EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT ("AGREEMENT") dated as of November 5, 2003, by and
between Callidus Software Inc., a Delaware corporation (together with its
successors, the "COMPANY"), and Reed D. Taussig ("EXECUTIVE").

      WHEREAS, Executive accepted an offer of employment with the Company dated
October 17, 1997 (the "ORIGINAL OFFER LETTER");

      WHEREAS, in connection with Executive's employment with the Company, he
executed the Company's Employment, Confidential Information and Invention
Assignment Agreement dated December 2, 1997 (the "CONFIDENTIALITY AGREEMENT");

      WHEREAS, the Company considers it in its best interests and the best
interests of its stockholders to foster the continued employment of Executive by
providing the benefits set forth herein;

      WHEREAS, Executive is willing to continue his employment on and after on
the terms hereinafter set forth in this Agreement;

      NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

                                   ARTICLE 1
                           POSITION; TERM OF AGREEMENT

      Section 1.01. Position. (a) Executive shall continue to serve as President
and Chief Executive Officer of the Company and shall report to the Board of
Directors of the Company (the "BOARD").

      (b) As President and Chief Executive Officer, Executive shall have such
duties and authority, consistent with such position, as shall be determined from
time to time by the Board.

      (c) Executive will devote substantially all of his business time to the
performance of his duties under this Agreement and will not engage in any other
business, profession or occupation for compensation or otherwise which would
conflict with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided that, so long as such
service does not materially interfere with the performance of Executive's duties
hereunder, nothing herein shall be deemed to preclude Executive from serving on
any civic
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or charitable board or, subject to the prior written consent of the Board, on
any other corporate board.

      (d) The Company intend and agree to take all actions legally permitted to
cause Executive to be a member of the Board so long as Executive is serving as
Chief Executive Officer of the Company.

                                   ARTICLE 2
                            COMPENSATION AND BENEFITS

      Section 2.01. Base Salary. The Company shall pay Executive an annual base
salary (the "BASE SALARY") at the annual rate of $250,000, payable in equal
monthly installments or otherwise in accordance with the payroll and personnel
practices of the Company from time to time.

      Section 2.02. Bonus. The Board of Directors may, in its sole discretion,
determine that Executive shall be eligible for a bonus during any year.

      Section 2.03. Employee Benefits. (a) During his employment with the
Company, Executive shall be eligible for employee benefits (including fringe
benefits, vacation and health, accident and disability insurance, and retirement
plan participation) substantially similar to those benefits made available
generally to senior executives of the Company.

                                   ARTICLE 3
                          CERTAIN TERMINATION BENEFITS

      Section 3.01. Severance Benefits. (a) In the event of the termination of
Executive's employment by the Company without Cause (as defined below) or by
reason of Executive's death or disability, Executive (or his estate, as
applicable) shall be entitled to receive from the Company the following
benefits, contingent upon Executive signing a release of claims arising from
Executive's employment and the termination thereof in a form reasonably
acceptable to the Company:

            (i) The Company shall continue to pay Executive his then current
      base salary for the six months following the date of termination.

            (ii) Executive shall be provided with health benefits on the
      Company's health plan (or the Company shall pay for Executive's continued
      coverage under COBRA at the same cost to Executive as before the
      termination) until the earlier of (x) six months following the date of
      termination or (y) the date Executive becomes eligible for group health
      coverage with another employer.


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            (iii) Executive shall be entitled to exercise the portion of his
      options and other equity in the Company on the terms provided in the
      applicable stock plan and/or the applicable award agreement.

      (b) For purposes hereof, "CAUSE" means (i) Executive's willful failure to
substantially perform his principal duties or gross negligence in the
performance of his duties; (ii) Executive's conviction of or entry of a plea of
guilty or nolo contendere to a felony or other crime causing material harm to
the Company; (iii) a willful act by Executive that constitutes gross misconduct;
or (iv) an act of fraud or misappropriation of funds or property against the
Company.

      Section 3.02. Other Termination Events. In the event of any other
termination, Executive shall not be entitled to the benefits set forth above.

                                   ARTICLE 4
                          COVENANTS AND REPRESENTATIONS

      Section 4.01. Covenants. (a) Executive agrees and acknowledges that during
and after his employment with the Company, he will be bound by the terms of the
Confidentiality Agreement, including but not limited to Sections 2(a) and 7
thereof relating to confidentiality and non-solicitation of employees,
respectively.

      (b) In connection with the termination of Executive's employment
hereunder, Executive shall cooperate with the Company and any Subsidiary or
Affiliate of the Company to ensure an orderly transition, in such a manner and
at such times as the Company shall reasonably request.

      (c) Except as required by law, neither party will at any time (whether
during or after termination of Executive's employment with the Company)
knowingly make any statement, written or oral, or take any other action that
would disparage or otherwise harm the other party, its business or reputation
or, in the case of the Company, the reputation of any of its Affiliates or the
officers and directors of any of them.

      Section 4.02. Employee Representation. Executive expressly represents and
warrants to the Company that Executive is not a party to any contract or
agreement, and is not otherwise obligated in any way, which will or may restrict
in any way Executive's ability to fully perform Executive's duties and
responsibilities under this Agreement.


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                                   ARTICLE 5
                           SUCCESSORS AND ASSIGNMENTS

      Section 5.01. Assignments. This Agreement shall be assignable by the
Company. This Agreement shall not be assignable by Executive.

      Section 5.02. Successors; Binding Agreement. This Agreement shall inure to
the benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.

                                   ARTICLE 6
                                  MISCELLANEOUS

      Section 6.01. Notices. Any notice required to be delivered hereunder shall
be in writing and shall be addressed:

      (i)   if to the Company, to:

            Callidus Software Inc.
            160 West Santa Clara Street, Suite 1400
            San Jose, CA  95113
            Attention: Chief Financial Officer

      (ii)  if to Executive, to Executive's last known address as reflected on
            the books and records of the Company;

or, in each case, to such other address as such party may hereafter specify for
the purpose by written notice to the other party hereto.

      Section 6.02. Dispute Resolution. (a) Any dispute or controversy arising
out of or relating to any interpretation, construction, performance or breach of
this Agreement shall be settled by arbitration to be held in Santa Clara County,
California, in accordance with the rules then in effect of the American
Arbitration Association. The arbitrator may grant injunctions or other relief in
such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and Executive shall each pay one-half of the costs and expenses of such
arbitration, and each party shall separately pay its own counsel fees and
expenses.

      Section 6.03. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.


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      Section 6.04. Employment Status. Nothing herein contained shall interfere
with the Company's right to terminate Executive's employment with the Company at
any time, with or without Cause, subject to the Company's obligations hereunder.
Executive shall also have the right to terminate Executive's employment with the
Company at any time without liability, subject only to the provisions hereof and
Executive's obligations hereunder.

      Section 6.05. Entire Agreement. This Agreement, together with
Confidentiality Agreement, represents the entire agreement between Executive and
the Company and its affiliates with respect to Executive's employment and/or
severance rights (other than with respect to vesting and exercisability of
Executive's equity in the Company as evidenced by separate option agreements
and, if applicable, the Change in Control Agreement dated September 2003), and
supersedes all prior discussions, negotiations, and agreements concerning such
rights; provided, however, that any amounts payable to Executive hereunder shall
be reduced by any amounts paid to Executive, or notice period given, as required
by any applicable law in connection with any termination of Executive's
employment. No modification or amendment to this Agreement shall be effective
unless in writing signed by the parties.

      Section 6.06. Tax Withholding. Notwithstanding anything in this Agreement
to the contrary, the Company shall withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as are legally required to be
withheld.

      Section 6.07. Waiver Of Rights. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.

      Section 6.08. Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Agreement, and this Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.

      Section 6.09. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
California without reference to principles of conflict of laws.

      Section 6.10. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.


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      IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.

                                       CALLIDUS SOFTWARE INC.


                                       By: /s/ Ronald J. Fior
                                           -------------------------------------
                                           Name:  Ronald J. Fior
                                           Title: Chief Financial Officer, Vice
                                                  President, Finance

                                       EXECUTIVE:

                                       /s/ Reed D. Taussig
                                       -----------------------------------------
                                       Reed D. Taussig


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Source: OneCLE Business Contracts.