8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

April 22, 2006

Date of Report (Date of earliest event reported)

Commission File No. 000-16449

RAINING DATA CORPORATION

(Exact Name of registrant as specified in its charter)

Delaware	94-3046892
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

25A Technology Drive, Irvine, CA 92618

(Address of principal executive offices, Zip Code)

(949) 442-4400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 Entry into a Material Definitive Agreement

(a)(1) On April 24, 2006, Thomas G.C. Lim accepted an offer letter from Raining Data Corporation (the “Registrant”) for the position of Chief Financial Officer and Vice President of Finance.

(a)(2) Pursuant to the terms of Mr. Lim’s offer letter (the “Offer Letter”), Mr. Lim will be entitled to receive an annual base salary of $175,000. Mr. Lim will receive a signing bonus of $20,000 and will be entitled to receive an annual incentive bonus of up to thirty-five percent (35%) of his annual base salary based on meeting certain business and financial targets. Upon commencement of his employment, Mr. Lim will receive a stock option grant of 150,000 shares of the Registrant’s Common Stock, at an exercise price equal to the last sale price quoted by The NASDAQ Capital Market as of the grant date. Twenty-five percent (25%) of the shares subject to this option will vest one year after his start date, and 1/36^th of the remaining shares subject to this option will vest monthly thereafter, subject to his continued service to the Registrant. In the event that Mr. Lim is terminated as a result of an involuntary termination, other than for cause or disability, within twelve (12) months after a change of control of the Registrant, one hundred percent (100%) of the shares subject to this option shall be vested on the date of Mr. Lim’s termination. In the event that Mr. Lim is terminated for any reason other than for cause within six (6) months after his start date, Mr. Lim shall receive three months of his annual base salary from the date of his termination, and except for the acceleration of vesting provided in the event of a change of control, the vesting of his stock option shall be accelerated such that he shall be entitled to purchase a number of shares as if the Registrant had employed Mr. Lim for one (1) year. In the event that Mr. Lim is terminated for any reason other than for cause after his first six (6) months of employment, Mr. Lim shall receive six months of his annual base salary following the date of his termination, and except for the acceleration of vesting provided in the event of a change of control, the vesting of his stock option shall be accelerated such that he shall be entitled to purchase a number of shares as if the Registrant had employed Mr. Lim for the six (6) months after the date of his termination. The Offer Letter contains non-competition and non-solicitation provisions in favor of the Registrant. The foregoing description of the Offer Letter is only a summary, and is qualified in its entirety by reference to the full text of the Offer Letter included as Exhibit 10.1 hereto and incorporated by reference herein.

ITEM 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(c)(1) On April 24, 2006, the Registrant issued a press release announcing the appointment of Thomas G.C. Lim as the Registrant’s Chief Financial Officer and Vice President of Finance, which appointment is effective May 30, 2006. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

(c)(2) From March 2004 to May 2006, Mr. Lim served as the Director of Finance and Controller of WageWorks, Inc., an employee benefits firm. Mr. Lim served as the Director of Finance of DNA Sciences, Inc., a bio-research company, from October 2002 to January 2004, and as the Corporate Controller of Certive Corporation, a software company, from June 2000 to September 2002. Mr. Lim graduated from the University of California, Berkeley, Haas School of Business with a B.S. in accounting and finance and is currently a candidate to receive a M.B.A. from the University of California, Berkeley, Haas School of Business in May 2006.

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(c)(3) A brief description of the terms and conditions of the material terms of Mr. Lim’s employment is contained in Item 1.01 above, which description is incorporated into this Item 5.02 by reference.

ITEM 9.01.Financial Statements and Exhibits.

(d)Exhibits.

Exhibit Number	Description
10.1	Offer Letter, dated April 22, 2006, by the Registrant to Thomas G.C. Lim.
99.1	Press release, dated April 24, 2006, issued by the Registrant.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

RAINING DATA CORPORATION

By:	/s/ Carlton H. Baab	Date: April 27, 2006
	Carlton H. Baab,
	President and CEO

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EXHIBIT INDEX

Exhibit Number	Description
10.1	Offer Letter, dated April 22, 2006, by the Registrant to Thomas G.C. Lim.
99.1	Press release, dated April 24, 2006, issued by the Registrant.

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EX-10.1

Exhibit 10.1

CONFIDENTIAL

April 22, 2006

Thomas G. C. Lim

34397 Torrey Pine Lane

Union City, CA 94587

Dear Thomas:

It has been a real pleasure discussing the opportunities ahead for Raining Data Corporation. We believe that you have the background and experience that we need to help us grow in our new directions, and we are pleased to offer you a position with Raining Data Corporation (the “Company”) as its Chief Financial Officer and Vice President of Finance. In that regard, the following are the details of this offer of employment:

Title

Your title will be Chief Financial Officer and Vice President of Finance. In this position, you will report directly to me.

Base Compensation

Your initial annual base salary will be $175,000, paid in accordance with the Company’s normal payroll procedures. Your base salary shall be subject to review at the end of each year of your employment, and any adjustment will be a function of performance, which I will evaluate and may be subject to approval of the Compensation of the Board of Directors.

Incentive Bonus

Additionally, you will receive a signing bonus of $20,000 and be entitled to an annual incentive bonus of up to thirty five percent (35%) of your base salary based on your meeting certain Management Business Objectives (MBOs) as are mutually agreed upon.

Stock Options

At a Compensation Committee Meeting (or sub-committee meeting) that will be held on your actual start date, you will be granted a stock option, which shall be, to the extent possible under the rule of Section 422(d) of the Internal Revenue Code of 1986, as amended (the “Code”), an “incentive stock option” (as defined in Section 422 of the Code) to purchase 150,000 shares of the Company’s Common Stock, at an exercise price equal to the then NASDAQ market price as of the close of the markets on the day of that meeting.

Twenty-five percent (25%) of the shares subject to the above option shall vest one year after your start date and 1/36^th of the remaining shares subject to the option shall vest monthly thereafter, so that the option shall be fully vested and exercisable four years from your start date, subject to your continued service to the Company on the relevant vesting dates. In all other respects the option shall be subject to the terms, definitions and provisions of the Company’s Stock Plan and the stock option agreement by and between you and the Company, both of which documents are incorporated herein by reference.

Change of Control, Additional Accelerated Vesting and Related Items

In addition to the vesting schedule as set forth above, in the event you are terminated as a result of an Involuntary Termination other than for Cause or Disability within 12 months after a Change of Control, one hundred percent (100%) of the Shares subject to the above option shall be vested upon the date of such termination, provided that you sign a general release in a commercially customary form prescribed by the Company, which releases and discharges all known and unknown claims that you may have against the Company or persons and entities affiliated with the Company, and a covenant not to sue or prosecute any legal action or proceeding based upon such claims. For the purposes of this paragraph, the following terms shall have the following meanings:

A)“Cause” shall mean

(i)Gross and willful failure to perform services:

(ii)Conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof, if such felony either is work-related or materially impairs your ability to perform services for the Company:

(iii)          A material breach of fiduciary duty, including fraud, embezzlement, dishonesty or any intentional action that materially injures the Company as determined in good faith by the Company’s Board of Directors;

(iv)          Death;

(v)           A material breach of the Confidential Information Agreement.

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In all of the foregoing cases, the Company shall provide written notice to you indicating in reasonable detail the event or circumstances that constitute Cause under this Agreement and the Company will provide you with forty-five days to cure such breach or failure prior to termination for Cause. During such 45-day cure period, the Company may place you on unpaid leave.

B)“Change in Control” shall mean (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange 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, provided, however, that Change in Control shall not include any change resulting from any capital financings of the Company; or (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or (iii) the consummation of a merger or consolidation of the Company with any other corporation, 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 or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

C)“Disability” shall mean that you physically or mentally are unable regularly to perform your duties hereunder for a period in excess of sixty (60) consecutive days or more than ninety (90) days in any consecutive twelve (12) month period. The Company shall make a good faith determination of whether you are physically or mentally unable to regularly perform your duties subject to its review and consideration of any physical and/or mental health information provided to it by you.

D)“Involuntary Termination” shall mean (i) without your express written consent, the substantial reduction your duties or responsibilities relative to your duties or responsibilities in effect immediately prior to such reduction; provided, however, that a reduction in duties or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example, when the Vice President of Company remains as such following a Change of Control and is not made the Vice President of the acquiring corporation) shall not constitute an “Involuntary Termination”; (iii) without your express written consent, a material reduction by the Company in your base compensation as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of employee benefits package is significantly reduced; (v) your relocation to a facility or a location more than 50 miles from your then present location,

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without your express written consent; (vi) any purported termination of you by the Company which is not effected for death or Disability or for Cause; or (vii) the failure of the Company to obtain the assumption of this agreement by any successors.

Severance

If your employment is terminated for any reason other than for Cause prior to the first six months from your start date, you shall continue to receive your then basic salary for three months following the date of your termination (the “Severance Period”). If you obtain other employment during the Severance Period, the total amount of your earnings from other sources will be deducted from your severance payments. You agree to notify the Company of other employment during the Severance Period, and provide the Company with complete information regarding your earnings. Except for Change of Control as set forth above, the vesting of your stock options shall be accelerated such that you shall be entitled to purchase a number of shares of the Company’s Common Stock pursuant to the Stock Option Agreement as if the Company had employed you for one year.

If your employment is terminated for any reason other than Cause after your first six months of service, you shall continue to receive your then basic salary for six months following the date of your termination subject to the credit for other earnings described above. Except for Change of Control as set forth above, your stock options shall continue to vest during the six month severance period such that you shall be entitled to purchase a number of shares of the Company’s Common Stock pursuant to the Stock Option Agreement as if the Company had employed you through the end of that six month severance period.

Your receipt of the severance benefits described above will be contingent upon your signing a general release in a commercially customary form prescribed by the Company, which releases and discharges all known and unknown claims that you may have against the Company or persons and entities affiliated with the Company, and a covenant not to sue or prosecute any legal action or proceeding based upon such claims. Additionally, your receipt of the severance benefits described above also will be contingent upon your compliance with the noncompetition and nonsolicitation obligations set forth below, and your obligations under the Company’s Employment Confidential Information, Invention Assignment, and Arbitration Agreement.

Noncompetition and Nonsolicitation

During the severance periods described above, you agree that you will not, directly or indirectly, engage in (whether as an employee, consultant, proprietor, partner, director or otherwise) or have any ownership interest in, or participate in the financing operation, management, control of, any person, firm, corporation or business that engages in any business activity that is competitive with the Company (or of any Affiliated Company), provided, however, that nothing contained in this paragraph shall be construed to prohibit

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you from purchasing and owning (directly or indirectly) up to one percent (1%) of the capital stock or other securities of any corporation or other entity whose stock or securities are traded on any national or regional securities exchange or the national over-the- counter market and such ownership shall not constitute a violation of this paragraph.

Additionally, for a period of one (1) year following the termination of your employment for any reason, you agree that you will not, directly or indirectly, (A) divert or attempt to divert from the Company (or any Affiliated Company) any business of any kind in which it is engaged, including, without limitation, the solicitation of or interference with any of its suppliers or customers; or (B) solicit, hire, recruit, or employ any person or entity who is employed by or has a contractual relationship with the Company, or encourage any person or entity who is employed by or has a contractual relationship with the Company to terminate their employment or contractual relationship with the Company.

Benefit Plans

You shall be entitled to participate, to the extent permitted by law, in the medical insurance plans and other benefits offered by the Company. You should note that the Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

Vacation

You shall also be eligible to receive three weeks of paid time-off per year, which, if unused, shall accrue in accordance with the Company’s standard benefit policies.

Start Date

We hope that you will be able to start with the Company as soon as possible. However, in any case your start date will be on or prior to May 29, 2006.

The Company is excited about your joining and looks forward to a beneficial and fruitful relationship. Nevertheless, you should be aware that your employment with the Company is for no specific period and constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause and with at least one-month notice. We request that, in the event of resignation, you give the Company at least one month’s notice. You understand and agree that neither your job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of your employment with the Company.

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Miscellaneous

For purpose of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to the Company within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

This Agreement and all benefits due you hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case.

You agree that you will not enter into any agreements with another entity that requires you to be an employee or consultant, in name or duties, during your employment with the Company. Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or become involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company. Similarly, you agree not to bring any third party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.

As a Company employee, you will be expected to abide by Company rules and standards. You will be specifically required to sign an acknowledgment that you have read and that you understand the Company’s rules of conduct with are included in the Company Handbook. As a condition of your employment, you are also required to sign and comply with an Employment, Confidential Information, Invention Assignment and Arbitration Agreement which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, and non-disclosure of Company proprietary information. In the event of any dispute or claim relating to or arising out of your employment relationship, you and the Company agree that (i) any and all disputes between you and the Company shall be fully and finally resolved by binding arbitration, (ii) you are waiving any and all rights to a jury trial but all court remedies will be available in arbitration, (iii) all disputes shall be resolved by a neutral arbitrator who shall issue a written opinion, (iv) the arbitration shall provide for adequate discovery, and (v) the Company shall pay all arbitration fees, excluding attorneys fees and legal costs. Please note that we must receive your signed Agreement before your first day of employment.

This letter shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

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In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this letter shall continue in full force and effect without such provision. In the event that there is any conflict between this offer letter and your Stock Option Plan or Stock Option Agreement, this offer letter will govern.

To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below. A duplicate original is enclosed for your records. This letter, along with any agreements relating to proprietary rights between you and the Company, sets forth the terms of your employment with the Company and supersedes any prior representations or agreements including, but not limited to, any representation made during your recruitment, interviews or pre employment negotiations, whether written or oral. This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Company’s Chief Executive Officer and you. This offer of employment will terminate if it is not accepted, signed and returned by April 23, 2006, or unless otherwise withdrawn by the Company prior to your acceptance.

Thomas, we all look forward to working with you at Raining Data, and believe that your contributions will be significant in moving the Company into its new market opportunities.

Best regards,

Carlton H. Baab

President & CEO

Raining Data Corporation

AGREED AND ACCEPTED:
Thomas G. C. Lim	Date
Start Date

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EX-99.1

Exhibit 99.1

PRESS RELEASE

Contact Information

Raining Data Corporation

25A Technology Drive

Irvine, CA 92618

Richard W. Koe, Chairman of the Board of
Directors

Phone:	(949) 442-4400 (949) 250-8187
Fax:

CFO Change At Raining Data

IRVINE, CA. – April 24, 2006

The Board of Directors of Raining Data Corporation announced today the resignation of Brian Bezdek, as Chief Financial Officer and Secretary of the Company. Mr. Bezdek has resigned in order to pursue personal outside interests. The Board of Raining Data also announced that Thomas G.C. Lim has accepted the position of Chief Financial Officer and Vice President of Finance. The transition will be complete by the end of May.

 “On behalf of Raining Data Corporation, we would like to thank Brian Bezdek for his many contributions to Raining Data,” said Chairman of the Board, Richard W. Koe. “During Brian’s four years of service, he played an integral role in the successful operational turnaround of the company. Brian leaves the Company well-positioned as it enters the next phase of its strategic plan. We wish Brian and his family the very best,” said Mr. Koe.

“Also on behalf of the Raining Data Corporation, we would like to welcome Thomas Lim as its new CFO and Vice President of Finance,” Mr. Koe said. “Thomas Lim brings with him a wealth of experience and relationships.”

Mr. Lim’s career includes public accounting at Grant Thornton LLP; Senior Finance Manager positions at USWeb/CKS and E*Trade; Corporate Controller at Certive Corporation; and Director of Finance at DNA Sciences. Mr. Lim leaves his current position at WageWorks, Inc., where he is Director of Finance and Controller. “As Raining Data enters into its next phase of providing leading XML-centric platforms and solutions for advanced flexibility and interoperability, we believe Thomas Lim’s experience is a timely addition to the Raining Data management team,” Mr. Koe said.

About Raining Data

Raining Data Corporation (Nasdaq: RDTA), headquartered in Irvine, California, offers enterprise-grade XML database management and information aggregation software solutions and has been providing reliable data management and rapid application deployment solutions for ISVs and developers of database applications for more than three decades. Raining Data’s flagship products include:  1) The High-performance TigerLogic® XML Data Management Server (XDMS), which provides flexible, scalable and extensible XML data storage as well as query and retrieval of critical business data across a variety of structured and unstructured information sources, delivering mid-tier scalability and transactional integrity across heterogeneous enterprise databases as well as dynamic extensibility and ease of use, mostly found in repositories and file systems; 2) Powerful Pick® Universal Data Model (Pick UDM) based database management systems and components, including D(3)®, mvEnterprise® and mvBase® that are the choice of more than a thousand application developers worldwide and ..NET Integration components including the Pick Data Provider for .NET and the Pick Reporting Services Connector; and 3) Omnis Studio®, a powerful, cross-platform, object-oriented RAD tool for developing sophisticated thick-client, Web-client or ultra thin-client database applications.

Raining Data’s installed customer base includes more than 500,000 active users representing over 20,000 customer sites worldwide, with a significant base of diverse vertical applications.  With more than 160 employees and contractors in five countries, Raining Data offers 24x7 customer support and maintains a strong international presence. More information about Raining Data Corporation and its products can be found at www.rainingdata.com.

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Raining Data, Pick, mvDesigner, D3, mvEnterprise, mvBase, Omnis, Omnis Studio and TigerLogic are trademarks of Raining Data Corporation. All other trademarks and registered trademarks are properties of their respective owners.