Exhibit 10.18
September 5, 1996
Mr. Alan I. Fraser
14403 Donna Lane
Saratoga, CA 95070
Dear Alan:
On behalf of Digital Link Corporation (the "Company") Board of
Directors, I am extremely pleased to offer you the position of
President and Chief Executive Officer of the Company. The
terms offered are as follows:
1. Your biweekly salary will be $11,538.47 and will be
subject to an annual review starting January, 1998. Starting next
year you will be eligible to earn up to 35% of your base salary as
an annual bonus based on targets. Generally eighty per cent
(80%) of this bonus is based upon meeting the fiscal years
Company targeted revenues and operating income and 20% is at
the Board's discretion. The structure and criterion of bonus
may be changed at any time by the Compensation Committee.
Executive bonuses are payable after the first Board of
Directors' meeting following the close of the fiscal year which
is the calendar year. You must be an employee of Digital Link
at the time the bonus is paid. You will not qualify for any
bonus for the remainder of 1996. You will also be eligible to
participate in the regular health insurance and other employee
benefit plans established by the Company for its employees from
time to time. A brief summary of the benefits currently
offered by the company, entitled Flexible Benefit Program, is
attached.
2. Digital Link will pay a car allowance of $250.00 per
month plus $.20 per mile for actual business related auto travel.
3. The Company will pay you a $45,000 sign-on bonus on the
date you begin employment with the Company. This bonus is non
refundable as long as you stay as an active employee of the
Company for at least 90 days.
4. The Board of Directors of the Company will grant you an
option to purchase up to 370,000 shares of common stock of the
Company under the 1992 Equity Incentive Plan at the current
fair market value of the Company's common stock. The shares
you will be given the opportunity to purchase will vest at the
rate of 25% one year from the date of the grant, and then
ratably over the following 36 months as long as you remain
employed by the Company. You also qualify for additional stock
options under annual review starting January 1998.
5. The Company will loan you $250,000 on the date you begin
employment, to be repaid at the end of 36 months along with the
entire interest payment, except as provided below. The per
annum interest rate will be the IRS related party interest rate
on the date of the loan.
If you sell any shares of Digital Link common stock prior
to the end of the 36 months period, the proceeds of the sales
must first be applied to the repayment of the loan. Your
options and shares (upon exercise) will be the collateral for
repayment of the loan. You will have to sign a separate full
recourse promissory note and security agreement to document
these obligations.
6. As the CEO, you will be elected to the Company's Board of
Directors as of your first date of employment.
7. As an employee of the Company, you will have access to
certain Company confidential information and you may, during the
course of your employment, develop or have access to information or
inventions which will be the property of the Company. To protect the
interests of the Company, you will be required to sign the
Company's standard Invention Assignment and Proprietary
Information Agreement as a condition of your employment. A
copy of this agreement is attached for your review. We wish
to remind you not to bring with you any confidential or
proprietary material of any former employer or violate any
other obligations you may have to your former employers.
8. While we look forward to a long and profitable
relationship, should you decide to accept our offer, you will
be an at-will employee of the Company, which means that the
employment relationship may be terminated by either of us for
any reason at any time. Any statements or representations to
the contrary (and, indeed, any statements contradicting any
provision of this letter) should be regarded by you as
ineffective. unless written and signed by the Chairperson of
the Board. Participation in any Company benefit program is not
to be regarded as an assurance of continued employment for any
particular period of time.
9. In the event of termination by Digital Link of your active
services with Digital Link other than for cause (cause or other
than cause to be determined by the Board of Directors of the
Company) you will have a consulting contract with the Company
for up to the next twelve months. During these twelve months
you will be a consultant and will be paid full base salary and
benefits and the stock options will continue to vest. In the
event that you are employed elsewhere during the period, your
salary will discontinue upon start of alternate work but your
stock vesting will be continued. You in return agree not to
compete with the Company for the twelve month consulting period
after termination of your active employment with the Company.
10. In the event your position is eliminated due to the
Company being acquired by another company, you will have a
consulting contract with the acquirer, for up to the next
twelve months after termination. During these twelve months you
will be a consultant and will be paid full base salary and
benefits and the stock options will continue to vest. In the
event that you are employed elsewhere during the period, your
salary will stop upon start of alternate work but your stock
vesting will be continued. You in return agree not to compete
with the Company or its acquirer for the twelve month
consulting period after termination of your active employment
with the acquirer.
11. The Immigration Reform and Control Act of 1986 requires
you, within three business days of hire, to present
documentation demonstrating that you have authorization to work
in the United States. Acceptable documentation is shown on the
enclosed form titled Employment Eligibility Verification (Form
I-9). Please bring this form to work along with the
appropriate documentation. If you have questions about this
requirement, which applies to U.S. citizens and non-U.S.
citizens alike, please contact our Human Resources department.
12. You and the Company agree that any dispute or claim of any
nature arising between us, other than claims for worker's
compensation or unemployment benefits, shall be submitted to
final and binding arbitration before a single neutral
arbitrator. The arbitrator shall be selected according to the
commercial arbitrator selection procedures of the American Arbitration
Association, and his or her fees shall be shared equally by the
parties. The arbitrator shall decide any such claim and may
grant any relief authorized by law. The arbitrator shall issue
a written award and opinion. Nothing contained herein shall
preclude you or the Company from seeking a temporary injunction
or other provisional relief where appropriate. This agreement
is governed by the California arbitration statute, Code of
Civil Procedure 1280 et seq.
13. As an acceptance of the offer, please sign below and
return a copy of this letter to myself by September 12, 1996,
after which date this offer will expire, unless extended in
writing by the Company. Your signature will acknowledge that
you have read, understood and agree to the terms and conditions
of this offer. We would like your first day of employment be no
later than September 30, 1996.
I have received and had access to all the information I need to
make an informed decision in respect to employment by the
Company. I accept the offer of employment stated in this
letter and expect to begin employment on September 30, 1996.
\s\ Alan Fraser September 10, 1996
Signature Date
We look forward to welcoming you to the Company.
Sincerely,
\s\ Vinita Gupta
Vinita Gupta
Chairperson of the Board