Document:

exv10w6

 

Exhibit 10.6

[Form of Non-Executive Change of Control Agreement – Partial Double-Trigger]

[Date]

[Name]

Callidus Software Inc.

160 West Santa Clara Street

San Jose, CA 95113

Dear [Name]:

This letter modifies any Stock Option Agreement (“Option Agreement”) you may now or hereafter have
with respect to the common stock of Callidus Software Inc. (the “Company”) and any prior agreement
between you and the Company regarding the Option Agreements. This letter provides for accelerated
vesting of the options subject to the Option Agreement (the “Options”) under the conditions
described below.

In the event that you are “Involuntarily Terminated,” except for “Cause,” at any time during the
period commencing 90 days prior to a “Change of Control” of the Company and ending on the first
anniversary of the “Change of Control” of the Company, you shall receive vesting of your Option,
over and above the vesting provided for in your Option Agreement, equal to the greater of (i) 50%
of the shares subject to the Option which otherwise would have remained unvested immediately
following the Change of Control or (ii) that number of shares which otherwise would have vested
under the Option Agreement through the first anniversary of the Change of Control, assuming that
your employment with the Company would have continued through the date of such anniversary.

          For purposes of the above, “Change of Control” means:

	 	(i)	 	The acquisition by any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) of the “beneficial ownership” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities (it being understood that securities owned by any
person on the date hereof shall not be counted against such limit with respect to such
person); or
	 
	 	(ii)	 	A change in the composition of the Board occurring within a rolling two-year
period, as a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” shall mean directors who either (A) are members of
the Board as of date hereof, or (B) are elected,

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	 	 	 	or nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination (but
shall not include an individual not otherwise an Incumbent Director whose election
or nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Board); or
	 
	 	(iii)	 	A merger or consolidation of the company with any other entity 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
(including the parent corporation of such surviving entity)) at least fifty percent
(50%) of the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or consolidation, or a
sale or disposition by the Company of all or substantially all the Company’s assets.

The term “Surviving Entity” shall refer to the Company in the case of a Change of Control event
described in clause (i) or (ii) above, or the entity surviving the merger, consolidation or sale of
substantially all of the assets and continuing with the assets or business of the Company in the
case of a Change of Control event described in clause (iii) above.

          For purposes of the above, “Involuntarily Terminated” means any of the following:

	 	(i)	 	Your actual termination by the Company;
	 
	 	(ii)	 	The failure of the Surviving Entity to provide you with principle duties
related in nature and responsibility to the principle duties which you had at the
Company immediately prior to the Change of Control (it being understood that
equivalency of title or reporting relationship shall not be required);
	 
	 	(iii)	 	The Surviving Entity conditioning your continued employment on your
performing your duties at a regular work place located more than 50 miles from your
regular work place immediately prior to the Change of Control;
	 
	 	(iv)	 	The failure of the Surviving Entity to pay you a rate of cash compensation
equivalent to your rate of compensation immediately prior to the Change of Control,
measured by comparing base salary plus bonuses, commissions and similar incentives on
an annualized basis (it being understood that a bonus, commission or similar incentive
will be treated as equivalent to the prior year’s bonus, commission or similar
incentive so long as the dollar amounts and targets are equivalent, regardless of
whether you actually achieve the same dollar amounts and targets as in the prior
year);

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	 	(v)	 	The failure of the Surviving Entity to assume your Option on substantially
the same terms as it exists immediately prior to the Change of Control, or an attempt
by the Surviving Entity to modify the vesting schedule of the Option in a manner
adverse to you.

          For purposes of the above, “Cause” means:

	 	(i)	 	your willful failure to substantially perform your principle duties or gross
negligence in the performance of your duties;
	 
	 	(ii)	 	your conviction of or entry of a plea of guilty or nolo contendere to a
felony or other crime causing material harm to the Company; or
	 
	 	(iii)	 	a willful act by you that constitutes gross misconduct; or
	 
	 	(iv)	 	an act of fraud or misappropriation of funds or property against the Company.

The modification to the terms of the vesting schedule of your Option(s) as described in this letter
has been approved by the Company’s Board of Directors and is effective immediately.

Sincerely,

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Exhibit 10.14

Executive Incentive Plan

 

Overview and Purpose

Callidus’s incentive plan was created as a means to recognize and reward
the link between the achievement of Callidus’s corporate objectives and the
executive’s contribution to this success. The plan is designed to motivate
executives to achieve performance goals by placing compensation “at risk”
based on performance. The specific purpose of the plan is to:

	 	•	 	Align the risks/rewards for the senior management team to achieve
Callidus’ top business priorities, and
	 
	 	•	 	Motivate and retain executives by providing above market
compensation opportunities for achieving stretch goals.

The plan aligns Callidus’ business strategy and human resources strategies to
motivate, develop, retain and competitively compensate executives based on
performance.

Objectives

Our incentive plan supports our compensation philosophy and guiding
principles by meeting four primary objectives:

	 	•	 	Provide competitive total pay opportunities that help attract,
reward and retain executives.
	 
	 	•	 	Establish a direct link between operational performance that
creates shareholder value and individual performance and rewards.
	 
	 	•	 	Create a sense of focus and accountability through the development
of specific objectives.
	 
	 	•	 	Align interests and objectives of shareholders and executives to
drive Company growth and stock appreciation.

Performance Period

The fiscal year is divided into two, six-month performance periods,
January to June and July to December.

Eligibility and Participation

Executives who are employed at the end of the performance period are
considered eligible to participate and receive an award under the plan. An
executive must be in good performance standing to be eligible for any award
under the plan.

Performance Measures

The Plan rewards performance as measured against Callidus’ financial
performance. Overall company performance for Callidus will be measured versus
plan as approved by the Board of Directors. The Compensation Committee of the
Board will select and approve the financial measures based on the business priorities for the fiscal year.
Measures may include revenue, revenue growth, operating income, net income,
return on investment, cash from operations, or any financial metric deemed
appropriate for the business year.

 

 

Award Pool Funding

The first step in the process is for the Company to build a funding pool
following the measurement of the company’s performance. This pool is the
amount of total dollars that are available for incentive awards for the
executive team. The Board bases the pool on Callidus’ financial performance
for the year against the key metrics approved in the business plan.

The company must meet a minimum level of performance, referred to as the
threshold, to initiate funding of the financial related pool. Threshold
performance is met when the company has achieved a percentage of plan
determined by the Board based on the specific financial metrics. Company
performance represents 100% of the funding pool for the plan, unless the Board
determines to base a portion of funding on individual performance measures.
For clarification targets must be met after funding the incentives.

For purposes of illustration, assume that there are 10 executives with
identical earned salaries of $200,000 for the fiscal year. Also assume that
the target award opportunity is 50% of base salary for each position, or
$100,000. Therefore, the executive bonus pool would be $1,000,000 at target
company performance — i.e. 100% achievement of financial metrics.

This approach is consistent with Callidus’ commitment to a pay-for-performance
philosophy and culture. Callidus’ Board of Directors maintains the discretion
to determine any funding of the plan if the company’s performance does not
meet threshold levels or if the company significantly exceeds plan.

Administration

An executive must be with the company for the entire performance period,
and be in good performance standing during the entire performance period, to
be eligible for an award under the plan.

Awards will be paid as soon as possible following the close of the performance
period and once final performance is known for the company and approved by the
Board of Directors. Incentive awards are subject to all applicable payroll
taxes.

Callidus reserves the right to modify the plan, and individual awards, at any
time. You will be notified of any plan changes.

Acknowledgement

My signature below indicates that I have received a copy of the plan and
that my target incentive opportunity has been communicated to me.

 

	 	 	 	 	 
	 
	 	 	 	 
	 
	 	Employee Signature
	 	Date
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 
	 	Manager Signature
	 	Date

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