Exhibit 10.25
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Executive Incentive Bonus Plan
Overview and Purpose

      Callidus’ Executive Incentive Bonus Plan was created as a means to
recognize and reward the link between the achievement of Callidus’ corporate
objectives and the senior executive’s contribution to its success. The plan is
designed to motivate the senior executive team to achieve business targets by
placing compensation “at risk” based on determined target achievement. The
specific purpose of the plan is to:

  •   Align the risks/rewards for the Executive team to achieve Callidus’ top
business priorities, and     •   Motivate and retain senior executive staff by
providing a bonus structure appropriate for their level in the market and to
promote achievement of stretch goals. The plan incorporates Callidus’ annual
business strategy and a desire to motivate, retain and competitively compensate
the senior executive staff based on achievement and/or overachievement of the
annual approved Company Business Plan.

Objective

      The Executive Incentive Bonus Plan supports the Callidus compensation
philosophy and guiding principles by meeting several key objectives:

  •   Provide competitive total cash opportunities that help attract, reward and
retain top executives. Target total cash with above market opportunities for
above–plan performance.     •   Create shareholder value by establishing a
direct link between achievement of the business plan and executive rewards.    
•   Create a sense of focus and accountability through the development of
specific and critical targets.     •   Align interests and objectives of
shareholders and the Executive Team to drive Callidus growth and stock
appreciation.

Performance Period

      The fiscal year is divided into four, quarterly performance periods, each
corresponding to the Company’s fiscal quarters, for measuring Company
performance. Payout is based on achievement of agreed upon quarterly targets
established two times each year, typically in January and July, and would
typically be paid in January, April, July, and October.

 

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Exhibit 10.25
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Executive Incentive Bonus Plan
Eligibility and Participation

      The Chief Executive Officer and Senior Vice Presidents who are employed at
the end of each performance period are considered eligible to participate and
receive an award under this plan. An executive must be in good performance
standing to be eligible for any award under this plan. Executives who leave
during an applicable period are not eligible for a payout. Exceptions may be
made by the CEO with the approval of the Compensation Committee of the Board of
Directors (“Compensation Committee”).

Performance Measures

      The plan rewards performance as measured against Callidus’ financial
performance as measured against a pre-defined set of objectives (i.e. Targets)
based on revenue generation, operating income and On-Demand annual contract
values before stock based compensation and other income. Overall Company
performance for Callidus will be measured against the targets as established by
the Board of Directors. The Board of Directors will select and approve the
financial targets based on the business priorities for the fiscal 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 of Directors bases the pool on Callidus’ financial performance for the
applicable period against the key targets 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 approximately 85 to 95% of plan
based on the specific financial metrics. Company performance represents 100% of
the funding pool for the plan. 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.

  •   Funding and therefore payout is reduced on a pro-rated basis if less than
100% of target is achieved.     •   Funding and payout accelerates based on
overachievement of target.     •   No funding or payout of bonus if less than
85% of target is achieved.     •   No cap on overachievement.

 

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Exhibit 10.25
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Executive Incentive Bonus Plan
Award Payout by Position

      Bonus payout amounts are determined and approved at the beginning of the
calendar year and reviewed again at the half year by the Compensation Committee.
The bonus payouts range from 75% — 100% of base salary based on position and
market analysis.

Award Approval

      Upon the close of each applicable quarter, the CFO reviews the financial
results against established targets with the CEO and then the Compensation
Committee. Once the financial performance has been reviewed and approved for the
period and if the Company met the window of established target performance for
the period (85%-100%), awards for the applicable quarterly period are
distributed. Each eligible executive has a specific target incentive opportunity
that is used to calculate individual awards as noted above. Calculation is
applied to base salary earned during the period.         Callidus’ Board of
Directors maintains the discretion to determine any funding of the plan if the
Company’s performance does not meet the minimum threshold.

Administration

      Senior executives must be with Callidus 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. New Hire bonuses would be pro-rated with
Compensation Committee and CEO approval.         Awards will be paid based on
standard Payroll deadlines after final performance results are known for the
Company and the Compensation Committee has approved a payout. Incentive awards
are subject to all applicable payroll taxes.         Callidus reserves the right
to modify the plan, and individual awards, at any time. Executives will be
notified of any plan changes.

 

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Exhibit 10.25
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Executive Incentive Bonus Plan
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