Exhibit 10.2

 

AMENDMENT OF EMPLOYMENT AGREEMENT

 

This Amendment of Employment Agreement (“Amendment”) is made and entered into as
of February 24, 2005 by and between Rainmaker Systems, Inc. a Delaware
corporation (the “Company”), and Martin D. Hernandez (“Employee”), for the
purpose of amending the Employment Agreement dated as of January 1, 2001 by and
between the Company and Employee (the “Employment Agreement”). Capitalized terms
not otherwise defined have the meaning ascribed to such terms in the Employment
Agreement.

 

WHEREAS, the Employment Agreement sets forth a formula for determining
performance-based bonus compensation for 2001 that the Board has continued to
use in subsequent years; and

 

WHEREAS, upon the terms and conditions set forth herein, the Company and
Employee desire to amend the Employment Agreement to provide for an initial term
of employment ending December 31, 2007, to amend the formula for
performance-based bonus compensation and to shorten the period of time utilized
to calculate the amount of compensation that Employee is to be paid in the event
of a termination and Change of Control.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants set forth herein, and for other good and valuable consideration the
receipt and adequacy of which is hereby acknowledged, the parties hereto hereby
agree that the Employment Agreement shall be amended as follows, effective as of
the date hereof:

 

1. The introductory sentence of Section 1, Employment and Term, is hereby
amended and restated as follows:

 

“Unless terminated in accordance with Section 4 hereof, the Company agrees to
employ Employee as President for an initial term ending December 31, 2007.
Unless terminated in accordance with Section 4 hereof, this Agreement shall be
automatically renewed for an additional one year term at the expiration of the
initial term and any subsequent one year term, unless within 30 days of the
expiration of the then pending term, one of the parties hereto delivers written
notice to the other stating the desire to not renew.”

 

2. Section 2, Compensation, paragraphs (B) and (B)(i), are hereby amended
effective as January 1, 2005 (it being understood and agreed by the parties that
bonus eligibility for the 2004 calendar year shall be determined in accordance
with the Employment Agreement as it exists prior to giving effect to this
Amendment), by: (A) replacing the words “net profit” with the words “net
income”; and (B) replacing the references to the year “2001” with the year
“2005” in every instance where said reference appears in such paragraphs.

 

3. Section 2, Compensation, paragraph (B)(ii) is hereby amended and restated in
its entirety effective as of January 1, 2005 as follows (it being understood and
agreed by the parties that bonus eligibility for the 2004 calendar year shall be
determined in accordance with the Employment Agreement as it exists prior to
giving effect to this Amendment):

 

(ii) Net Income Target. Fifty percent (50%) of the Bonus amount to be paid to
Employee shall be based upon whether the Company meets or exceeds its quarterly
net income

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goals (the “Quarterly Net Income Bonus”) and annual net income goals (the
“Annual Net Income Bonus”), as determined by the Company and approved by the
Company’s board of directors. If the Company meets but does not exceed each of
its quarterly net income goals, then the total Quarterly Net Income Bonus amount
available to Employee for the calendar year shall be twenty-five percent 25% of
the Base Salary, paid quarterly. If the Company meets but does not exceed its
annual net income goal, then the Annual Net Income Bonus amount available to
Employee shall be twenty-five percent 25% of the Base Salary, paid annually.
Notwithstanding the foregoing, each of the Quarterly Net Income Bonus and the
Annual Net Income Bonus amount, may be lesser or greater in accordance with the
terms of this Agreement. In the event that the Company meets its quarterly net
income goal, then Employee shall be paid one hundred percent (100%) of the
Quarterly Net Income Bonus amount payable for that quarter (i.e., 6.25% of the
Base Salary) (the “Target Quarterly Net Income Bonus Amount”). In the event that
the Company meets its annual net income goal, then Employee shall be paid one
hundred percent (100%) of the Annual Net Income Bonus amount payable for that
year (i.e., 25% of the Base Salary) (the “Target Annual Net Income Bonus
Amount”).

 

  (a) If the Company Exceeds Net Income Target. (I) If the Company exceeds its
net income goal for a given quarter, then Employee shall be paid a Quarterly Net
Income Bonus for that quarter calculated on a percentage basis equal to the
percentage by which the Company exceeds its quarterly net income goal. However,
such increased Quarterly Net Income Bonus for any quarter may not exceed ten
percent (10%) above the Target Quarterly Net Income Bonus Amount. For example,
if the Company exceeds its quarterly net income goal by nine percent (9%), then
the Quarterly Net Income Bonus amount due Employee for that quarter would be
equal to one hundred nine percent (109%) of the Target Quarterly Net Income
Bonus Amount. If the Company exceeds its quarterly net income goal by 10 percent
or more, then the Quarterly Net Income Bonus amount due Employee for that
quarter would be equal to one hundred ten percent (110%) of the Target Quarterly
Net Income Bonus Amount. For example, if the Company exceeds its quarterly net
income goal by fifteen percent (15%), then the Quarterly Net Income Bonus amount
due Employee for that quarter would be equal to one hundred ten percent (110%)
of the Target Quarterly Net Income Bonus Amount.

 

(II) If the Company exceeds its net income goal for a given year, then Employee
shall be paid an Annual Net Income Bonus for that year calculated on a
percentage basis equal to the percentage by which the Company exceeds its annual
net income goal. However, such increased Annual Net Income Bonus for any year
may not exceed ten percent (10%) above the Target Annual Net Income Bonus
Amount. For example, if the Company exceeds its annual net income goal by nine
percent (9%), then the Annual Net Income Bonus amount due Employee for that year
would be equal to one hundred nine percent (109%) of the Target Annual Net
Income Bonus Amount. If the Company exceeds its annual net income goal by 10
percent or more, then the Annual Net Income Bonus amount due Employee for that
year would be equal to one hundred ten percent (110%) of the Target Annual Net
Income Bonus Amount. For example, if the Company exceeds its annual net income
goal by fifteen percent (15%), then the Annual Net Income Bonus amount due
Employee for that year would be equal to one hundred ten percent (110%) of the
Target Annual Net Income Bonus Amount.

 

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  (b) If the Company Does Not Meet its Net Income Target. (I) In order for
Employee to be paid any portion of the Quarterly Net Income Bonus applicable to
that quarter, the Company must achieve at least ninety percent (90%) of its net
income goal for that quarter. If the Company fails to achieve quarterly net
income equal to at least ninety percent (90%) of the net income goal for that
quarter, then Employee shall not be paid any Quarterly Net Income Bonus for that
quarter. If the Company achieves between 90 percent (90%) and one hundred
percent (100%) of its net income goal for a given quarter, then Employee shall
be paid a Quarterly Net Income Bonus for that quarter calculated on a percentage
basis equal to the percentage of the quarterly net income goal achieved. For
example, if the Company achieves ninety-one percent (91%) its quarterly net
income goal, then the Quarterly Net Income Bonus amount due Employee for that
quarter would be equal to ninety-one percent (91%) of the Target Quarterly Net
Income Bonus Amount.

 

(II) In order for Employee to be paid any portion of the Annual Net Income Bonus
applicable to that year, the Company must achieve at least ninety percent (90%)
of its net income goal for that year. If the Company fails to achieve annual net
income equal to at least ninety percent (90%) of the net income goal for that
year, then Employee shall not be paid any Annual Net Income Bonus for that year.
If the Company achieves between 90 percent (90%) and one hundred percent (100%)
of its net income goal for a given year, then Employee shall be paid an Annual
Net Income Bonus for that year calculated on a percentage basis equal to the
percentage of the annual net income goal achieved. For example, if the Company
achieves ninety-one percent (91%) its annual net income goal, then the Annual
Net Income Bonus amount due Employee for that year would be equal to ninety-one
percent (91%) of the Target Annual Net Income Bonus Amount.

 

4. Section 4, Termination, paragraph (A)(ii) is hereby amended by: (A) replacing
the numerical phrase “one and one quarter (1 1/4)” with the numerical phrase
“one (1)”; and (B) replacing the numerical phrase “fifteen (15)” with the
numerical phrase “twelve (12)” in every instance where said numerical phrase
appears in such paragraph.

 

5. Section 4, Termination, paragraph (C), is hereby amended by replacing the
numerical phrase “one and one-half (1.5)” with the numerical phrase “one (1)”.

 

6. Miscellaneous.

 

A Employment Agreement Otherwise Not Affected. Except as expressly amended
pursuant hereto, the Employment Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects.

 

B Binding Effect. This Amendment shall be binding upon, inure to the benefit of
and be enforceable by the Employee and the Company and their respective
successors and assigns.

 

C Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

 

D Complete Agreement; Amendments. This Amendment contains the entire and
exclusive agreement of the parties hereto and thereto with reference to the
matters discussed herein and

 

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therein. This Amendment supersedes all prior commitments, drafts,
communications, discussion and understandings, oral or written, with respect
thereto. This Amendment may not be modified, amended or otherwise altered except
in accordance with the terms of Section 7(A) of the Employment Agreement.

 

E Severability. Whenever possible, each provision of this Amendment shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Amendment shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Amendment, or the validity or effectiveness of such provision in any other
jurisdiction.

 

F Counterparts. This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment
as of the day and year first above written.

 

RAINMAKER SYSTEMS, INC. By:  

/s/ Robert Leff

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    Robert Leff     Chairman of Compensation Committee    

/s/ Martin D. Hernandez

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    MARTIN D. HERNANDEZ

 

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