in a writing signed by you
and a duly authorized member of the Board. This Agreement is intended to bind and inure to the
benefit of and be enforceable by you and the Company, and our respective successors, assigns,
heirs, executors and administrators, except that you may not assign any of your duties or rights
hereunder without the express written consent of the Company. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced as if such invalid, illegal or unenforceable provisions
had never been contained herein. This Agreement and the terms of your employment with the Company
shall be governed in all aspects by the laws of the State of California.
As required by law, this offer is subject to satisfactory proof of your right to work in the United
States, and satisfactory completion of a Company-required background check.
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We look forward to having you join us. If you wish to accept this offer under the terms and
conditions described above, please sign and date this letter and return it to me. If you have any
questions about this Agreement, please do not hesitate to call me to discuss our offer at your
earliest convenience.
Best regards,
/s/ Xxxxxx Xxxxx
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Chairman of the Board of Directors |
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Accepted and agreed: |
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/s/ Xxxx Xxxxxxx
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Date: 11/18/04 |
Initialed: DS
