Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

DATE:

  

April 1, 2005 (the “Effective Date”)

    

PARTIES:

    

Rainmaker Systems, Inc.

    

1800 Green Hills Road

    

Scotts Valley, CA 95066

    

Attention: Board of Directors

    

Telephone:     (831) 430-3800

    

Facsimile:       (831) 439-9192

    

(the “Company”)

    

and

    

Edwin Okamura

    

110 Edgewater Drive

    

Rio Vista, CA 94571

    

Telephone:     512.464.8429

    

Facsimile:       866.300.0567

    

(“Executive”)

 

RECITALS:

 

A. The Company desires to continue to employ Executive in the role set forth
herein below and Executive desires to remain employed by the Company.

 

AGREEMENT:

 

In consideration of the foregoing recitals (which are incorporated herein), and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:

 

1. Employment; Duties. The Company shall employ Executive as Vice President of
Marketing, and Executive accepts such employment under the terms and conditions
set forth in this Agreement. Executive’s duties shall be consistent with those
of a Vice President of Marketing, as defined from time to time by the Chief
Executive Officer of the Company.

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2. Full-Time Best Efforts.

 

(a) Time and Effort. Executive shall devote Executive’s full professional time
and attention to the performance of Executive’s obligations under this
Agreement, and shall at all times faithfully, industriously, and to the best of
Executive’s ability, experience, and talent perform all of Executive’s
obligations hereunder. So long as this Agreement is in effect, Executive shall
not be employed or engaged by any other person or firm other than the Company
unless otherwise authorized in writing by the Chief Executive Officer of the
Company. Notwithstanding the foregoing, Executive, upon receiving written
permission from the Company’s CEO of the Company, shall be permitted to serve on
the boards of non-competitive companies provided that these endeavors do not
impede Executive’s job performance, and Executive shall be entitled to retain
all compensation paid to him in connection with such endeavors.

 

(b) Performance Standards; Underperformance. Within 180 days after the Effective
Date, the Chief Executive Officer of the Company, shall establish performance
expectations and standards, which shall (i) be reasonably acceptable to
Executive, (ii) may change from time to time as the needs of the Company change,
and (iii) shall serve as a basis to evaluate Executive’s performance from time
to time. Within six months following the Effective Date, and at least annually
thereafter, the CEO and the Executive shall meet in order for the CEO to provide
a formal evaluation of Executive’s performance. “Underperformance” shall mean
Executive’s failure to meet some or all of the then-current performance
expectations and standards, and can be the basis for a change in job
description, salary, and benefits, or termination of Executive’s employment
under this Agreement if such Underperformance is not cured within 60 days’
following notice of the elements of such Underperformance has been given to
Executive by the Company.

 

3. Term. The term of this Agreement shall begin on the Effective Date and shall
end on the second anniversary of the Effective Date (the “Initial Term”) unless
terminated prior to that date as provided herein. Unless 60 days’ advance
written notice is given by one party to the other regarding termination of
Executive’s employment hereunder, at the expiration of the Initial Term, and any
renewal term, the term of this Agreement shall automatically extend for an
additional one year.

 

4. Compensation and Benefits. The Company shall pay compensation to Executive
consisting of an annual base salary, any applicable bonuses and other benefits
as described in this Agreement. In addition to the financial compensation and
benefits set forth below, Executive shall be reimbursed for any approved
business-related expenses and shall receive vacation, sick leave, and other time
off as is customary and usual for executives of Executive’s status in the
Company.

 

(a) Base Salary; Unpaid Wages. Executive’s annual base salary as of the
Effective Date is $100,000. Executive’s base salary shall be reviewed annually
in conjunction with Executive’s annual performance review and may be adjusted as
appropriate in light of Executive’s performance. Executive’s annual base salary
shall be paid in accordance with the standard payroll practices of the Company.

 

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(b) Benefits. Executive shall be entitled to participate in such life insurance,
disability, medical, dental, stock options, stock grants, and retirement plans
and other programs as may be made generally available from time to time by the
Company for the benefit of executives of Executive’s level or its employees
generally (the “Benefits”).

 

(c) Bonuses/Commissions. Executive shall be eligible to receive quarterly
bonuses in accordance with the Company’s 2005 Executive Bonus Plan (Exhibit A)
and consistent with the criteria set forth in Section 2(b).

 

(d) Expense Reimbursement. The Company shall reimburse Executive for all
reasonable and necessary out-of-pocket expenses properly incurred in the
performance of this Agreement, but only to the extent that Executive submits to
the Company an itemized account of such expenses. Reimbursement for such
expenses shall occur promptly after their approval and receipt by the Company of
such documentary evidence of such expenses as the Company may reasonably
require.

 

5. Stock Option Grant. Executive has received options to purchase 100,000 shares
of Rainmaker’s common stock (the “Options”) pursuant to Rainmaker’s 2003 Stock
Incentive Plan. The Options shall vest in accordance with Rainmaker’s standard
vesting schedule.

 

6. Documents and Materials. Except in the performance of Executive’s duties in
the ordinary course of business for which Executive is employed by the Company,
Executive shall not make or cause to be made any copies, or other reproductions
or recordings or any abstracts or summaries of any reports, studies, memoranda,
correspondence, manuals, records, plans or other written, printed, computerized
or otherwise recorded materials of any kind belonging to or in the possession of
the Company or any of its Affiliates (defined below). Immediately upon the
termination of Executive’s employment with the Company or at any time upon the
request of the Company, Executive shall surrender all such material to the
Company and execute a document acknowledging that Executive has complied with
the provisions of this Agreement.

 

7. Trade Secrets and Other Confidential Information. Executive shall not at any
time, whether during or after the term of this Agreement, use for Executive’s
own benefit or purposes or for the benefit or purposes of any other person or
entity, or disclose (except in the performance of Executive’s duties in the
ordinary course of business for which Executive is employed by the Company) in
any manner to any person or entity, any trade secrets, information, data, know
how or knowledge (including that relating to service techniques, purchasing and
sales organization and methods, client lists, market development and expansion
plans, personnel training and development programs and client and supplier
relationships) or any other Discoveries (defined below) belonging to or relating
to the affairs of the Company or any of its

 

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Affiliates or to the clients of the Company or any of its Affiliates; provided,
however, that this Section shall not apply to any trade secret, information,
data, know how, knowledge, or Discovery that is or becomes generally available
to the public through no fault or action of Executive.

 

8. Customers and Vendors. Executive acknowledges that the lists of the Company’s
and its Affiliates’ customers and vendors as they may exist from time to time
constitute a valuable and unique asset of the Company, and Executive shall not,
during or after the term of Executive’s employment, disclose such lists or any
part thereof to any person or entity for any reason whatsoever, nor shall
Executive use such customer or vendor lists for Executive’s own benefit or
purposes or for the benefit or purposes of any business with whom Executive may
become associated.

 

9. Discoveries. Any and all inventions, discoveries, improvements, designs,
methods, systems, developments, know how, ideas, suggestions, devices, trade
secrets and processes (collectively, “Discoveries”), whether patentable or not,
which are discovered, disclosed to or otherwise obtained by Executive during
Executive’s employment with the Company are confidential, proprietary
information and are the sole and absolute property of the Company. Executive
shall disclose promptly to the Company all Discoveries and shall assist the
Company in making any application in the United States and in foreign
jurisdictions for patents of any kind with respect thereto.

 

10. Works for Hire. All works and writings of a professional nature that are
produced by Executive during Executive’s employment with the Company that relate
to the Company’s business or that are produced during regular working hours with
the Company or with the use of the Company’s resources constitute works made for
hire and are the sole and absolute property of the Company. Executive grants the
Company the exclusive right to copyright all such works made for hire in the
United States and in foreign jurisdictions. Whenever requested to do so by the
Company, Executive shall execute any and all applications, assignments, or other
instruments that the Company may deem necessary to protect the Company’s
interest therein for the works made for hire.

 

11. Non-Competition.

 

(a) Corporate Relationship. Executive acknowledges (i) that Executive’s
employment as a member of the Company’s executive management team creates a
relationship of confidence and trust between Executive and the Company with
respect to confidential and proprietary information applicable to the business
of the Company, its Affiliates and its clients, and (ii) the highly competitive
nature of the business of the Company. Accordingly, the Company and Executive
agree that the restrictions contained in this Section are reasonable and
necessary for the protection of the immediate interests of the Company and that
any violation of these restrictions would cause substantial injury to the
Company.

 

(b) Competitive Business Defined. The term “Competitive Business” means any
business which is similar to or competitive with the business of the Company
with respect to which Executive has had direct responsibility and which is
located in the same regions or markets as the business of the Company.

 

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(c) Existing Client Defined. The term “Existing Client” means a client for whom
the Company or any of its Affiliates is performing services or marketing
products as of the date of the termination of Executive’s employment with the
Company or for whom the Company or any of its Affiliates performed services or
marketed products within the two-year period immediately preceding the
termination of Executive’s employment with the Company.

 

(d) Noncompetition. During Executive’s employment with the Company and for the
defined duration set forth below following the termination of Executive’s
employment with the Company, Executive shall not:

 

i. own, manage, operate, control, have any financial interest in, or lend
Executive’s name to any person or entity engaged in, a Competitive Business or
cause others to or assist others in engaging in any Competitive Business in the
foregoing manner;

 

ii. employ or otherwise engage, or attempt to employ or otherwise engage, in or
on behalf of Executive or any Competitive Business, any person who is employed
or engaged as an employee, consultant, agent or representative of the Company or
any of its Affiliates as of the date of Executive’s termination or at any time
during the one-year period following such termination; or

 

iii. solicit directly or indirectly on behalf of Executive or any Competitive
Business, the customer business or account of any Existing Client.

 

If termination is by the Company without Cause the foregoing covenant shall
remain in effect for four months unless there has been a Change of Control
(defined below) and Executive’s employment is terminated without Cause during
the 120 day period following the Change of Control, or otherwise ends, the
foregoing covenant shall remain in effect for six months.

 

(e) Non-Competition Exception. Following the termination of Executive’s
employment, Executive’s obligation to not compete with the Company as set forth
above is solely dependent upon the Company’s paying to Executive all amounts due
and payable to Executive under this Agreement (the “Payments Due”) within ten
business days following the due dates therefore. The failure to make the
Payments Due payments within such cure period shall serve as a waiver of
Executive’s obligations under the covenant not to compete; provided, however,
that such waiver shall not waive the Company’s obligation to make the Payments
Due, and provided further that if the Payments Due are resumed within 30 days
after the expiration of the cure period provided for herein, Executive’s
obligation not to compete as provided herein shall resume until the expiration
of the applicable period; and provided further,

 

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that if Executive has commenced employment in a Competitive Business prior to
the Company making the Payments Due, Executive shall not be obligated to resign
such employment.

 

(f) Specific Enforcement. Subject to Section 11 (e), the foregoing covenants
shall be specifically enforceable; provided, however, that the covenants shall
not be construed to prohibit ownership of not more than 5% of the equity of any
publicly held entity engaged in direct competition with the Company, so long as
the Executive is not otherwise engaged with such entity in any of the other
activities specified in the foregoing clauses.

 

(g) Severability. If any court shall determine that the duration, geographic
limitations, subject or scope of any restriction contained in this Section is
unenforceable, it is the intention of the parties that this Section 11 shall not
thereby be terminated but shall be deemed amended to the extent required to make
it valid and enforceable, such amendment to apply only with respect to the
operation of this Section in the jurisdiction of the court that has made the
adjudication.

 

(h) Employability. Executive acknowledges (i) that Executive has sufficient
abilities and talents to be able to obtain, upon the termination of Executive’s
employment, comparable employment from another business while fully honoring and
complying with the above covenants concerning confidential information and
contacts with the Company’s or any of its Affiliates’ customers or employees,
and (ii) the importance to the Company and its Affiliates of the above
covenants. Accordingly, for the duration of the applicable period of Executive’s
covenant not to compete as set forth above and upon the Company’s reasonable
request of Executive, Executive shall advise the Company of the identity of
Executive’s new employer and shall provide a general description, in reasonable
detail, of Executive’s new duties and responsibilities sufficient to inform the
Company of its need to request a court order to enforce the above covenants.

 

(i) Remedies. The parties acknowledge that the damages sustained by the Company
or its Affiliates as a result of a breach of the agreements contained herein
will subject the Company or its Affiliates to immediate, irreparable harm and
damage, the amount of which, although substantial, cannot be reasonably
ascertained, and that recovery of damages at law will not be an adequate remedy.
Therefore, the Company and its Affiliates, in addition to any other remedies
they may have under this Agreement or at law, shall be entitled to injunctive
and other equitable relief to prevent or curtail any breach of any provision of
this Agreement subject to Section 11(e). If an action is instituted to enforce
this Agreement or any of the terms and conditions hereof, including suit for
preliminary injunction, the prevailing party shall be entitled to costs and
reasonable attorneys’ fees. The Company acknowledges that (A) the Company shall
not be entitled to an injunction or the right to enforce the covenant not to
compete or seek damages as a result of Executive’s competitive activities if the
Company has not made the Payments Due as provided in Section 11(e), and (B) the
requirement to pay Executive the Payments Due is part, but not the sole,
consideration being accepted by Executive’s agreement to the covenant not to
compete contained herein.

 

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12. Disability. The Company may terminate this Agreement upon notice to
Executive if Executive is physically or mentally incapacitated and unable to
perform Executive’s duties under this Agreement for a period of 90 out of any
180 days. If a question arises as to the incapacity of Executive, then the
Company shall promptly employ one physician who is a member of the American
Medical Association and who is reasonably acceptable to Executive to examine
Executive and determine if Executive’s physical or mental condition is such as
to render Executive unable to perform Executive’s duties under this Agreement.
The decision of the physician shall be certified in writing to the Company,
shall be sent by the Company to Executive or Executive’s representative and
shall be conclusive for purposes of this Agreement. Any compensation payments
payable to Executive hereunder shall be reduced by the amount of any disability
payments Executive receives as a result of disability policies on which the
Company has paid the premiums.

 

13. Death During Employment. This Agreement shall terminate upon Executive’s
death, and the Company shall pay a death benefit equal to Executive’s base
monthly salary for the balance of the month of Executive’s death and for three
months following Executive’s death. Such amounts shall be paid to the
beneficiary named in writing by Executive, or if none, to Executive’s surviving
spouse, or if none, to the executors and administrators of Executive’s estate
and shall be paid within 60 days after Executive’s death.

 

14. Termination for Other Than for Disability or Death.

 

(a) By the Company. The Company may terminate Executive’s employment under this
Agreement prior to the expiration of the Initial Term or any renewal term as
follows:

 

i. without Cause, upon 30 days’ prior notice to Executive; or

 

ii. immediately upon the showing of Cause. For purposes of this Agreement,
“Cause” shall mean, but not be limited to (1) gross misconduct, gross
negligence, or gross omissions by Executive, which is not cured to the Company’s
satisfaction within 30 days after notice of such gross misconduct, gross
negligence or gross omissions is given to Executive; (2) an act or acts of
dishonesty by Executive involving the Company; (3) conduct of Executive which is
materially injurious to the Company, monetarily or otherwise; (4) a material
breach of Sections 7 through 11 of this Agreement; (5) any other material breach
by Executive of this Agreement which breach has not been cured by Executive
within 30 days after notice of such breach is given to such Executive by the
Company; (6) Underperformance by Executive if such Underperformance is not cured
as provided in Section 2(b), or (7) Executive is convicted of, or enters a plea
of nolo contendere with respect to, any offense that, if committed in the State
of Texas, would have constituted a felony under the laws of the State of Texas
or the United States.

 

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(b) By Executive. Executive may terminate Executive’s employment under this
Agreement upon 30 days’ notice to the Company. An Executive’s termination shall
be deemed for “Good Reason” if such termination is due to: (i) a change
materially adverse to Executive in the nature of scope of Executive’s position,
status, responsibilities or duties with the Company as they existed as of the
Effective Date (other than for uncured Underperformance), (ii) a material
reduction by the Company in Executive’s base salary as in effect on the
Effective Date or as the same may be increased from time to time, other than
pursuant to an across the board reduction of an equal or greater percentage
affecting all of the Company’s executive officers or due to uncured
Underperformance; (iii) a change, exceeding a thirty-mile radius, in Executive’s
principal work location established on the Effective Date, except for required
travel on the Company’s business to an extent substantially consistent with
business travel obligations of the other officers of the Company; (iv) failure
of the Company to pay Executive amounts required to be paid under this Agreement
if not cured within ten business days after notice of such failure is given to
the Company by Executive; or (v) a material breach by the Company of any other
material provision of this Agreement that has not been cured by the Company
within 30 days after notice of such breach is given to the Company by Executive.

 

(c) Termination Obligations. Upon termination of Executive’s employment with the
Company, the Company shall have no further obligation to Executive except as
provided under this Agreement; provided, however, that termination of
Executive’s employment shall not affect Executive’s right to receive any
compensation or applicable bonuses that have accrued but have not been paid
through the date of termination. Executive shall return to the Company any and
all equipment including electronic equipment, keys, credit cards, and the like,
owned by the Company and used by Executive.

 

(d) Severance. Upon the termination of Executive’s employment with the Company
under this Section prior to the expiration of the Initial Term, the Company
shall pay to Executive a severance benefit equal to that portion of Executive’s
then current base salary as follows: (i) if termination is by the Company
without Cause the severance shall be four months salary unless there has been a
Change of Control (defined below) and Executive’s employment is terminated
without Cause during the 120 day period following the Change of Control, in
which case the severance shall be six months salary; (ii) if termination is by
the Company for uncured Underperformance (even though such termination is for
cause), the severance shall be one month salary; (iii) if the termination is by
the company for Cause (other than uncured Underperformance) Executive shall
receive no severance benefit of any kind; (iv) if the termination is by
Executive for Good Reason, the severance shall be four months salary; and (v) if
the termination is by Executive without Good Reason, Executive shall receive no
severance benefit of any kind. In addition, in the event any severance payment
is owing pursuant to the foregoing, as partial consideration for payment of such
severance amounts, Executive shall execute at the time of such termination and
as a condition of receipt of the severance amounts, the Company’s standard
Release Agreement. Executive shall not be entitled to receive any Benefits
except that if the

 

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termination is by the Company without Cause within 120 days following a Change
of Control, the Company shall pay Executive’s COBRA payment while Executive is
receiving severance payments. Payments due to Executive under this Section shall
be paid in cash or by check on the same dates on which Executive would otherwise
have received payments of Executive’s annual base salary hereunder if employment
had continued; provided, however, that if termination of employment is by the
Company without Cause and the Company is not able to make such payments in light
of material financial hardships, such payments shall be made when the Company is
financially able to make them.

 

(e) Payments upon Termination. Regardless of the reason for the termination of
Executive’s employment, the Company shall pay to Executive all salary and
expenses due to Executive through the effective date of termination less any
amounts owed to the Company by Executive; provided that any applicable severance
payments shall be paid in accordance with the standard payroll practices of the
Company over the period utilized to determine the applicable severance payment.

 

(f) Withholding Tax. The Company shall be entitled to withhold from any
compensatory payments that it makes to Executive under this Agreement or
otherwise an amount sufficient to satisfy all Federal, state and local income
and employment tax withholding and all other applicable withholding requirements
with respect to any and all compensation paid to Executive by the Company.

 

(g) Change of Control Defined. For purposes of this Agreement, “Change of
Control” means:

 

i. When any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (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; or

 

ii. Any merger, consolidation or transfer of securities of the Company with or
into another corporation, other than a merger, consolidation or transfer of
securities in which the holders of more than 50% of the shares of capital stock
of the Company outstanding immediately prior to such transaction continue to
hold (either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than 50% of the
total voting power represented by the voting securities of the Company, or such
surviving entity, outstanding immediately after such transaction; or

 

iii. The sale, transfer, or disposal by other means of all or substantially all
of the Company’s assets (or consummation of any transaction having similar
effect).

 

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15. Rights of Indemnity. Executive shall be entitled to the same rights of
indemnification as provided to all other executives, officers and directors of
the Company pursuant to applicable law and the Company’s governing documents.

 

16. Arbitration. Except for (i) any claim for unemployment compensation or
workers’ compensation, and (ii) any relief sought for breach by Executive of
Sections 6-11 of this Agreement, in which case a claim may be, but is not
required to be, brought before any court in the State of Texas having
jurisdiction over the matter, any controversy or claim arising out of or related
to this Agreement (as applicable, a “Dispute”) shall be resolved by binding
arbitration in accordance with the then-effective rules of the American
Arbitration Association (“AAA”) and limited discovery shall be permitted.
Arbitration shall be held at the location chosen by the party that has not
initiated the arbitration, which location shall be limited to Texas or any other
state in which the Company has an office or employees (as applicable, the
“Arbitration Location”). Upon notification by a party of such party’s intention
to arbitrate a Dispute (the “Notice Date”), each party shall select one
arbitrator, and the two arbitrators so chosen shall select one arbitrator. Each
of the arbitrators chosen shall be impartial and independent of the parties. If
a party fails to select an arbitrator within twenty days after delivery of the
Notice Date, or if the arbitrators chosen fail to select a third arbitrator
within twenty days after being chosen, then any party may in writing request the
judge of the United States District Court closest to the Arbitration Location
senior in term of service to appoint the arbitrator or arbitrators. The
arbitration shall be conducted in accordance with the National Rules for the
Resolution of Employment Disputes of the AAA to the extent such rules do not
conflict with the terms hereof; however there is no requirement that the
arbitration proceed through or under the auspices of the AAA. The decision of a
majority of the arbitrators shall be reduced to writing and shall be binding on
the parties. Judgment upon the award rendered by a majority of the arbitrators
may be entered and execution had in any court of competent jurisdiction or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement. The charges and expenses of the arbitrators shall be
allocated as determined by the arbitrators.

 

17. Survival. The covenants contained in this Agreement shall survive any
termination of Executive’s employment with the Company and any termination of
this Agreement. The existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of any of the
covenants contained in this Agreement except as prescribed in Section 11 (e).

 

18. Severability. If the scope of any restriction contained in this Agreement is
too broad to permit enforcement of such restriction to its fullest extent, then
such restriction shall be enforced to the maximum extent permitted by law, and
Executive and the Company hereby consent and agree that the scope of such
restriction may be judicially modified in any proceeding brought to enforce such
restriction. To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted from this Agreement and the
remainder of this Agreement shall remain in full force and effect.

 

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19. Notice. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and delivered by personal delivery, air
courier, or if mailed by registered or certified first-class mail, return
receipt requested, to the residence of Executive as it appears in the corporate
records for notice to Executive, or to the principal office of the Company for
notice to the Company. All notices delivered in accordance with this Section
shall be deemed to have been received and shall be deemed effective if delivered
in person or by air courier, upon actual receipt by the intended recipient, or
if mailed, upon the date of delivery or refusal to accept delivery as shown by
the return receipt therefor.

 

20. Affiliate; Construction and Interpretation. An “Affiliate” means any person
or entity that directly or indirectly controls, is controlled by, or is under
common control with another. Control shall mean beneficial ownership of 50.01%
or more of the outstanding voting securities or other ownership interests.
Unless the context of this Agreement otherwise requires, (a) words of any gender
include each other gender; (b) words using the singular or plural number also
include the plural or singular number, respectively; (c) the terms “include,”
“includes,” “including” and derivative or similar words shall be construed to be
followed by the phrase “without limitation”; (d) the word “or” is not exclusive;
and (e) reference to any document (including this Agreement) and to any law,
rule, or regulation means such document, law, rule or regulation as amended from
time to time.

 

21. No Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel to enforce any provision of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought. Any written waiver shall not be
deemed a continuing waiver unless specifically stated, and shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.

 

22. Amendments. No amendment or modification of this Agreement shall be deemed
effective unless made in writing and signed by the parties hereto.

 

23. Assignment. The rights and obligations of the Company under this Agreement
shall, without the prior written consent of Executive, inure to the benefit of
and be binding upon the successors and assigns of the Company. This is a
personal service contract and may not be assigned by Executive except that
rights of Executive to receive severance or benefits under Sections 12, 13, or
14 shall be assignable through a testamentary disposition or by the laws of
descent and distribution or the laws of guardianship, in the case of death or
disability.

 

24. Governing Law. This Agreement is made under and shall be governed by and
construed in accordance with the internal laws of the State of Texas. By
execution of this Agreement, each party submits to in personam jurisdiction of
the courts of the State of Texas.

 

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25. Headings. The headings of sections in this Agreement are solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.

 

26. Counterparts and Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one agreement. Any counterpart may be
delivered by any party by transmission of signature pages to the other parties
at the addresses set forth herein, and delivery shall be effective and complete
upon completion of such transmission; manually signed copies of signature pages
shall nonetheless be delivered promptly after any such facsimile delivery.

 

[The remainder of this page is intentionally blank.]

 

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27. Entire Agreement. This instrument contains the entire agreement of the
parties relating to the subject matter hereof and supersedes all prior and
simultaneous agreements, communications, and understandings with respect to such
subject matter, whether oral or written.

 

This Agreement is executed and delivered on the day and year first above
written.

 

Company: Rainmaker Systems

/s/    MICHAEL SILTON

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By:

 

Michael Silton

Its:

 

CEO

/s/    EDWIN OKAMURA

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Executive: Edwin Okamura

 

 

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EXHIBIT A

 

Rainmaker Systems, Inc.

2005 EXECUTIVE BONUS PLAN

 

Executive Name: Edwin Okamura

 

Total Target Annual Bonus: $ 31,250

 

(A) Quarterly Bonus . Employee and Company desire to create a performance-based
bonus compensation arrangement. The Company agrees that Employee shall be
eligible for a quarterly bonus (the “Bonus”) determined in accordance with the
formula established annually by the Board of Directors. The formula for 2005 is
set forth below in Sections A(i), (ii), (iii) and (iiii). If the Company meets
its revenue and net income goals for 2005, then Employee will be paid the total
Bonus amount (the “Target Annual Bonus Amount”). The Target Annual Bonus amount
will be established annually by the CEO. It is the intent of the Company and
Employee to use this performance-based bonus compensation arrangement to tie a
potentially large portion of Employee’s total compensation to the financial
performance of the Company.

 

(i) Revenue Target . Fifty percent (50%) of the Bonus amount to be paid to
Employee in 2005 shall be based upon whether the Company meets its quarterly
revenue goals, as determined by the Company and approved by the Company’s board
of directors (the “Revenue Bonus”). If the Company meets but does not exceed
each of its quarterly revenue goals, then the total annual Revenue Bonus amount
available to Employee shall be $15,625, paid quarterly; however, this total
annual Revenue Bonus amount may be lesser or greater in accordance with the
terms of this Agreement. In the event that the Company meets its quarterly
revenue goal, then Employee shall be paid one hundred percent (100%) of the
quarterly Revenue Bonus amount. This calculation would result in Employee
receiving a quarterly Revenue Bonus payment for such quarter equal to $3,906.25
(the “Target Quarterly Revenue Bonus Amount”).

 

(a) If the Company Exceeds Revenue Target . If the Company exceeds its revenue
goal for a given quarter, then Employee shall be paid a Revenue Bonus for that
quarter calculated on a percentage basis equal to the percentage by which the
Company exceeds its quarterly revenue goal. For example, if the Company exceeds
its quarterly revenue goal by twenty percent (20%), then the Revenue Bonus
amount due Employee for that quarter would be equal to one hundred twenty
percent (120%) of the Target Quarterly Revenue Bonus Amount. This calculation
would result in Employee receiving a quarterly Revenue Bonus payment for such
quarter equal to $4,687.50 ( i.e. , $3,906.25 x 120% = $4,687.50). There is no
limit on the quarterly Revenue Bonus amount that Employee may earn in a given
quarter.

 

(b) If the Company Does Not Meet its Revenue Target . If the Company does not
meet its revenue goal for a given quarter, then Employee shall be paid a Revenue
Bonus for that quarter calculated as follows:

 

(1) In order for Employee to be paid any portion of the Revenue Bonus applicable
to that quarter, the

 

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Company must achieve at least eighty percent (80%) of its revenue goal for that
quarter. If the Company fails to achieve quarterly revenues equal to at least
eighty percent (80%) of the revenue goal for that quarter, then Employee shall
not be paid any Revenue Bonus for that quarter.

 

(2) If the Company achieves quarterly revenues equal to eighty percent (80%) of
that quarter’s revenue goal, then Employee shall be paid a quarterly Revenue
Bonus for that quarter equal to fifty percent (50%) of the Target Quarterly
Revenue Bonus Amount. This calculation would result in Employee receiving a
quarterly Revenue Bonus payment for such quarter equal to $1,953.13 ( i.e. ,
$3,906.25 x 50% = $1,953.13).

 

(3) If the Company achieves quarterly revenues equal to an amount between eighty
percent (80%) and one hundred percent (100%) of that quarter’s revenue goal,
then Employee shall be paid a quarterly Revenue Bonus for that quarter that is
determined by adding to the base fifty percent (50%) Target Quarterly Revenue
Bonus Amount an amount equal to two and one-half percent (2.5%) of the Target
Quarterly Revenue Bonus Amount for each one percent (1%) increase in quarterly
revenues above the eighty percent (80%) quarterly revenue minimum. For example:

 

(A) If the Company achieves quarterly revenues equal to eighty-one percent (81%)
of that quarter’s revenue goal, then Employee shall be paid a quarterly Revenue
Bonus for that quarter equal to fifty-two and one-half percent (52.5%) of the
Target Quarterly Revenue Bonus Amount. This calculation would result in Employee
receiving a quarterly Revenue Bonus payment for such quarter equal to $2,050.78
( i.e. , $3,906.25 x 52.5% = $2,050.78).

 

(B) If the Company achieves quarterly revenues equal to eighty-five percent
(85%) of that quarter’s revenue goal, then Employee shall be paid a quarterly
Revenue Bonus for that quarter equal to sixty-two and one-half percent (62.5%)
of the Target Quarterly Revenue Bonus Amount. This calculation would result in
Employee receiving a quarterly Revenue Bonus payment for such quarter equal to
$2,441.41 ( i.e. , $3,906.25 x 62.5% = $2,441.41).

 

(C) If the Company achieves quarterly revenues equal to ninety percent (90%) of
that quarter’s revenue goal, then Employee shall be paid a quarterly Revenue
Bonus for that quarter equal to seventy-five percent (75%) of the Target
Quarterly Revenue Bonus Amount. This calculation would result in Employee
receiving a quarterly Revenue Bonus payment for such quarter equal to $2,929.69
( i.e. , $3,906.25 x 75% = $2,929.69).

 

(D) If the Company achieves quarterly revenues equal to ninety-five percent
(95%) of that quarter’s revenue goal, then Employee shall be paid a quarterly
Revenue Bonus for that quarter equal to eighty-seven and one-half percent
(87.5%) of the Target Quarterly Revenue Bonus Amount. This calculation would
result in Employee receiving a quarterly Revenue Bonus payment for such quarter
equal to $3,417.97 ( i.e. , $3,906.25 x 87.5% = $3,417.97).

 

(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 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 $7,812.50, 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
$7,812.50, 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., $1,953.13) (the “Target Quarterly Net Income Bonus Amount”). In
the event that the

 

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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., $7,812.50) (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.

 

(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.

 

16

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(iii) Rule of Construction . In making the calculations required under Section
2(B) of this Agreement, (a ) dollar amounts (for example, revenues and net
income) shall be rounded to the nearest $1000 (for example, $15,135,500 shall be
rounded to $15,136,000), and (b ) percentages shall be rounded to the nearest
one-tenth of one percent (for example, 63.45% shall be rounded to 63.5%).

 

(iiii) Administration. The Bonus formula and Target Annual Bonus Amount will be
established by the Board each year by January 31 and may be adjusted from time
to time during the year. Executive must be an employee of the company on the
date of payment of the bonus to qualify for the bonus. The bonus shall not be
prorated for employees who terminate prior to payment of the bonus, even if they
were employed with the company during the bonus period. This bonus plan shall be
administered by the CFO under the direction of the CEO and the Board of
Directors. The bonus plan may be changed at any time without notice by the CEO.

 

Executive   Date    

/s/    EDWIN OKAMURA

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April 4, 2005

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CEO   Date    

/s/    MICHAEL SILTON

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April 4, 2005

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