Exhibit 10.1
E MPLOYMENT A GREEMENT
T HIS E MPLOYMENT A GREEMENT (the “ Agreement ”) is made
and entered into, effective as of October 31, 2006 (the
“ Effective Date ”), by and between
C ALL
W AVE , I NC ., a
Delaware corporation (the “ Company ”), and
M ARK
S TUBBS (“ Employee ”), with
reference to the following facts:
R ECITALS :
The parties have agreed to execute
this Agreement in order to memorialize the terms and conditions on
which the Company shall employ Employee.
A GREEMENTS :
N OW ,
T HEREFORE
, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. P OSITION AND D UTIES
1.1 P OSITION AND T ITLE . The
Company hereby hires Employee to serve as the Chief Financial
Officer of the Company.
(a) L IMITS ON A UTHORITY . Employee shall perform his duties as Chief
Financial Officer of the Company pursuant to this Agreement in
compliance with applicable law and consistent with such budgets as
the Company’s Board of Directors adopts and modifies from
time to time.
(b) A NNUAL R EVIEWS . Within thirty (30) days after each annual
anniversary of the Effective Date of this Agreement, the Company
shall review Employee’s performance of his duties pursuant to
this Agreement and advise Employee of the results of that review;
provided, however , that Company may elect to conduct a
partial-year performance review in order to synchronize
Employee’s annual review date with that of the
Company’s other executives. In connection with each such
review, the Company shall evaluate whether any increase in
Employee’s compensation under Section 2 , below,
is appropriate.
(c) R EPORTING AND A UTHORITY . Employee shall report to the Company’s
Chief Executive Officer or his designee. Subject to directions from
the Chief Executive Officer and to the power and authority of the
Company’s Board of Directors to govern the affairs of the
Company, Employee shall have full authority and responsibility for
supervising and managing the financial affairs of the Company,
including (i) preparing and delivering to the Board of
Directors accurate financial statements at such time and with such
detail as the Board of Directors may request, (ii) supervising
the Company’s engagement of and relationship with its
independent certified public accountants, (iii) supervising
the Company’s collection of receivables, deposit of funds,
and payment of expenses, (iv) preparing such forecasts as the
Company’s Chief Executive Officer or Board of Directors may
request, (v) ensuring that the Company’s financial
affairs are conducted in compliance with applicable law, and
(vi) exercising such other authority and responsibility as the
Company’s Chief Executive Officer may delegate to Employee
from time to time.
1.2 A CCEPTANCE . Employee hereby accepts employment by the
Company in the capacity set forth in Section 1.1 ,
above, and agrees to perform the duties of such position from and
after the Effective Date of this Agreement in a diligent,
efficient, trustworthy, and businesslike manner. Employee agrees
that, to the best of the Employee’s ability and experience,
Employee at all times shall loyally and conscientiously discharge
all of the duties and responsibilities imposed upon Employee
pursuant to this Agreement.
1.3 B USINESS T IME .
Employee shall devote his exclusive business time to the
performance of his duties under this Agreement.
1.4 L OCATION . Employee shall perform his duties under this
Agreement from the Company’s principal offices in Santa
Barbara, California. Employee acknowledges and agrees that from
time to time he shall be required to travel (at the cost and
expense of the Company) to other locations outside of Santa
Barbara, California, in order to discharge his duties under this
Agreement.
1.5 T ERM .
The term of this Agreement shall commence as of the Effective Date
and shall continue until terminated pursuant to
Section 3 of this Agreement.
2. C OMPENSATION . The
Company shall compensate Employee for his services pursuant to this
Agreement as follows:
2.1 S ALARY . The
Company shall pay to Employee an annual salary in the amount of Two
Hundred Ten Thousand Dollars ($210,000.00) (the “ Base
Compensation ”). Such annual salary shall be subject to
periodic increases at the time of Employee’s annual review
pursuant to Section 1.1(b) , above, and such other
times and in such amounts as the Company, in its discretion, shall
determine to be appropriate. The Base Compensation will be paid
periodically in accordance with the Company’s normal payroll
practices and shall be subject to the usual, required
withholding.
2.2 A NNUAL P ERFORMANCE B ONUS .
For each full fiscal year during the term of this Agreement,
Employee will be eligible to receive a bonus based upon the
achievement of reasonable performance criteria; provided
that the bonus arrangement described in this
Section 2.2 shall be effective as of July 1, 2006.
Fifty percent (50%) of such bonus shall be based upon the
Company’s achievement of corporate objectives determined by
the Chief Executive Officer, and the remaining fifty percent
(50%) of such bonus shall be based upon Employee’s
achievement of Employee’s individual objectives as specified
by the Chief Executive Officer after consultation with the Employee
(the “ Annual Bonus ”). Consistent with Company
policy, the amount of any performance-based bonus shall be subject
to the final discretion of the Compensation Committee of the
Company’s board of directors. Subject to the foregoing, the
goal for the Annual Bonus payable for any calendar year shall be
forty percent (40%) of Base Compensation.
2.3 E QUITY G RANTS .
The Company annually shall grant to Employee an option, which will
be, to the extent possible under the $100,000 rule of
Section 422(d) of the Internal Revenue Code of 1986, as
amended (the “ Code ”), an incentive stock
option, to purchase at least fifty thousand (50,000) shares of
the Company’s common stock with an exercise price per share
equal to 100% of the fair market value of the underlying stock on
the date of the approval of the grant by the Company’s board
of directors, as determined by the board of directors or its
committee, in their sole discretion. Subject to acceleration
pursuant to Section 3, below, each such option grant will vest
as to 12.5% of the shares subject to the option six months after
the date of grant, and as to 1/48th of the shares subject to the
option monthly thereafter, so that the option will be fully vested
and exercisable four (4) years from the date of grant, subject
to Employee’s continued service to the Company on the
relevant vesting dates.
2.4 F RINGE B ENEFITS /V ACATION . Subject to the limitations imposed by the
Company’s vacation accrual policies (the “ Vacation
Accrual Policies ”) upon the maximum accrued and unused
vacation time permitted for Company employees, Employee shall
accrue paid vacation in each period of twelve (12) consecutive
months of employment during the term of this Agreement
(a) prior to the date on which Employee has been employed for
six (6) years, at a rate of three weeks (3) per year, and
(b) from and after prior to the date on which Employee has
been employed by the Company for six (6) years, at
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such rate as is then applicable under the
Company’s Vacation Accrual Policies. Employee shall be
eligible for such other fringe benefits as are provided to the
Company’s senior executive level employees generally from
time to time.
2.5 R EIMBURSEMENT OF U SUAL AND C USTOMARY B USINESS E XPENSES . The
Company shall reimburse Employee for authorized business expenses
incurred by Employee in the performance of his duties, provided
that such business expenses are reasonable in amount, incurred
for the benefit of the Company, and are supported by itemized
accountings and expense receipts submitted to the Company prior to
any reimbursement in accordance with the Company’s business
expense reimbursement policies.
3. T ERMINATION
3.1 D EFINITIONS . For purposes of this Agreement, the
term:
(a) “C
HANGE OF C ONTROL ” shall mean the occurrence of one of the
following events:
(i) Any transaction or series of related
transactions by which any “ person ” (as such
term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”)), including all affiliates of such person, is or becomes
the “ beneficial owner ” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly of securities
of the Company representing 50% or more of the combined voting
power of the Company’s then outstanding securities other than
(A) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or (B) any affiliate, or
any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
(ii) The date of the consummation of a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting securities
of the Company (or such surviving entity) outstanding immediately
after such merger or consolidation; or
(iii) The date of the consummation of a plan of
complete liquidation of the Company or the sale or disposition by
the Company of all or substantially all of the Company’s
assets. For purposes of this clause (iii), the phrase “
the sale or disposition by the Company of all or substantially
all of the Company’s assets ” shall mean a sale or
other disposition transaction or series of related transactions
involving assets of the Company or of any direct or indirect
subsidiary of the Company (including the stock of any direct or
indirect subsidiary of the Company) in which the value of the
assets or stock being sold or otherwise disposed of (as measured by
the purchase price being paid therefor or by such other method as
the Board of Directors of the Company determines is appropriate in
a case where there is no readily ascertainable purchase price)
constitutes more than two-thirds of the “fair market value of
the Company” (as hereinafter defined). For purposes of the
preceding sentence, the “ fair market value of the
Company ” shall be the aggregate market value of the
Company’s outstanding common stock (on a fully diluted basis)
plus the aggregate market value of the Company’s other
outstanding equity securities. The aggregate market value of the
Company’s equity securities shall be determined by
multiplying the number of shares of the Company’s common
stock (on a fully diluted basis) outstanding on the date of the
execution and delivery of a definitive agreement with respect to
the transaction or series of related transactions (the “
Transaction Date ”) by the average closing price of
such security for the ten trading days
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immediately preceding the Transaction Date, or
if not publicly traded, by such other method as the Board of
Directors of the Company shall determine is appropriate.
(b) “D
ATE OF T ERMINATION ” shall mean the date specified in the Notice of
Termination (as defined below).
(c) “D
ISABILITY
”
OR “D ISABLED ” shall mean that Employee either (i) is
unable to engage in any substantial gainful activity due to
physical or mental impairment which can be expected to result in
death or to last for a continuous period of twelve (12) months
or more, or (ii) is, by reason of any medically determinable
physical mental impairment which can be expected to last for a
continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three months under an accident and health plan sponsored by the
Company. Employee covenants and agrees to submit to a reasonable
physical examination by such licensed medical doctor for the
purpose of evaluating whether Employee is Disabled.
(d) “G
OOD R EASON ” shall mean the occurrence of any of the
following circumstances without Employee’s consent;
provided, however, that such circumstances shall not
constitute Good Reason unless (x) Employee provides the
Company with thirty (30) days’ written notice specifying
the purported grounds for Good Reason and (y) the purported
grounds are not cured within thirty (30) days after the date
upon which such notice is delivered to the Company:
(i) a ten percent (10%) or greater reduction by
the Company in his then current total compensation at plan (other
than a reduction generally applicable to other senior Employees of
the Company), or any reduction in Employee’s Base
Compensation (other than a reduction generally applicable to other
senior employees of the Company) as specified in
Section 2.2 , or any reduction in Employee’s
minimum annual option grant (other than a reduction generally
applicable to other senior employees of the Company) as specified
in Section 2.4 ; or
(ii) the relocation of the Company’s principal
executive offices to a location more than twenty-five
(25) miles outside the Santa Barbara, California area, or the
Company’s requiring Employee to relocate anywhere other than
the location of the Company’s principal executive offices,
except for required travel on the Company’s business to an
extent substantially consistent with Employee’s business
travel obligations contemplated by Section 1.4 ,
above.
(e) “M
ISCONDUCT
” shall mean (i) the willful failure by
Employee to substantially perform his duties with the Company
(other than any such failure resulting from Employee’s
incapacity due to phys
