S-1

As filed with the Securities and Exchange Commission on May 24, 2007.

Registration No. 333-          

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

DemandTec, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	7372	94-3344761
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

One Circle Star Way, Suite 200

San Carlos, California 94070

(650) 226-4600

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Daniel R. Fishback

President and Chief Executive Officer

One Circle Star Way, Suite 200

San Carlos, California 94070

(650) 226-4600

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Robert V. Gunderson, Jr., Esq.
Craig M. Schmitz, Esq.
Matthew C. Bonner, Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
(650) 321-2400 Jeffrey R. Vetter, Esq.
Laird H. Simons, III, Esq.
Scott J. Leichtner, Esq.
Fenwick & West LLP
801 California Street
Mountain View, California 94041
(650) 988-8500

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

CALCULATION OF REGISTRATION FEE

Title of Each Class of	Proposed Maximum Aggregate	Amount of
Securities to be Registered	Offering Price(1)(2)	Registration Fee
Common Stock, $0.001 par value per share	$86,250,000	$2,648

(1)	Includes offering price of shares issuable upon exercise of the underwriters’ over-allotment option.
(2)	Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) of the Securities Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued May 24, 2007

           Shares

COMMON STOCK

DemandTec, Inc. is offering           shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $     and $      per share.

We have applied to list our common stock on The NASDAQ Global Market under the trading symbol “DMAN.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 7.

PRICE $   A SHARE

		Underwriting
	Price to	Discounts and	Proceeds to
	Public	Commissions	DemandTec
Per Share	$	$	$
Total	$	$	$

We have granted the underwriters the right to purchase up to an additional           shares of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on          , 2007.

MORGAN STANLEY CREDIT SUISSE

WILLIAM BLAIR & COMPANY

JMP SECURITIES

MONTGOMERY & CO., LLC

PACIFIC CREST SECURITIES

          , 2007

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		7
Special Note Regarding Forward-Looking Statements and Industry Data		20
Use of Proceeds		21
Dividend Policy		21
Capitalization		22
Dilution		24
Selected Consolidated Financial Data		26
Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Business		44
Management		57
Related Party Transactions		80
Principal Stockholders		81
Description of Capital Stock		83
Shares Eligible for Future Sale		86
Underwriters		88
Legal Matters		90
Experts		90
Where You Can Find More Information		91
Index to Financial Statements		F-1
EXHIBIT 2.1
EXHIBIT 3.1
EXHIBIT 3.3
EXHIBIT 3.4
EXHIBIT 4.3
EXHIBIT 10.2
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10
EXHIBIT 10.11
EXHIBIT 10.12
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.16
EXHIBIT 10.17
EXHIBIT 10.18
EXHIBIT 10.19
EXHIBIT 10.22
EXHIBIT 23.1
EXHIBIT 23.2

You should rely only on the information contained in this prospectus or in any free writing prospectus to be delivered or made available to you. We have not authorized anyone to provide you with additional or different information. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.

Until          , 2007 (25 days after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States: Neither we nor any of the underwriters has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before buying our common stock. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes. You should carefully consider, among other things, the matters discussed in “Risk Factors.”

DEMANDTEC, INC.

We are the leading provider of consumer demand management, or CDM, software. Our software enables retailers and consumer products, or CP, companies to define merchandising and marketing strategies based on a scientific understanding of consumer behavior and makes actionable pricing, promotion and other merchandising and marketing recommendations to achieve revenue, profitability and sales volume objectives. We deliver our applications by means of a software-as-a-service, or SaaS, model, which allows us to capture and analyze the most recent retailer and market-level data and rapidly enhance our software to address our customers’ ever-changing merchandising and marketing needs.

Our CDM software is comprised of a suite of integrated applications — DemandTec Price, DemandTec Promotion, DemandTec Markdown and DemandTec TradePoint. DemandTec Price combines price optimization functionality with price management features to enable retailers and CP companies to create multiple pricing scenarios, evaluate tradeoffs and optimize everyday prices. DemandTec Promotion enables retailers and CP companies to create and simulate multiple promotional plans based on mathematical forecasts. DemandTec Markdown enables retailers to optimize plans and prices for items they intend to remove from their assortments, such as end-of-season items, discontinued product lines or overstocked merchandise. DemandTec TradePoint provides retailers and their CP trading partners with a platform to automate and streamline the presentation, negotiation and reconciliation of trade promotion offers in a secure, web-based environment.

Our software as a service is used by over 135 customers worldwide, including Advance Auto Parts, Best Buy, Casino, Circle K Stores, General Mills Sales, Kraft Foods Global, Monoprix, Office Depot, Procter & Gamble, Safeway and Wal-Mart.

The retail and CP markets are large, global markets. In 2005, retail trade represented approximately 23% of worldwide gross domestic product. There are more than 1,500 retailers worldwide that have annual sales in excess of $500 million, and there are thousands of CP companies that sell to these retailers. In 2004, the CP industry generated revenue in the United States of more than $2 trillion. Retailers and CP companies operate in intensely competitive environments in which consumers are becoming more discerning and less loyal. The growth of discount stores, warehouse clubs and dollar stores and the emergence of the Internet as a viable retail alternative have provided consumers with increasing alternatives when purchasing goods. In addition, consumers are becoming more knowledgeable and, in many instances, more price sensitive. In order to gain sustainable advantage in the competition for share of consumer wallet, retailers and CP companies must better understand and predict consumer behavior across geographic, demographic and other segments. Without a scalable solution to incorporate statistical analytics, however, retailers and CP companies historically have made merchandising decisions based on simpler approaches such as cost-plus or competitor-matching pricing and “one-size-fits-all” assortments.

Our CDM software enables customers to incorporate a scientific understanding of consumer demand into their merchandising and marketing decision-making processes. Key benefits of our CDM software include:

•  Understanding and predicting consumer behavior to make merchandising and marketing decisions that achieve revenue, profitability and sales volume objectives.  Our software enables retailers and CP companies to make daily pricing decisions, enforce pricing rules consistently, forecast sales more accurately and devise more targeted promotions based on an understanding and prediction of consumer demand. By using our software, our customers can achieve their revenue, profitability and sales volume objectives, while striking a balance with their desired price and brand images in order to enhance consumer loyalty and maximize the lifetime value of the consumer.

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•  Incorporating scalable science into merchandising and marketing decision-making processes.  We incorporate advanced econometric modeling techniques and optimization theory into scalable software that our customers use to make day-to-day merchandising and marketing decisions. Our proprietary demand models quantify consumer response at the individual store and item levels based on a variety of factors, including store location, consumer demographics, advertising, in-store displays, the availability of complementary and substitute products, seasonality, competitive activity and loyalty and marketing programs. Our optimization science uses a combination of complex algorithms to help customers determine prices, promotions and markdowns that best accomplish their objectives while complying with their business rules.

•  Leveraging technological advancements through a SaaS delivery model, we are able to adapt to our customers’ changing business needs rapidly and to deliver results quickly.  By delivering our software as a service, we are able to capture and analyze the most current retailer and market-level data to better understand the dynamic nature of consumer behavior. We intimately understand how our customers use our software to make day-to-day merchandising and marketing decisions and we are able to enhance our offerings rapidly to address our customers’ evolving business needs. Our grid computing environment allows us to maximize scalability and processing capacity.

Our objective is to extend our position as the leading provider of CDM software. Key elements of our strategy to achieve this objective include:

•  continuing to invest in our state-of-the-art scientific technology that enables our customers to determine the best merchandising and marketing plans to achieve their revenue, profitability and sales volume objectives;

•  developing new software and enhancing our existing software to address a broader set of consumer demand management business requirements in the retail and CP markets;

•  capitalizing on the convergence of merchandising and marketing by developing additional applications and analytics that provide a unified understanding of consumer behavior for both merchants and marketers;

•  delivering additional software to CP companies; and

•  broadening our customer base internationally.

Risk Factors

Our business is subject to numerous risks, which are highlighted in the section entitled “Risk Factors” immediately following this prospectus summary. Some of these risks are:

•  we incurred a net loss of $1.5 million in fiscal 2007, had an accumulated deficit of $67.9 million as of February 28, 2007 and may not achieve or maintain profitability;

•  our quarterly operating results are likely to fluctuate significantly for a variety of reasons;

•  our growth depends upon our ability to add new and retain existing large customers;

•  we depend on a small number of large retail customers; and

•  retailers and CP companies may not widely adopt technology solutions incorporating scientific techniques to understand consumer behavior.

For further discussion of these and other risks you should consider before making an investment in our common stock, see the section entitled “Risk Factors” immediately following this prospectus summary.

Corporate Information

We were incorporated in Delaware in November 1999. Our principal executive offices are located at One Circle Star Way, Suite 200, San Carlos, California 94070. In November 2006, we acquired TradePoint Solutions, Inc., or TradePoint. Our telephone number is (650) 226-4600. Our website address is www.demandtec.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase

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shares of our common stock. Our fiscal year ends on the last day of February. References to fiscal 2007, for example, refer to our fiscal year ended February 28, 2007.

Unless the context otherwise requires, we use the terms “DemandTec,” “we,” “us” and “our” in this prospectus to refer to DemandTec, Inc. and its subsidiaries on a consolidated basis. “DemandTec” and the DemandTec logo are registered trademarks of DemandTec. Other DemandTec trademarks used in this prospectus include “DemandTec Price,” “DemandTec Promotion,” “DemandTec Markdown,” “DemandTec TradePoint” and “MyDemandTec.” This prospectus contains additional trade names and trademarks of ours and of other companies.

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THE OFFERING

Common stock offered by DemandTec	shares
Common stock to be outstanding after this offering	shares
Use of proceeds	We intend to use approximately $10.4 million of the net proceeds from this offering to repay outstanding indebtedness. We intend to use the remaining net proceeds for working capital and other general corporate purposes. See ‘‘Use of Proceeds.”
Proposed NASDAQ Global Market symbol	DMAN

The number of shares of our common stock to be outstanding after this offering is based on 40,331,446 shares of our common stock outstanding as of February 28, 2007, and excludes:

•  12,351,742 shares of common stock issuable upon the exercise of options outstanding as of February 28, 2007 at a weighted average exercise price of $0.99 per share;

•  363,495 shares of common stock issuable upon the exercise of warrants outstanding as of February 28, 2007 at a weighted average exercise price of $1.91 per share;

•  635,251 shares of common stock reserved as of February 28, 2007 for future grant under our 1999 Equity Incentive Plan and an additional 1,350,000 shares of common stock reserved since February 28, 2007 for future grant under our 1999 Equity Incentive Plan, of which 1,101,450 shares of common stock are issuable upon the exercise of outstanding options granted after February 28, 2007 at a weighted average exercise price of $3.51 per share; and

•  6,000,000 shares of common stock reserved for future issuance under our 2007 Equity Incentive Plan and 1,000,000 shares of common stock reserved for future issuance under our 2007 Employee Stock Purchase Plan, each of which will become effective on the date of this prospectus and contains a provision that will automatically increase its share reserve each year.

Unless otherwise indicated, this prospectus reflects and assumes the following:

•  the automatic conversion of all outstanding shares of our preferred stock into 27,022,234 shares of our common stock upon the closing of this offering;

•  the filing of our restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the closing of this offering; and

•  no exercise by the underwriters of their option to purchase up to an additional           shares from us to cover over-allotments.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables summarize consolidated financial data for our business for the periods presented. You should read this summary consolidated financial data in conjunction with the sections titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, all included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period.

	Year Ended February 28,
	2005			2006			2007
	(in thousands, except
	per share data)
Consolidated Statements of Operations Data:
Revenue	$	19,537		$	32,539		$	43,485
Cost of revenue(1)(2)		8,881			12,584			14,230
Gross profit		10,656			19,955			29,255
Operating expenses:
Research and development(2)		9,737			11,021			15,340
Sales and marketing(2)		8,105			10,170			12,108
General and administrative(2)		1,798			2,388			2,673
Amortization of acquired intangible assets		—			—			118
Total operating expenses		19,640			23,579			30,239
Loss from operations		(8,984	)		(3,624	)		(984	)
Other income (expense), net		(284	)		850			(480	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(9,268	)		(2,774	)		(1,464	)
Provision for income taxes		8			14			52
Loss before cumulative effect of change in accounting principle		(9,276	)		(2,788	)		(1,516	)
Cumulative effect of change in accounting principle		—			(54	)		—
Net loss		(9,276	)		(2,734	)		(1,516	)
Accretion to redemption value of preferred stock		32			32			32
Net loss attributable to common stockholders	$	(9,308	)	$	(2,766	)	$	(1,548	)
Net loss per common share, basic and diluted	$	(1.15	)	$	(0.31	)	$	(0.14	)
Shares used in computing basic and diluted net loss per common share		8,078			8,899			11,061
Pro forma net loss per common share, basic and diluted (unaudited)(3)							$	(0.03	)
Shares used in computing pro forma basic and diluted net loss per common share (unaudited)(3)								38,073

(1)	Includes $203 of amortization of acquired intangible assets in fiscal 2007.
(2)	Includes stock-based compensation expense as follows:

	Year Ended February 28,
	2005		2006		2007
	(in thousands)
Cost of revenue	$	—	$	—	$	41
Research and development		14		6		62
Sales and marketing		11		1		74
General and administrative		6		64		156
Total stock-based compensation expense	$	31	$	71	$	333

(3) Refer to note 1 of the notes to our consolidated financial statements for a description of how we compute pro forma basic and diluted net loss per common share.

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The pro forma consolidated balance sheet data in the table below reflect (1) the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 27,022,234 shares of our common stock and (2) the reclassification of the redeemable convertible preferred stock warrant liability to additional paid-in capital, each upon the closing of this offering. The pro forma as adjusted consolidated balance sheet data in the table below also reflect (1) our sale of           shares of common stock in this offering, at an assumed initial public offering price of $      per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, (2) the use of approximately $10.4 million of the net proceeds of this offering to repay in full the principal and accrued interest on our term loan and (3) the expensing of debt issuance and related costs of $485,000.

	As of February 28, 2007
							Pro Forma As
	Actual			Pro Forma			Adjusted(1)
				(unaudited)			(unaudited)
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	25,478		$	25,478		$
Total assets		56,795			56,795
Deferred revenue, current and non-current		42,172			42,172			42,172
Current and long-term debt		15,063			15,063			4,800
Redeemable convertible preferred stock warrant liability		592			—			—
Redeemable convertible preferred stock		49,073			—			—
Total stockholders’ (deficit) equity		(58,660	)		(8,995	)

(1) Each $1.00 increase or decrease in the assumed initial public offering price of $      per share would increase or decrease, respectively, our cash, cash equivalents and marketable securities, working capital, total assets and total stockholders’ equity (deficit) by approximately $      million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase shares of our common stock. If any of the following risks is realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the price of our common stock could decline and you could lose part or all of your investment.

Risks Related to Our Business and Industry

We have a history of losses and we may not achieve or sustain profitability in the future.

We have a history of losses and have not achieved profitability on an annual basis. We experienced net losses of $9.3 million, $2.7 million and $1.5 million in fiscal 2005, fiscal 2006 and fiscal 2007, respectively. As of February 28, 2007, we had an accumulated deficit of $67.9 million. We may continue to incur net losses in the future. In addition, we expect our cost of revenue and operating expenses to continue to increase as we implement initiatives to continue to grow our business. We also expect to incur additional general and administrative expenses associated with being a public company. If our revenue does not increase to offset these expected increases in cost of revenue and operating expenses, we will not be profitable. You should not consider our revenue growth in recent periods as indicative of our future performance. In fact, in future periods our revenue could decline. Accordingly, we cannot assure you that we will be able to achieve or maintain profitability in the future.

     We may experience significant quarterly fluctuations in our operating results due to a number of factors, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.

Our quarterly operating results may fluctuate significantly due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. If our operating results fall below the expectations of investors or securities analysts or below the guidance, if any, we provide to the market, the price of our common stock could decline very substantially.

Factors that may affect our operating results include:

•  our ability to increase sales to existing customers and to renew contracts with our existing customers, particularly larger customers;

•  our ability to attract new customers, particularly larger retail customers;

•  changes in our pricing policies or those of our competitors;

•  outages and capacity constraints with our hosting partners;

•  fluctuations in demand for our software;

•  reductions in customers’ budgets for information technology purchases and delays in their purchasing cycles;

•  our ability to develop and implement in a timely manner new software and enhancements that meet customer requirements;

•  our ability to hire, train and retain key personnel;

•  any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products;

•  our ability to control costs, including our operating expenses; and

•  general economic conditions in the retail and CP markets.

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We may experience seasonality in the sales of our software. Seasonal variations in our sales may lead to significant fluctuations in our cash flows and deferred revenue on a quarterly basis. If we experience a delay in signing or a failure to sign a significant customer contract in any particular quarter, then our operating results for such quarter and for subsequent quarters may be below the expectations of securities analysts or investors, which may result in a decline in our stock price.

     We depend on a small number of customers, which are primarily large retailers, and our growth, if any, depends upon our ability to add new and retain existing large customers.

We derive a significant percentage of our revenue from a relatively small number of customers, and the loss of any one or more of those customers could decrease our revenue and harm our current and future operating results. Through February 28, 2007, of our 134 customers, the 30 retail customers accounted for substantially all of our revenue. In fiscal 2007, three customers accounted for approximately 30% of our revenue, and in fiscal 2006, three customers accounted for approximately 44% of our revenue. Although our largest customers may vary from period to period, we anticipate that we will continue to depend on revenue from a relatively small number of customers. Further, our ability to grow revenue depends on our ability to increase sales to existing customers, to renew contracts with our existing customers and to attract new customers. If economic factors were to negatively impact the retail market segment, it could reduce the amount that these customers spend on information technology, and in particular CDM software, which would adversely affect our revenue and results of operations.

     Our business depends substantially on customers renewing their agreements for our software. Any decline in our customer renewals would harm our operating results.

To maintain and grow our revenue, we must achieve and maintain high levels of customer renewals. We sell our software pursuant to agreements with initial terms that are generally from one to three years in length. Our customers have no obligation to renew their agreements after the expiration of their term, and we cannot assure you that these agreements will be renewed on favorable terms or at all. The fees we charge for our solutions vary based on a number of factors, including the software, service and hosting components provided and the duration of the contract term. Our initial agreements with customers may include fees for software, services or hosting components that may not be required or needed upon renewal. As a consequence, upon renewal of these contracts, if any, we may receive lower total fees. In addition, if a contract is renewed for a term longer than the preceding term, we may receive total fees in excess of total fees received in the initial agreement but a smaller average annual fee because we generally charge lower annual fees in connection with agreements with longer terms. In any of these situations, we will need to sell additional software, services and/or hosting in order to maintain the same level of annual fees from that customer. There can be no assurance that we will be able to renew these contracts, sell additional software or services or sell to additional new customers. In the past, some customers have elected not to renew their agreements with us or have renewed on less favorable terms. For instance, Sainsbury plc, which accounted for 21.2% of our fiscal 2006 revenue, did not renew its agreement when its term expired in the fourth quarter of fiscal 2006. We have limited historical data with respect to customer renewals, so we may not be able to predict future customer renewal rates and amounts accurately. Our customers’ renewals may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction with our software, the price of our software, the prices of competing products and services, consolidation within our customer base or reductions in our customers’ information technology spending levels. If our customers do not renew their agreements for our software for any reason or if they renew on less favorable terms, our revenue would decline.

     Because we recognize revenue ratably over the terms of our customer agreements, the lack of renewals or the failure to enter into new agreements will not immediately be reflected in our operating results but will negatively affect revenue in future quarters.

We recognize revenue ratably over the terms of our customer agreements, which typically range from one to three years. As a result, most of our quarterly revenue results from agreements entered into during previous quarters. Consequently, a decline in new or renewed agreements in a particular quarter, as well as any renewals at reduced annual dollar amounts, will not be reflected in any significant manner in our revenue for that quarter, but it will negatively affect revenue in future quarters.

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Our sales cycles are long and unpredictable, and our sales efforts require considerable time and expense.

We market our software to large retailers and CP companies, and sales to these customers are complex efforts that involve educating our customers about the use and benefit of our software, including its technical capabilities. Customers typically undertake a significant evaluation process that can result in a lengthy sales cycle, in some cases over 12 months. We spend substantial time, effort and money in our sales efforts without any assurance that our efforts will generate long-term agreements. In addition, customer sales decisions are frequently influenced by budget constraints, multiple approvals, and unplanned administrative, processing and other delays. If sales expected from a specific customer are not realized, our revenue and, thus, our future operating results could be adversely impacted.

Our business will be adversely affected if the retail and CP industries do not widely adopt technology solutions incorporating scientific techniques to understand and predict consumer demand to make pricing and other merchandising decisions.

Our software addresses the new and emerging market of applying econometric modeling techniques and optimization techniques in software to enable retailers and CP companies to understand and predict consumer demand in order to improve their pricing, merchandising and promotion decisions. These decisions are fundamental to retailers and CP companies; accordingly, our target customers may be hesitant to accept the risk inherent in applying and relying on new technologies or methodologies to supplant traditional methods. Our business will not be successful if retailers and CP companies do not accept the use of software to enable more strategic pricing and other merchandising decisions.

If we are unable to continue to enhance our current software or to develop or acquire new software to address changing consumer demand management business requirements, we may not be able to attract or retain customers.

Our ability to attract new customers, renew existing customers and maintain or increase revenue from existing customers will depend in large part on our ability to anticipate the changing needs of the retail and CP industries, to enhance and improve existing software and to introduce new software in the future that meet those needs in a timely manner. Any new software may not be introduced in a timely or cost-effective manner and may not achieve market acceptance, meet customer expectations, or generate revenue sufficient to recoup the cost of development or acquisition of such application. If we are unable to successfully develop or acquire new software and enhance our existing applications to meet customer requirements, we may not be able to attract or retain customers.

Understanding and predicting consumer behavior is dependent upon the continued availability of accurate and relevant data from retailers and other sources. If we are unable to obtain access to relevant data, or if we do not enhance our core science and statistical modeling methodologies to incorporate new data sources and changing consumer behavior, our software may become less competitive or obsolete.

The ability of our statistical models to forecast consumer demand depends upon the assumptions we make in designing the models and in the quality of the data we use to build them. Consumer behavior is affected by many factors, including evolving consumer needs and preferences, new competitive product offerings, more targeted merchandising and marketing, emerging industry standards, and changing technology. Data adequately representing all of these factors may not be readily available in certain geographies or in certain markets. For example, in some developing markets, adoption of data collection systems, such as point of sale, or POS, systems, is sporadic and relatively immature. In addition, the relative importance of the variables that influence demand will change over time, particularly with the continued growth of the Internet as a viable retail alternative and the emergence of non-traditional marketing channels. If we are unable to obtain access to relevant data sources or enhance our core science and modeling methodologies to adjust for changes in consumer behavior, customers may delay or decide against purchases or renewals of our software.

We rely on our management team and will need additional personnel to grow our business, and the loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

Our success depends to a significant degree on our ability to attract, retain and motivate our management team and our other key personnel. Our professional services organization and other customer facing groups, in particular,

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play an instrumental role in ensuring our customers’ satisfaction. In addition, our science, engineering and modeling team requires experts in econometrics and advanced mathematics, and there are a limited number of individuals with the education and training necessary to fill these roles should we experience employee departures. All of our employees work for us on at-will basis, and there is no assurance that any employee will remain with us. Our competitors may be successful in recruiting and hiring members of our executive management team or other key employees and it may be difficult for us to find suitable replacements on a timely basis. Many of the members of our management team and key employees are substantially vested in their shares of our common stock or options to purchase shares of our common stock and therefore retention of these employees may be difficult in the highly competitive market and geography in which we operate our business.

We have experienced growth in recent periods. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

We have substantially expanded our overall business, headcount and operations in recent periods. We will need to continue to expand our operations in order to increase our customer base and to develop additional software. Further, increases in our customer base could create challenges in our ability to implement our software and support our customers. In addition, we will be required to continue to improve our operational, financial and management controls and our reporting procedures. As a result, we may be unable to manage our business effectively in the future, which may negatively impact our operating results.

We have derived most of our revenue from sales to our retail customers. If our software is not widely accepted by CP customers, our ability to grow our revenue and achieve our strategic objectives will be harmed.

To date, we have derived most of our revenue from retail customers, and we have not received significant revenue from our CP customers. However, in order to grow our revenue and to achieve our long-term strategic objectives, it is important for us to expand our sales to derive a more significant portion of our revenue from new and existing CP customers. If we are not able to achieve widespread acceptance of our software by our CP customers, our revenue growth and business will be harmed.

We face intense competition that could prevent us from increasing our revenue and prevent us from becoming profitable.

The market for our software is highly competitive and we expect competition to intensify in the future. Competitors vary in size and in the scope and breadth of the products and services they offer. Currently, we face competition from traditional enterprise software vendors such as Oracle Corporation and SAP AG, retail software vendors targeting smaller retailers such as KSS Group and Athens Group, and statistical tool vendors such as SAS, Inc. To a lesser extent, we also compete or potentially compete with marketing information providers such as ACNielsen, Inc. and Information Resources, Inc. as well as business consulting firms such as McKinsey & Company, Inc., Deloitte & Touche LLP and Accenture LLP, which offer merchandising consulting services and analyses. Because the market for CDM software is relatively new, we expect to face additional competition from other established and emerging companies and, potentially, from internally-developed applications. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and a failure to increase, or the loss of, market share.

Competitive offerings may have better performance, lower prices and broader acceptance than our software. Many of our current or potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, research and development, marketing and other resources than we have. As a result, our competition may be able to offer more effective software or may opt to include software competitive to our software as part of broader, enterprise software solutions at little or no charge.

We may not be able to maintain or improve our competitive position against our current or future competitors, and our failure to do so could seriously harm our business.

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     We rely on two third-party service providers to host our software and any interruptions or delays in services from these third parties could impair the delivery of our software as a service.

We deliver our software to customers over the Internet. The software is hosted in two third-party data centers located in California. We do not control the operation of either of these facilities, and we are dependent on these service providers to provide all power, connectivity and physical security. These facilities could be vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They are also subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. The occurrence of a natural disaster or intentional misconduct, a decision to close these facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in our services. Additionally, because we currently rely upon disk and tape bond back-up procedures, but currently do not operate or maintain a fully-redundant back-up site, there is an increased risk of service interruption.

Furthermore, we depend on access to the Internet through third-party bandwidth providers in order to operate our business. If we or the facilities of our third-party service providers lose the services of one or more of our bandwidth providers for any reason, we could experience disruption in the delivery of our software or we could be required to retain the services of a replacement bandwidth provider. Our operations also rely heavily on the availability of electricity, which also comes from third-party providers. If we or the facilities of our third-party service providers were to experience a major power outage or if the cost of electricity were to increase significantly, our operations would be harmed.

     If our security measures are breached and unauthorized access is obtained to our customers’ data, our operations may be perceived as not being secure, customers may curtail or stop using our software and we may incur significant liabilities.

Our operations involve the storage and transmission of our customers’ confidential information, and security breaches could expose us to a risk of loss of this information, litigation and possible liability. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to our customers’ data, our reputation will be damaged, our business may suffer and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose potential sales and existing customers.

     If we fail to respond to rapidly changing technological developments or evolving industry standards, our software may become less competitive or obsolete.

Because our software is designed to operate on a variety of network, hardware and software platforms using standard Internet tools and protocols, we will need to continuously modify and enhance our software to keep pace with changes in Internet-related hardware, software, communication, browser and database technologies. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase our research and development expenses. If we are unable to respond in a timely manner to these rapid technological developments, our software may become less marketable and less competitive or obsolete.

     Our use of open source and third-party technology could impose limitations on our ability to commercialize our software.

We incorporate open source software into our software. Although we monitor our use of open source closely, the terms of many open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our software. In such event, we could be required to seek licenses from third parties in order to continue offering our software, to re-engineer our technology or to discontinue offering our software in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business,

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operating results and financial condition. We also incorporate certain third-party technologies, including software programs and algorithms, into our software and may desire to incorporate additional third-party technologies in the future. Licenses to new third-party technology may not be available to us on commercially reasonable terms, or at all.

     If we are unable to protect our intellectual property rights, our competitive position could be harmed and we could be required to incur significant expenses in order to enforce our rights.

To protect our proprietary technology, including our core statistical and mathematic models and our software, we rely on trade secret, patent, copyright, service mark, trademark and other proprietary rights laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. Despite our efforts, the steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation or infringement is uncertain, particularly in countries outside of the United States, including China where a third party conducts a portion of our development activity for us. Further, we do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims. Our current patents and any future patents that may be issued may be contested, circumvented or invalidated. Moreover, the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages, and, as with any technology, competitors may be able to develop similar or superior technologies to our own now or in the future.

Protecting against the unauthorized use of our patents, copyrights, service marks, trademarks and other proprietary rights is expensive, difficult and not always possible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could be costly and divert management resources, either of which could harm our business, operating results and financial condition. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.

We cannot be certain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property. The enforcement of our intellectual property rights also depends on our legal actions against these infringers being successful, but we cannot be sure these actions will be successful, even when our rights have been infringed. Furthermore, effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our services are available or where we have development work performed. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in Internet-related industries are uncertain and still evolving.

     Material defects or errors in our software could harm our reputation, result in significant expense to us and impair our ability to sell our software.

Our software is inherently complex and may contain material defects or errors that may cause it to fail to perform in accordance with customer expectations. Any defects that cause interruptions to the availability of our software could result in lost or delayed market acceptance and sales, require us to pay sales credits or issue refunds to our customers, cause existing customers to not renew their agreements and prospective customers to not purchase our software, divert development resources, hurt our reputation and expose us to other claims for liability. After the release of our software, defects or errors may also be identified from time to time by our internal team and by our customers. These defects or errors may occur in the future. The costs incurred in correcting any material defects or errors in our software may be substantial.

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     Because our long-term success depends, in part, on our ability to expand sales of our software to customers located outside of the United States, our business increasingly will be susceptible to risks associated with international operations.

As part of our strategy, we intend to expand our international operations. We have limited experience operating in international jurisdictions. Our inexperience in operating our business outside of the United States increases the risk that any international expansion efforts that we may undertake will not be successful. In addition, conducting international operations subjects us to new risks that we have not generally faced in the United States. These include:

•  fluctuations in currency exchange rates;

•  unexpected changes in foreign regulatory requirements;

•  localization of our software, including translation of the interface of our software into foreign languages and creation of localized agreements;

•  longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

•  tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our software in certain international markets;

•  difficulties in managing and staffing international operations;

•  potentially adverse tax consequences, including the complexities of international value added tax systems and restrictions on the repatriation of earnings;

•  the burdens of complying with a wide variety of international laws and different legal standards, including local data privacy laws and local consumer protection laws that could regulate retailers’ permitted pricing and promotion practices;

•  political, social and economic instability abroad, terrorist attacks and security concerns in general; and

•  reduced or varied protection of intellectual property rights in some countries.

The occurrence of any of these risks could negatively affect our international business and, consequently, our results of operations.

     Because portions of our software engineering, quality assurance and testing, operations and customer support is provided by a third party in China, our business will be susceptible to risks associated with those operations.

Portions of our engineering, quality assurance and testing, operations and customer support are provided by Sonata Services Limited, or Sonata, a third party located in Shanghai, China. Remotely coordinating a third party in China requires significant management attention and substantial resources, and there can be no assurance that we will be successful in coordinating these activities. Furthermore, if there is a disruption to these operations in China, it will require that substantial management attention and time be devoted to achieving resolution. If Sonata were to stop providing these services or if there was widespread departure of trained Sonata personnel, this could cause a disruption in our product development process, quality assurance and product release cycles and customer support organizations or require us to incur additional costs to replace and train new personnel.

Enforcement of intellectual property rights and contractual rights may be more difficult in China. China has not developed a fully integrated legal system and the array of new laws and regulations may not be sufficient to cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. Accordingly, the enforcement of our contractual arrangements with Sonata, our confidentiality agreements with each Sonata resource dedicated to our work, and the interpretation of the laws governing this relationship are subject to uncertainty.

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     If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and investors’ views of us.

Ensuring that we have internal financial and accounting controls and procedures adequate to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, in fiscal 2009, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by the NASDAQ Stock Market, the Securities and Exchange Commission, or SEC, or other regulatory authorities, which would require additional financial and management resources.

Furthermore, implementing any appropriate changes to our internal control over financial reporting may entail substantial costs in order to modify our existing accounting systems, may take a significant period of time to complete and may distract our officers, directors and employees from the operation of our business. These changes, however, may not be effective in maintaining the adequacy of our internal control over financial reporting, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In addition, investors’ perceptions that our internal control over financial reporting is inadequate or that we are unable to produce accurate financial statements may adversely affect our stock price. Our independent registered public accounting firm has identified two material weaknesses in internal controls with respect to the historical financial statements of TradePoint relating to revenue recognition and the availability of support documentation for its financial statements. After we acquired TradePoint, we integrated the accounting processes associated with TradePoint into our financial and accounting systems. While neither we nor our independent registered public accounting firm have identified deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, there can be no assurance that material weaknesses will not be subsequently identified.

     We may expand through acquisitions of other companies, which may divert our management’s attention and result in unexpected operating difficulties, increased costs and dilution to our stockholders.

Our business strategy may include acquiring complementary software, technologies or businesses. An acquisition may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties in assimilating or integrating the businesses, technologies, services, products, personnel or operations of the acquired companies, especially if the key personnel of the acquired company choose not to work for us, and we may have difficulty retaining the customers of any acquired business due to changes in management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of our business. We also may be required to use a substantial amount of our cash or issue equity securities to complete an acquisition, which could deplete our cash reserves and dilute our existing stockholders and could adversely affect the market price of our common stock. Moreover, we cannot assure you that the anticipated benefits of any acquisition, investment or business relationship would be realized or that we would not be exposed to unknown liabilities.

In addition, an acquisition may negatively impact our results of operations because we may incur additional expenses relating to one time charges, writedowns and/or tax-related expenses. For example, our acquisition of TradePoint in November 2006 resulted in amortization of acquired intangible assets in fiscal 2007 and will generate $967,000 of amortization expense in each of the next three fiscal years and continue to generate expense for seven years thereafter.

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     If one or more of our key strategic relationships were to become impaired or if these third parties were to align with our competitors, our business could be harmed.

We have alliances with a number of third parties whose products, technologies and services complement our software. Many of these third parties also compete with us or work with our competitors. If we are unable to maintain our relationships with the key third parties that currently recommend our software or that provide consulting services on our software implementations or if these third parties were to begin to recommend our competitors’ products and services, our business could be harmed.

     Claims by others that we infringe their proprietary technology could harm our business.

Third parties could claim that our software infringes their proprietary rights. In recent years, there has been significant litigation involving patents and other intellectual property rights, and we expect that infringement claims may increase as the number of products and competitors in our market increases and overlaps occur. In addition, to the extent that we gain greater visibility and market exposure as a public company, we will face a higher risk of being the subject of intellectual property infringement claims. Any claims of infringement by a third party, even those without merit, could cause us to incur substantial defense costs and could distract our management from our business. Furthermore, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from offering our software. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially reasonable terms or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful.

Third parties may also assert infringement claims relating to our software against our customers. Any of these claims may require us to initiate or defend potentially protracted and costly litigation on their behalf, regardless of the merits of these claims, because in certain situations we agree to indemnify our customers from claims of infringement of proprietary rights of third parties. If any of these claims succeeds, we may be forced to pay damages on behalf of our customers, which could materially adversely affect our business.

     Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

A change in accounting standards or practices could have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, on December 16, 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS, No. 123R, Share-Based Payment.  SFAS No. 123R, which we adopted on March 1, 2006, requires that employee stock-based compensation be measured based on its fair value on the grant date and treated as an expense that is reflected in the financial statements over the related service period. As a result, our operating results for fiscal 2007 reflect expenses that are not reflected in prior periods, making it more difficult for investors to evaluate our results of operations for fiscal 2007 relative to prior periods.

     We might require additional capital to support our business growth, and this capital might not be available on acceptable terms, or at all.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new software or enhance our existing software, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings or enter into additional credit agreements to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future

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could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

     Evolving regulation of the Internet may affect us adversely.

As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. For example, we believe increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information could affect our customers’ ability to use and share data, potentially reducing demand for our software and restricting our ability to store and process data for our customers. In addition, taxation of software provided over the Internet or other charges imposed by government agencies or by private organizations for accessing the Internet may also be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based software, which could harm our business, financial condition and operating results.

     We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance efforts.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the NASDAQ Stock Market impose additional requirements on public companies, including enhanced corporate governance practices. For example, the listing requirements for The NASDAQ Global Market provide that listed companies satisfy certain corporate governance requirements relating to independent directors, audit committees, distribution of annual and interim reports, stockholder meetings, stockholder approvals, solicitation of proxies, conflicts of interest, stockholder voting rights and codes of business conduct. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors and board committees or as executive officers and more expensive for us to obtain director and officer liability insurance.

Risks Related to this Offering and Ownership of Our Common Stock

     The trading price of our common stock is likely to be volatile, and you might not be able to sell your shares at or above the initial public offering price.

The trading prices of the securities of technology companies historically have been highly volatile. Further, our common stock has no prior trading history. Factors affecting the trading price of our common stock, many of which are beyond are control, could include:

•  variations in our operating results;

•  announcements of technological innovations, new products and services, acquisitions, strategic alliances or significant agreements by us or by our competitors;

•  recruitment or departure of key personnel;

•  the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

•  changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;

•  market conditions in our industry, the retail industry and the economy as a whole;

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•  price and volume fluctuations in the overall stock market;

•  lawsuits threatened or filed against us;

•  adoption or modification of regulations, policies, procedures or programs applicable to our business; and

•  the expiration of market standoff or contractual lock-up agreements.

In addition, if the market for technology stocks or the stock market in general experiences loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Some companies that have had volatile market prices for their securities have had securities class actions filed against them. A suit filed against us, regardless of its merits or outcome, could cause us to incur substantial costs and could divert management’s attention.

     A market for our securities may not develop or be maintained and our stock price may decline after this offering.

Prior to this offering, there has been no public market for shares of our common stock. Although our common stock will be quoted on The NASDAQ Global Market, an active public trading market for our common stock may not develop or, if it develops, may not be maintained after this offering. For example, NASDAQ imposes certain securities trading requirements, including minimum bid price, minimum number of stockholders, minimum number of trading market makers and minimum market value of publicly traded shares. The initial public offering price may be higher than the trading price of our common stock after this offering. As a result, you could lose all or part of your investment.

     Future sales of shares by existing stockholders, or the perception that such sales may occur, could cause our stock price to decline, even if our business is doing well.

If our existing stockholders, particularly our directors and executive officers and the venture capital funds affiliated with our current and former directors sell substantial amounts of our common stock in the public market, or are perceived by the public market as intending to sell, the trading price of our common stock could decline below the initial public offering price. Based on shares outstanding as of February 28, 2007, upon completion of this offering, we will have outstanding           shares of common stock. Of these shares, only the shares of common stock sold in this offering will be freely tradable, without restriction, in the public market. Our officers, directors, and the holders of substantially all of our common stock have entered into contractual lock-up agreements with the underwriters pursuant to which they have agreed not to sell or otherwise transfer any of their common stock or securities convertible into or exchangeable for shares of common stock for a period through the date approximately 180 days after the date of the final prospectus for this offering. However, Morgan Stanley & Co. Incorporated and Credit Suisse Securities (USA) LLC may permit these holders to sell shares prior to the expiration of the lock-up agreements with the underwriters.

The 180-day restricted period under the lock-up agreements with the underwriters will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. See “Shares Eligible for Future Sale” for a discussion of these and other transfer restrictions.

Based on shares outstanding as of February 28, 2007, after the contractual lock-up agreements pertaining to this offering expire 180 days from the date of this prospectus, or such longer period described above, up to an additional 40,331,446 shares will be eligible for sale in the public market, 22,584,601 of which are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act. In addition, some of these 40,331,446 shares are limited by restrictions on sales related to our right of repurchase on unvested shares.

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Some of our existing stockholders and warrant holders have demand and piggyback rights to require us to register with the SEC up to 27,235,729 shares of our common stock, subject to expiration of the contractual lock-up agreements. If we register these shares of common stock, the stockholders would be able to sell those shares freely in the public market.

The 12,351,742 shares that were subject to outstanding options as of February 28, 2007 will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, the contractual lock-up agreements and Rules 144 and 701 under the Securities Act. The 363,495 shares issuable upon exercise of outstanding warrants will become eligible for sale in the public market to the extent permitted by the contractual lock-up agreements and Rule 144.

After this offering, we intend to register approximately 21,295,826 shares of our common stock that we may issue under our equity plans. Once we register and issue these shares, they can be freely sold in the public market upon issuance, subject to any vesting or contractual lock-up agreements.

If any of these additional shares described are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline. For additional information, see “Shares Eligible for Future Sale.”

     If securities analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities analysts. If no securities analysts commence coverage of our company, the trading price for our stock would suffer. In the event we obtain securities analyst coverage, if one or more of the analysts who covers us downgrades our stock or publishes unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

     Insiders will continue to have substantial control over us after this offering and will be able to influence corporate matters.

Upon completion of this offering, our directors and executive officers and their affiliates will beneficially own, in the aggregate, approximately     % of our outstanding common stock. As a result, these stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us. For information regarding the ownership of our outstanding stock by our executive officers and directors and their affiliates, see “Principal Stockholders.”

     As a new investor, you will experience substantial dilution as a result of this offering and future equity issuances.

The initial public offering price per share is substantially higher than the pro forma net tangible book value per share of our common stock outstanding prior to this offering. As a result, investors purchasing common stock in this offering will experience immediate substantial dilution of $      per share, based on an assumed initial public offering price of $      per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus. In addition, we have issued options and warrants to acquire common stock or preferred stock at prices significantly below the initial public offering price. As of February 28, 2007, there were 12,351,742 shares subject to outstanding options at a weighted average exercise price of $0.99 per share and 363,495 shares subject to outstanding warrants at a weighted average exercise price of $1.91 per share. To the extent outstanding options and warrants are ultimately exercised, there will be further dilution to investors in this offering. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of common stock. For additional information, see “Dilution.”

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     Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders. In addition, our restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our restated certificate of incorporation and amended and restated bylaws, which will be in effect immediately prior to the closing of this offering:

•  authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt;

•  establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

•  require that directors only be removed from office for cause and only upon a majority stockholder vote;

•  provide that vacancies on our board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office;

•  limit who may call special meetings of stockholders;

•  prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders;

•  require supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and amended and restated bylaws; and

•  require advance notification of stockholder nominations and proposals.

For more information regarding these and other provisions, see “Description of Capital Stock — Anti-Takeover Effects of Our Charter and Bylaws and Delaware Law.”

     Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that enhance our operating results or increase the value of your investment.

Our management will have broad discretion to use the net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply the net proceeds of this offering in ways that enhance our operating results or increase the value of your investment. We intend to use a portion of the net proceeds of this offering to repay in full the principal and accrued interest on an outstanding loan, which, as of February 28, 2007, was $10.4 million. We expect to use the remaining net proceeds from this offering for general corporate purposes, including working capital and capital expenditures. You will not have the opportunity to influence our decisions on how to use the net proceeds from this offering.

We do not expect to pay dividends in the foreseeable future.

We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This prospectus includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would” and “could” and similar words or phrases identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•  anticipated trends and challenges in our business and the market in which we operate;

•  our ability to anticipate market needs or develop new or enhanced software to meet those needs;

•  expected adoption of our software;

•  our ability to compete in our industry and innovation by our competitors;

•  the loss of key personnel or qualified technical staff;

•  our ability to protect our confidential information and intellectual property rights;

•  our ability to manage expansion into international markets;

•  our expectations regarding the use of proceeds from this offering;

•  our ability to manage growth;

•  our ability to identify and manage any potential acquisitions successfully; and

•  our ability to obtain any required funding in the future on acceptable terms.

All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some of which are not predictable or within our control. Actual results may differ materially from expected results. See “Risk Factors” for a more complete discussion of these risks, assumptions and uncertainties and for other risks and uncertainties. These risks, assumptions and uncertainties are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. We undertake no obligation to update publicly or revise any forward-looking statements after the date of this prospectus, whether as a result of new information, future events or otherwise, except as required by law.

We obtained the industry, market and competitive position data throughout this prospectus from our own internal estimates and research as well as from industry and general publications and research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions are appropriate, neither that research nor these definitions have been verified by any independent source.

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USE OF PROCEEDS

We estimate that our net proceeds from the sale of the common stock that we are offering will be approximately $      million, assuming an initial public offering price of $      per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses. If the underwriters’ option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $      million. Each $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, the net proceeds to us by approximately $      million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions.

We intend to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on an outstanding loan from Silicon Valley Bank and Gold Hill Venture Lending, which, as of February 28, 2007, was $10.4 million. The loan has an interest rate of 9.5% and matures in July 2010. We borrowed this money in anticipation of the acquisition of TradePoint and used $3.7 million to fund the initial cash portion of the purchase price of TradePoint. We intend to use the remaining net proceeds from this offering for working capital and other general corporate purposes, including to finance our growth, develop new software and fund capital expenditures. Additionally, we may choose to expand our current business through acquisitions of other complementary businesses, products, services or technologies.

The amount and timing of our actual expenditures will depend on numerous factors, including the cash used or generated in our operations, the status of our development efforts, the level of our sales and marketing activities, technological advances and competitive pressures. Therefore, we cannot estimate the amount of the net proceeds from this offering that will be used for any of the purposes described above. Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in short-term, investment grade, interest-bearing securities.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common or preferred stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors, will be subject to compliance with certain covenants under a loan agreement with Silicon Valley Bank and Gold Hill Venture Lending, which restrict or limit our ability to pay dividends, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

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CAPITALIZATION

The following table sets forth the following information as of February 28, 2007:

•  our actual cash, cash equivalents and marketable securities and capitalization;

•  our pro forma cash, cash equivalents and marketable securities and capitalization after giving effect to (1) the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 27,022,234 shares of our common stock and (2) the reclassification of the redeemable convertible preferred stock warrant liability to additional paid-in capital, each upon the closing of this offering; and

•  our pro forma as adjusted cash, cash equivalents and marketable securities and capitalization further reflecting (1) the receipt of the estimated net proceeds from the sale of the           shares of common stock offered in this offering at an assumed initial public offering price of $     , which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus, (2) the use of a portion of the net proceeds of this offering to repay in full the principal and accrued interest on an outstanding loan from Silicon Valley Bank and Gold Hill Venture Lending, which, as of February 28, 2007, was $10.4 million, (3) the expensing of debt issuance and related costs of $485,000 and (4) the filing of our restated certificate of incorporation immediately prior to the closing of this offering.

You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our consolidated financial statements and related notes.

	As of February 28, 2007
							Pro Forma As
	Actual			Pro Forma			Adjusted(1)
				(unaudited)			(unaudited)
	(in thousands)
Cash, cash equivalents and marketable securities	$	25,478		$	25,478		$
Current and long-term debt	$	15,063		$	15,063		$	4,800
Redeemable convertible preferred stock warrant liability		592			—			—
Redeemable convertible preferred stock, $0.001 par value: 23,035,729 shares authorized, 22,822,234 shares issued or outstanding actual; no shares authorized, issued or outstanding pro forma or pro forma as adjusted		49,073			—			—
Stockholders’ (deficit) equity:
Convertible preferred stock, Series A, $0.001 par value: 4,200,000 shares authorized, 4,200,000 shares issued and outstanding actual;           shares authorized, no shares issued or outstanding pro forma;      shares authorized, no shares issued or outstanding pro forma as adjusted		2,071			—			—
Common stock, $0.001 par value: 100,000,000 shares authorized, 12,909,351 shares issued and outstanding actual; 100,000,000 shares authorized, 39,931,585 shares issued and outstanding pro forma;           shares authorized,           shares issued and outstanding pro forma as adjusted		13			40
Additional paid-in capital		7,197			58,906
Accumulated deficit		(67,941	)		(67,941	)		(68,426	)
Total stockholders’ (deficit) equity		(58,660	)		(8,995	)
Total capitalization	$	6,068		$	6,068		$

(1) Each $1.00 increase or decrease in the assumed initial public offering price of $      per share would increase or decrease, respectively, the amount of cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ (deficit) equity and total capitalization by approximately $      million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions payable by us.

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This table excludes the following shares:

•  12,351,742 shares of common stock issuable upon the exercise of options outstanding as of February 28, 2007 at a weighted average exercise price of $0.99 per share;

•  399,861 shares of our common stock that are issued and outstanding but that were subject to a right of repurchase by us as of February 28, 2007 and therefore not included in stockholders’ (deficit) equity pursuant to United States generally accepted accounting principles;

•  363,495 shares of common stock issuable upon the exercise of warrants outstanding as of February 28, 2007 at a weighted average exercise price of $1.91 per share;

•  635,251 shares of common stock reserved as of February 28, 2007 for future grant under our 1999 Equity Incentive Plan; and

•  6,000,000 shares of common stock reserved for future issuance under our 2007 Equity Incentive Plan and 1,000,000 shares of common stock reserved for future issuance under our 2007 Employee Stock Purchase Plan, each of which will become effective on the date of this prospectus and contains a provision that will automatically increase its share reserve each year.

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DILUTION

Our pro forma net tangible book value as of February 28, 2007 was ($19.0) million, or approximately ($0.47) per share. Pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the 40,331,446 shares of our common stock outstanding as of February 28, 2007 after giving effect to (1) the automatic conversion of all outstanding shares of preferred stock into 27,022,234 shares of common stock and (2) the reclassification of the redeemable convertible preferred stock warrant liability to additional paid-in capital, each upon the closing of this offering.

Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after the closing of this offering. After giving effect to our sale of           shares of common stock in this offering at an assumed initial public offering price of $      per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value as of February 28, 2007 would have been $      million, or $      per share. This represents an immediate increase in pro forma net tangible book value of $      per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $      per share to purchasers of common stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share				$
Pro forma net tangible book value per share as of February 28, 2007	$	(0.47	)
Increase in pro forma net tangible book value per share attributable to new investors
Pro forma as adjusted net tangible book value per share after the offering
Dilution in pro forma net tangible book value per share to new investors				$

A $1.00 increase or decrease in the assumed initial public offering price of $      would increase or decrease our pro forma as adjusted net tangible book value per share after the offering by $      per share and the dilution in pro forma net tangible book value per share to new investors by $      per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

The following table presents on a pro forma basis as of February 28, 2007, after giving effect to the automatic conversion of all outstanding shares of preferred stock into an aggregate of 27,022,234 shares of common stock upon the closing of this offering, the differences between our existing stockholders and the purchasers of shares in this offering with respect to the number of shares purchased from us, the total consideration paid and the average price paid per share:

	Shares Purchased					Total Consideration						Average Price
	Number		Percent			Amount			Percent			per Share
Existing stockholders		40,331,446			%	$	57,924,592	(1)			%	$	1.44
New stockholders
Totals				100.0	%					100.0	%

(1) Includes $4,084,924 of consideration from the issuance of 2,149,960 shares of common stock in connection with our acquisition of TradePoint. See note 3 of the notes to our consolidated financial statements for a description of how we valued the consideration received in connection with the acquisition.

A $1.00 increase or decrease in the assumed initial public offering price of $      per share would increase or decrease, respectively, total consideration paid by new stockholders and total consideration paid by all stockholders by approximately $      million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

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If the underwriters’ over-allotment option is exercised in full, the following will occur:

•  the number of shares of common stock held by existing stockholders will decrease to approximately     % of the total number of shares of our common stock outstanding after this offering; and

•  the number of shares held by new investors will increase to approximately     % of the total number of shares of our common stock outstanding after this offering.

As of February 28, 2007, there were options outstanding to purchase a total of 12,351,742 shares of common stock at a weighted average exercise price of $0.99 per share and warrants outstanding to purchase a total of 363,495 shares of common stock at a weighted average exercise price of $1.91 per share. To the extent outstanding options and warrants are exercised, there will be further dilution to new investors.

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SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, related notes and other financial information included in this prospectus. The selected consolidated financial data in this section are not intended to replace our consolidated financial statements and are qualified in their entirety by our consolidated financial statements and related notes included in this prospectus.

We derived the selected consolidated financial data for fiscal 2005, fiscal 2006 and fiscal 2007 and as of February 28, 2006 and 2007 from our audited consolidated financial statements and related notes that are included elsewhere in this prospectus. We derived the selected consolidated financial data for fiscal 2003 and fiscal 2004, and as of February 28, 2003, 2004 and 2005, from our audited consolidated financial statements and related notes that are not included in this prospectus. Our historical results are not necessarily indicative of future results.

	Years Ended February 28,
	2003			2004			2005			2006			2007
	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue	$	8,423		$	9,470		$	19,537		$	32,539		$	43,485
Cost of revenue(1)(2)		9,018			8,505			8,881			12,584			14,230
Gross profit (loss)		(595	)		965			10,656			19,955			29,255
Operating expenses:
Research and development(2)		8,319			8,667			9,737			11,021			15,340
Sales and marketing(2)		7,041			5,334			8,105			10,170			12,108
General and administrative(2)		1,523			1,358			1,798			2,388			2,673
Amortization of acquired intangible assets		—			—			—			—			118
Total operating expenses		16,883			15,359			19,640			23,579			30,239
Loss from operations		(17,478	)		(14,394	)		(8,984	)		(3,624	)		(984	)
Other income (expense), net		(344	)		(481	)		(284	)		850			(480	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(17,822	)		(14,875	)		(9,268	)		(2,774	)		(1,464	)
Provision for income taxes		—			—			8			14			52
Loss before cumulative effect of change in accounting principle		(17,822	)		(14,875	)		(9,276	)		(2,788	)		(1,516	)
Cumulative effect of change in accounting principle		—			—			—			(54	)		—
Net loss		(17,822	)		(14,875	)		(9,276	)		(2,734	)		(1,516	)
Accretion to redemption value of preferred stock		22			30			32			32			32
Net loss attributable to common stockholders	$	(17,844	)	$	(14,905	)	$	(9,308	)	$	(2,766	)	$	(1,548	)
Net loss per common share, basic and diluted	$	(2.19	)	$	(1.84	)	$	(1.15	)	$	(0.31	)	$	(0.14	)
Shares used in computing basic and diluted net loss per common share		8,130			8,103			8,078			8,899			11,061
Pro forma net loss per common share, basic and diluted (unaudited)(3)													$	(0.03	)
Shares used in computing pro forma basic and diluted net loss per common share (unaudited)(3)														38,073

(1) Includes $203 of amortization of acquired intangible assets in fiscal 2007.

(footnotes continue on next page)

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(2) Includes stock-based compensation expense as follows:

	Year Ended February 28,
	2003		2004		2005		2006		2007
	(in thousands)
Cost of revenue	$	—	$	—	$	—	$	—	$	41
Research and development		12		21		14		6		62
Sales and marketing		20		18		11		1		74
General and administrative		10		6		6		64		156
Total stock-based compensation expense	$	42	$	45	$	31	$	71	$	333

(3) See note 1 of the notes to our consolidated financial statements for a description of how we compute pro forma basic and diluted net loss per common share.

	As of February 28,
	2003			2004			2005			2006			2007
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	12,269		$	6,762		$	11,594		$	14,771		$	25,478
Working capital (deficit)		2,910			(2,227	)		(8,593	)		(10,731	)		(66	)
Total assets		18,081			14,857			19,299			21,016			56,795
Deferred revenue, current and long-term		4,516			10,664			24,536			25,124			42,172
Current and long-term debt		4,215			1,769			846			2,219			15,063
Redeemable convertible preferred stock warrant liability		—			—			—			214			592
Redeemable convertible preferred stock		42,168			49,179			49,211			48,976			49,073
Stockholders’ deficit		(36,697	)		(51,379	)		(60,595	)		(62,529	)		(58,660	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. Our fiscal year ends on the last day of February; fiscal 2007, for example, refers to our fiscal year ended February 28, 2007. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in “Risk Factors” included elsewhere in this prospectus.

Overview

We are the leading provider of CDM software. Our software enables retailers and CP companies to define merchandising and marketing strategies based on a scientific understanding of consumer behavior and makes actionable pricing, promotion and other merchandising and marketing recommendations to achieve revenue, profitability and sales volume objectives. We deliver our applications by means of a SaaS model, which allows us to capture and analyze the most recent retailer and market-level data and rapidly enhance our software to address our customers’ ever-changing merchandising and marketing needs. Our CDM software is comprised of a suite of integrated applications — DemandTec Price, DemandTec Promotion, DemandTec Markdown and DemandTec TradePoint. We were incorporated in November 1999 and began selling our software in fiscal 2001. Our revenue has grown from $19.5 million in fiscal 2005 to $32.5 million in fiscal 2006 and to $43.5 million in fiscal 2007. Our operating expenses have also increased significantly during these same periods. We have incurred losses to date and had an accumulated deficit of approximately $67.9 million at February 28, 2007.

We sell our software to retailers and CP companies under agreements with initial terms that generally are one to three years in length and provide a variety of services associated with our customers’ use of our software. The revenue we generate from each agreement is recognized ratably over the term of the agreement. Our revenue growth depends on our attracting new customers and renewing agreements with existing customers. Our ability to maintain or increase our rate of growth will be directly affected by the continued acceptance of our software in the marketplace, as well as the timing, size and term length of our customer contracts.

At February 28, 2007, we had agreements with initial terms of one year or longer with 24 retail customers and 103 CP companies. Retail customers accounted for substantially all of our revenue in fiscal 2007. Our agreements with retailers are large contracts that generally are two to three years in length. They had an average annual value of approximately $2.4 million in fiscal 2007, an increase from $1.6 million in fiscal 2006. The annual value for each retail customer agreement is largely related to the size of the retailer, and therefore this average annual value can fluctuate period to period depending upon the size of new retail customers. Additionally, our new retail customer agreements can create significant variability in the total annual value of new customer agreements signed in any given fiscal quarter. Our agreements with CP companies are principally one year in length and much smaller, with most less than $50,000 in annual contract value in fiscal 2007. Historically, the agreements we have signed in our fiscal first quarter have had an aggregate annual contract value less than the agreements signed in the preceding fiscal fourth quarter. We do not expect this trend to change in the near term. In addition, a significant percentage of our new customer agreements within a given fiscal quarter are usually entered into during the last month, weeks or even days of that quarter.

We are headquartered in San Carlos, California, and have sales and marketing offices in North America, Europe and Japan. We sell our software through our direct sales force and receive a number of customer prospect introductions through third-parties such as system integrators and a data syndication company. In fiscal 2007, 94% of our revenue was attributable to sales of our software to companies located in the United States. Over the next two fiscal years, we intend to expand our international operations by further developing our relationships with third-party systems integrators and by expanding our operations, professional services and direct sales force abroad, thereby incurring additional operating expenses and capital expenditures. Our ability to achieve profitability will also be affected by our revenue as well as our operating expenses associated with growing our business. Our largest

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category of operating expenses is research and development expenses, and the largest component of our operating expenses is personnel costs.

Sources of Revenue

We derive all of our revenue from customer agreements that cover use of our software and various related services associated with our customers’ use of our software. We recognize all revenue ratably over the term of the agreement.

Our agreements are non-cancelable, but customers typically have the right to terminate their agreement for cause if we materially breach our obligations under the agreement and, in certain situations, may have the ability to extend the duration of their agreement on pre-negotiated terms. We invoice our customers in accordance with contractual terms, which generally provide that our customers are invoiced in advance for annual use of our software and for services other than implementation and training services. We provide implementation services on a time and materials basis and invoice our customers monthly in arrears. We also invoice in arrears for our training classes on implementing and using our software on a per person, per class basis. Our payment terms typically require our customers to pay us within 30 days of the invoice date. We include amounts invoiced in accounts receivable until collected and in deferred revenue until recognized as revenue.

Cost of Revenue and Operating Expenses

Cost of Revenue

Cost of revenue includes expenses related to data center costs, including depreciation expenses associated with computer equipment and software, compensation and related expenses of operations, technical customer support and professional services personnel, amortization of acquired intangible assets and allocated overhead. We have contracts with two third parties for the use of their data center facilities, and our data center costs principally consist of the amounts we pay to these third parties for rack space, power and similar items. Amortization of intangible assets relates to developed technology acquired in the TradePoint acquisition. We are amortizing the acquired developed technology over five years on a straight-line basis, which results in quarterly amortization expense of approximately $153,000, assuming no future impairment. We allocate overhead costs, such as rent and occupancy costs, employee benefits, information management costs, and legal and other costs to all departments based on headcount. As a result, we include indirect overhead expenses in cost of revenue and each operating expense category. We expect that, in the future, cost of revenue will increase in absolute dollars but decrease as a percentage of revenue as we spread our data center infrastructure and personnel costs over a larger customer base.

Research and Development

Research and development expenses include compensation and related expenses for our research, product management and software development personnel and allocated overhead costs. We devote substantial resources to extending our existing software applications as well as to developing new software. We intend to continue to invest significantly in our research and development efforts because we believe these efforts are essential to maintaining our competitive position. We expect that, in the future, research and development expenses will increase in absolute dollars, but decrease as a percentage of revenue.

Sales and Marketing

Sales and marketing expenses include compensation and related expenses for our sales and marketing personnel, including commissions and incentives, marketing programs such as product marketing, events, corporate communications and other brand building expenses, and allocated overhead. We expect that, in the future, sales and marketing expenses will increase in absolute dollars as we hire additional personnel and spend more on marketing programs, but will remain relatively constant or decrease slightly as a percentage of revenue.

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General and Administrative

General and administrative expenses include compensation and related expenses for our executive, finance and accounting, human resources, legal and information management personnel, third-party professional services fees, other corporate expenses and overhead not allocated to cost of revenue, research and development, or sales and marketing. Third-party professional services primarily include outside legal, audit and tax-related consulting costs. We expect that in fiscal 2008 and for the near term thereafter general and administrative expenses will increase in both absolute dollars and as a percentage of revenue as we incur additional costs associated with being a public company. We expect that, thereafter, general and administrative expenses will increase in absolute dollars but remain relatively constant or decrease slightly as a percentage of revenue.

Amortization of Acquired Intangible Assets

In November 2006, we acquired TradePoint. The aggregate purchase price was approximately $9.8 million, which consisted of $3.7 million in cash, $4.1 million in our common stock, $1.8 million in deferred payments and $219,000 of transaction costs. In this acquisition, we purchased intangible assets related to customer relationships, a trade name and non-compete covenants. We are amortizing these acquired intangible assets over three to ten years on a straight-line basis, which, absent any impairment, will result in quarterly amortization expense of approximately $90,000 for the next several quarters and declining amounts thereafter.

Other Income (Expense), Net and Cumulative Effect of Change in Accounting Principle

Other Income (Expense), Net

Other income (expense), net includes interest income on our cash balances, interest expense on our outstanding debt, and losses or gains on conversions of non-U.S. dollar transactions into U.S. dollars. We have historically invested a majority of our cash in money market funds. In fiscal 2006 and fiscal 2007, other income (expense), net included the impact of recording our outstanding preferred stock warrants at fair value under SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, or SFAS No. 150, as described below.

Cumulative Effect of Change in Accounting Principle

On June 29, 2005, the FASB issued Staff Position 150-5, Issuer’s Accounting under SFAS No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable, or Staff Position 150-5. Staff Position 150-5 affirms that warrants of this type are subject to the requirements in SFAS No. 150, regardless of the timing of the redemption feature or the redemption price, and requires us to classify our preferred stock warrants as liabilities and adjust them to fair value at the end of each reporting period. We adopted Staff Position 150-5 and accounted for the cumulative effect of change in accounting principle as of September 1, 2005. Upon adoption, we recorded a cumulative credit of $54,000 reflecting the difference between the fair value of the warrants on that date as compared to the fair value of the warrants at the date of issuance, and, for the remainder of fiscal 2006, we recorded an additional expense of $1,000 to reflect the increase in fair value of these warrants between September 1, 2005 and February 28, 2006. In fiscal 2007, we recorded an additional expense of $126,000 in other income (expense), net to reflect the increase in fair value of these warrants during fiscal 2007. In May 2006, we issued additional warrants to purchase 75,000 shares of Series C redeemable convertible preferred stock and recognized additional expense of $80,000 in other income (expense), net to reflect the increase in fair value of these newly issued warrants from May 2006 through the end of fiscal 2007. Following the conversion of our outstanding convertible preferred stock into common stock upon the completion of this offering, we will reclassify the liability associated with these warrants to additional paid-in capital and these warrants will no longer be subject to fair value remeasurement.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements, as well as the

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reported amounts of revenue and expenses during the periods presented. We believe that these estimates and judgments are reasonable based upon information available to us at the time that these estimates and judgments were made. To the extent that there are material differences between these estimates and actual results, our consolidated financial statements could be adversely affected.

We believe that of our significant accounting policies, which are described in note 1 of the notes to our consolidated financial statements, the following accounting polices involve the greatest degree of judgment and complexity and have the potential for the greatest impact on our consolidated financial statements. Accordingly, we believe these policies are the most critical in fully understanding and evaluating our reported financial results.

Revenue Recognition

We generate revenue from fees under agreements with initial terms that are generally one to three years in length. All of our agreements contain multiple elements, which include the use of our software, hosting services and professional services, as well as maintenance and customer support. Professional services consist of fees generated for implementation, training, data integration and modeling and analytical services related to our customers’ use of our software.

Because we provide our software as a service, we follow the provisions of SEC Staff Accounting Bulletin, or SAB, No. 104, Revenue Recognition, and Emerging Issues Task Force, or EITF, Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. We recognize revenue when there is persuasive evidence of an arrangement, we have provided the customer access to our software, the collection of the fee is probable and the amount of fees to be paid by the customer is fixed or determinable. In applying the provisions of EITF Issue No. 00-21, we have determined that we do not have objective and reliable evidence of fair value of each element of our software offering. As a result, the elements within our agreements do not qualify for treatment as separate units of accounting. Therefore, we account for all fees received under our agreements as a single unit of accounting and recognize them ratably over the term of the related agreement, commencing upon the later of the agreement start date or the date we provide the customer access to our software.

Deferred Commissions

We capitalize certain commission costs directly related to the acquisition of a customer contract in accordance with FASB Technical Bulletin 90-1, Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts. Although we pay commissions on signed customer agreements shortly after we receive customer payment of our fees, for accounting purposes, we defer the commissions and amortize them as sales and marketing expense over the terms of the related customer agreement, generally one to three years. The deferred commission amounts are recoverable through their accompanying future revenue streams under the non-cancellable customer agreements. We believe this is the appropriate method of accounting since the commission charges are so closely related to the revenue from the customer agreements that they should be recorded as an asset and charged to expense over the same period that we recognize the revenue. Gross costs capitalized for fiscal 2005, 2006 and 2007 were approximately $1.9 million, $918,000 and $2.3 million, respectively. Capitalized commission costs expensed in fiscal 2005, 2006 and 2007 were approximately $956,000, $1.2 million and $1.5 million, respectively.

Stock-Based Compensation

Prior to March 1, 2006, we accounted for stock-based employee and director compensation arrangements using the intrinsic-value method in accordance with the provisions and related interpretations of Accounting Principles Board, or APB, Opinion No. 25, Accounting for Stock Issued to Employees, and elected to follow the disclosure-only alternative prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure.

APB No. 25 required companies granting options to record deferred stock-based compensation equal to the difference, if any, on the date of grant between the aggregate fair value of stock underlying each option and the exercise price of that option and amortize the difference over the respective vesting periods of the option.

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Effective March 1, 2006, we adopted the fair value provisions of SFAS No. 123R, using the prospective transition method, which required us to apply the provisions of SFAS No. 123R only to new awards granted, and to awards modified, repurchased or cancelled after the adoption date. Under this transition method, we began recognizing stock-based compensation expense under SFAS No. 123R on March 1, 2006 based on the grant date fair value of stock options granted or modified on or after March 1, 2006. We use the Black-Scholes option pricing model to determine the fair value of our stock option grants. This model requires judgment in determining factors such as our common stock fair value on the date of grant, the expected volatility of the price of our common stock and the expected term of the options.

As a result of adopting SFAS No. 123R on March 1, 2006, our net loss for fiscal 2007 was $202,000 higher than if we had continued to account for stock-based compensation under APB No. 25. Basic and diluted net loss per common share for fiscal 2007 were each $0.02 higher than if we had continued to account for stock-based compensation under APB No. 25.

We account for options and warrants granted to consultants and other non-employees in accordance with EITF Issue No. 96-18, Accounting for Equity Investments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, and value them using the Black-Scholes method prescribed by SFAS No. 123. These options and warrants are subject to periodic revaluation over the respective vesting periods.

Goodwill and Intangible Assets

We record as goodwill the excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we do not amortize goodwill, but will perform an annual impairment review of our goodwill during our third quarter, or more frequently if indicators of potential impairment arise. Following the criteria of SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, and SFAS No. 142, we have determined that we have a single operating segment and consequently evaluate goodwill for impairment based on an evaluation of the fair value of our company as a whole.

We record acquired intangible assets at their respective estimated fair values at the date of acquisition. Our acquired intangible assets are being amortized using the straight-line method over their estimated useful lives ranging from three to ten years.

Impairment of Long-Lived Assets

We evaluate the recoverability of our long-lived assets, including acquired intangible assets and property and equipment, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. We measure recoverability of the asset by comparison of its carrying amount to the future undiscounted cash flows we expect the asset to generate. If we consider the asset to be impaired, we measure the amount of any impairment as the difference between the carrying value and the fair value of the impaired asset. We observed no impairment indicators through February 28, 2007.

We evaluate the remaining useful lives of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining estimated amortization period. We observed no useful life indicators warranting a change to estimated amortization periods through February 28, 2007.

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Results of Operations

The following table sets forth selected consolidated statements of operations data as a percentage of revenue for each of the periods indicated.

	Year Ended February 28,
	2005			2006			2007
Revenue		100	%		100	%		100	%
Cost of revenue		45			39			33
Gross margin		55			61			67
Operating expenses:
Research and development		50			34			35
Sales and marketing		42			31			28
General and administrative		9			7			6
Amortization of acquired intangible assets		—			—			—
Total operating expenses		101			72			69
Loss from operations		(46	)		(11	)		(2	)
Other income (expense), net		(2	)		2			(1	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(48	)		(9	)		(3	)
Provision for income taxes		—			—			—
Loss before cumulative effect of change in accounting principle		(48	)		(9	)		(3	)
Cumulative effect of change in accounting principle		—			—			—
Net loss		(48	)		(9	)		(3	)
Accretion to redemption value of preferred stock		—			—			—
Net loss attributable to common stockholders		(48	)%		(9	)%		(3	)%

Revenue

	Year Ended February 28,
	2005		2006		2007
	(in thousands)
Revenue	$	19,537	$	32,539	$	43,485

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 revenue increased approximately $10.9 million, or 34%, over fiscal 2006 revenue. The revenue increase was primarily due to an $11.1 million increase in revenue from customers that did not contribute any revenue in prior years, which we refer to as new customers. This increase was offset by a $200,000 decline in revenue from customers that had contributed revenue in prior years, which we refer to as existing customers. Fiscal 2007 new customer revenue included approximately $1.3 million related to our TradePoint acquisition, and the balance resulted from new retail customers purchasing our software. The fiscal 2007 decline in existing customer revenue resulted from a decrease of approximately $8.2 million in revenue related to two customers that did not renew their agreements in the fourth quarter of fiscal 2006 offset by an increase in existing customer revenue of approximately $8.0 million associated with customers who contributed to revenue throughout fiscal 2007 but only for a portion of fiscal 2006.

In fiscal 2007, revenue from customers located outside the United States represented 6% of revenue as compared to 34% in fiscal 2006. This fiscal 2007 decrease related to the two customers described above that did not renew their agreements, each of which was located outside of the United States. In fiscal 2007, revenue from

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Safeway Inc. accounted for 11.8% of our revenue. In fiscal 2006, revenue from Sainsbury plc, Best Buy Stores, L.P., Safeway Inc. and RadioShack Corporation accounted for 21.2%, 12.4%, 11.3% and 10.6% of our revenue, respectively. No other customer accounted for more than 10% of our revenue in either of these periods. Sainsbury plc was one of the two customers that did not renew their agreements in the fourth quarter of fiscal 2006.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 revenue increased approximately $13.0 million, or 67%, over fiscal 2005 revenue. The revenue increase was primarily due to an increase in existing customer revenue, which accounted for approximately $10.6 million of the overall increase. The increase in fiscal 2006 existing customer revenue resulted primarily from customers that contributed to revenue throughout fiscal 2006 but only for a portion of fiscal 2005, which represented approximately $8.1 million of the fiscal 2006 existing customer revenue increase. New customer revenue, primarily from retail customers, accounted for approximately $2.4 million of the overall increase in fiscal 2006.

In fiscal 2006, revenue from customers located outside the United States represented 34% of revenue as compared to 48% in fiscal 2005. This fiscal 2006 decrease primarily reflects the fiscal 2006 increase in revenue from customers located in the United States. In fiscal 2005, revenue from Sainsbury plc, H.E.B. Grocery Company, L.P. and Best Buy Stores, L.P. accounted for 36.5%, 10.2% and 10.1% of our revenue, respectively. No other customer accounted for more than 10% of our revenue in fiscal 2005.

Cost of Revenue

	Year Ended February 28,
	2005			2006			2007
	(dollars in thousands)
Revenue	$	19,537		$	32,539		$	43,485
Cost of revenue		8,881			12,584			14,230
Gross profit		10,656			19,955			29,255
Gross margin		55	%		61	%		67	%

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 cost of revenue increased $1.6 million, or 13%, from fiscal 2006 cost of revenue. This increase was due primarily to personnel costs, which increased approximately $2.4 million, and depreciation expense, which increased approximately $450,000, offset by third-party data center costs, which decreased approximately $1.7 million. In addition, amortization of intangible assets acquired in the TradePoint acquisition increased cost of revenue by $203,000 in fiscal 2007.

Personnel costs increased in fiscal 2007 primarily as a result of increased headcount and use of third-party contractors in our professional services organization. Professional services headcount increased to 44 at February 28, 2007 from 37 at February 28, 2006, causing most of an overall increase in payroll expenses of approximately $1.7 million. During fiscal 2007, we increased the use of third-party contractors in our customer implementations, which resulted in third-party contractor expense increasing approximately $600,000.

Depreciation expense increased and data center costs decreased in fiscal 2007 due to our completing our transition to a new third-party data center provider in June 2006 where we became responsible for the hardware and software platform used to deliver our software to our customers. As a result, our third-party data center costs decreased significantly while depreciation expense increased because of the increase in capital expenditures associated with the procurement of hardware and software for our new third-party data center. In fiscal 2007, our capital expenditures were approximately $2.3 million and were largely associated with our move to our new third-party data center.

The amortization of intangible assets relates to acquired developed technology from our TradePoint acquisition that is being amortized to cost of revenue.

Stock-based compensation included in cost of revenue was approximately $41,000 in fiscal 2007. There was no stock-based compensation included in cost of revenue in fiscal 2006.

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Our gross margin increased to 67% in fiscal 2007 from 61% in fiscal 2006 predominantly due to our ability to control our new third-party data center costs and spread them across a larger base of customers. We expect that our gross margins may continue to improve in the future.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 cost of revenue increased $3.7 million, or 42%, from fiscal 2005 cost of revenue. This increase was due to third-party data center costs, which increased approximately $1.8 million, and personnel costs, which increased approximately $1.4 million.

Third-party data center costs increased as a result of new customers and expanded use of hosting services by our existing customers, which led to the overall expansion in our business in fiscal 2006. Personnel costs increased largely as a result of payroll expenses, which increased approximately $800,000, and third-party contractor expense, which increased approximately $600,000. Payroll expenses increased due to increased salary and benefit costs as headcount in our cost of revenue departments remained relatively constant in fiscal 2006 and fiscal 2005. In fiscal 2006, our professional services organization utilized personnel from third-party organizations in our customer implementations more frequently resulting in increased third-party contractor expense.

Research and Development Expenses

	Year Ended February 28,
	2005			2006			2007
	(dollars in thousands)
Research and development	$	9,737		$	11,021		$	15,340
Percent of revenue		50	%		34	%		35	%

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 research and development expenses increased $4.3 million, or 39%, from fiscal 2006 research and development expenses primarily due to increased personnel costs and allocated overhead. Personnel costs increased as a result of increased headcount and third-party contract development expenses. Research and development headcount increased to 89 at February 28, 2007 from 58 at February 28, 2006, which resulted in increased payroll expenses of approximately $2.9 million. Third-party contract development expenses increased approximately $1.0 million, primarily due to increased off-shore contract development activities. Allocated overhead expenses increased approximately $345,000 as a result of increased headcount. Stock-based compensation included in research and development expenses was approximately $62,000 in fiscal 2007 and $6,000 in fiscal 2006.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 research and development expenses increased $1.3 million, or 13%, from fiscal 2005 research and development expenses almost solely due to increased personnel costs. Personnel costs increased as a result of salary and benefit costs, which increased approximately $640,000, and third-party contract development expenses, which increased approximately $710,000, associated with increased off-shore contract development activities. Headcount increased to 58 employees at February 28, 2007 from 50 employees at February 28, 2006. Stock-based compensation included in research and development expenses was approximately $14,000 in fiscal 2005.

Sales and Marketing Expenses

	Year Ended February 28,
	2005			2006			2007
	(dollars in thousands)
Sales and marketing	$	8,105		$	10,170		$	12,108
Percent of revenue		42	%		31	%		28	%

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 sales and marketing expenses increased $1.9 million, or 19%, from fiscal 2006 sales and marketing expenses primarily as a result of personnel costs, travel and entertainment expenses, and marketing program expenses. Personnel costs increased approximately $1.1 million due to higher salaries, amortization of commission expenses, and benefit expenses associated with our sales organization.

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Travel and entertainment expenses increased approximately $330,000 associated with our expanding customer base. Marketing program expenses increased approximately $280,000 due to increased expenses associated with trade shows and events. Stock-based compensation included in sales and marketing expenses was $74,000 in fiscal 2007 and $1,000 in fiscal 2006.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 sales and marketing expenses increased $2.1 million, or 25%, over fiscal 2005 sales and marketing expenses, primarily due to increased personnel costs, travel and entertainment expenses, and marketing program expenses. Personnel costs increased approximately $975,000 due to headcount increases primarily in our sales organization, which grew to 24 employees at February 28, 2006 from 16 employees at February 28, 2005. Travel and entertainment expenses increased approximately $440,000 as a result of increased sales headcount and our expanding customer base. Marketing program expenses increased approximately $360,000 from increased expense associated with trade shows and events. Stock-based compensation included in sales and marketing expenses was approximately $11,000 in fiscal 2005.

General and Administrative Expenses

	Year Ended February 28,
	2005			2006			2007
	(dollars in thousands)
General and administrative	$	1,798		$	2,388		$	2,673
Percent of revenue		9	%		7	%		6	%

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 general and administrative expenses increased approximately $285,000, or 12%, over fiscal 2006 general and administrative expenses, primarily due to increased personnel costs associated with headcount increases. Headcount increased to 21 at February 28, 2007 from 17 at February 28, 2006 resulting in higher salary and benefit costs. Stock-based compensation included in general and administrative expenses was $156,000 and $64,000 in fiscal 2007 and fiscal 2006, respectively.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 general and administrative expenses increased $590,000, or 33%, over fiscal 2005 general and administrative expenses, primarily due to increased personnel expenses, third-party professional services expenses, and travel and entertainment expenses. Personnel costs increased by approximately $250,000 as a result of higher salary and benefit costs, as headcount remained constant at 17 at February 28, 2005 and at February 28, 2006. Third-party professional services costs increased by approximately $168,000 because of higher legal, accounting and tax consulting fees. Travel and entertainment expenses increased by approximately $108,000 due to increased travel and company events in fiscal 2006. Stock-based compensation included in general and administrative expenses was approximately $6,000 in fiscal 2005.

Amortization of Acquired Intangible Assets

	Year Ended February 28,
	2005		2006		2007
	(dollars in thousands)
Amortization of acquired intangible assets	$	—	$	—	$	118
Percent of revenue		—		—		0.3	%

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 amortization of acquired intangible assets resulted from our acquisition of TradePoint. In fiscal 2007, an additional $203,000 of amortization of acquired intangible assets was included in cost of revenue.

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Other Income (Expense), Net

	Year Ended February 28,
	2005			2006			2007
	(in thousands)
Interest income	$	123		$	385		$	735
Interest expense		(216	)		(194	)		(1,091	)
Other income (expense)		(191	)		659			(124	)
Other income (expense), net	$	(284	)	$	850		$	(480	)

Fiscal 2007 Compared to Fiscal 2006.  Fiscal 2007 other income (expense), net decreased $1.3 million from fiscal 2006 other income (expense), net. This decrease was due to higher interest expense and other expense offset by an increase in interest income. Interest expense increased $897,000 because of an increased level of debt outstanding during 2007. We increased our line of credit and bank loans to a total of $13.0 million as of February 28, 2007 from $2.2 million as of February 28, 2006, principally to support our acquisition of TradePoint. Other income (expense) decreased $783,000 in fiscal 2007 from fiscal 2006 because fiscal 2006 included a one-time gain of $750,000 on the sale of fixed assets. In addition, our adoption of FASB Staff Position 150-5, Issuer’s Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable, required us to classify our preferred stock warrants as liabilities and record the difference in fair value each period as an expense to other income (expense). Interest income increased $350,000 largely because of higher invested cash balances resulting from cash generated from operations as well as cash from our increased bank loans and line of credit.

Fiscal 2006 Compared to Fiscal 2005.  Fiscal 2006 total other income (expense), net increased $1.1 million over fiscal 2005 other income (expense), net due primarily to the $750,000 gain on sale of fixed assets discussed above and increased interest income of $262,000 from higher invested cash balances in fiscal 2006.

Provision for Income Taxes

Since inception, we have incurred annual operating losses and, accordingly, have not recorded a provision for income taxes for any of the periods presented other than provisions for minimum and foreign income taxes. As of February 28, 2007, we had net operating loss carryforwards for federal and state income tax purposes of approximately $64.0 million and $42.0 million, respectively. We also had federal and state research and development tax credit carryforwards of approximately $2.8 million and $2.3 million, respectively. Realization of deferred tax assets depends upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, we have offset substantially all of our net deferred tax assets by a valuation allowance. If not utilized, our federal net operating loss and tax credit carryforwards will begin to expire in 2019, and our state net operating losses will begin to expire in 2009. Our state tax credit carryforwards will carry forward indefinitely if not utilized. While not currently subject to an annual limitation, the utilization of these carryforwards may become subject to an annual limitation because of provisions in the Internal Revenue Code of 1986, as amended, that are applicable if we experience an “ownership change,” which may occur, for example, as a result of this offering or other issuances of stock.

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Quarterly Results of Operations

The following table sets forth our unaudited quarterly consolidated statements of operations data for each of the eight quarters of fiscal 2006 and 2007. In management’s opinion, we have prepared the data on the same basis as the audited consolidated financial statements included elsewhere in this prospectus and the data reflect all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our data. The results of historical periods are not necessarily indicative of the results of operations for any future period.

	For the Three Months Ended
	May 31,			Aug. 31,			Nov. 30,			Feb. 28,			May 31,			Aug. 31,			Nov. 30,			Feb. 28,
	2005			2005			2005			2006			2006			2006			2006			2007
	(in thousands, except per share data)
Revenue	$	6,001		$	7,346		$	9,376		$	9,816		$	10,066		$	10,447		$	10,673		$	12,299
Cost of revenue		2,781			3,176			3,336			3,291			3,320			3,102			3,274			4,534
Gross profit		3,220			4,170			6,040			6,525			6,746			7,345			7,399			7,765
Operating expenses:
Research and development		2,657			2,660			2,704			3,000			3,229			3,582			3,786			4,743
Sales and marketing		2,443			2,421			2,462			2,844			2,841			2,898			2,929			3,440
General and administrative		463			611			624			690			533			672			719			749
Amortization of acquired intangible assets		—			—			—			—			—			—			30			88
Total operating expenses		5,563			5,692			5,790			6,534			6,603			7,152			7,464			9,020
Income (loss) from operations		(2,343	)		(1,522	)		250			(9	)		143			193			(65	)		(1,255	)
Other income (expense), net		784			(55	)		27			94			122			(79	)		(231	)		(292	)
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle		(1,559	)		(1,577	)		277			85			265			114			(296	)		(1,547	)
Provision for (benefit from) income taxes		4			4			4			2			(10	)		(4	)		18			48
Income (loss) before cumulative effect of change in accounting principle		(1,563	)		(1,581	)		273			83			275			118			(314	)		(1,595	)
Cumulative effect of change in accounting principle		—			—			(54	)		—			—			—			—			—
Net income (loss)		(1,563	)		(1,581	)		327			83			275			118			(314	)		(1,595	)
Accretion to redemption value of preferred stock		8			8			8			8			8			8			8			8
Net income (loss) attributable to common stockholders	$	(1,571	)	$	(1,589	)	$	319		$	75		$	267		$	110		$	(322	)	$	(1,603	)
Net income (loss) per common share, basic	$	(0.18	)	$	(0.18	)	$	0.04		$	0.01		$	0.03		$	0.01		$	(0.03	)	$	(0.12	)
Net income (loss) per common share, diluted	$	(0.18	)	$	(0.18	)	$	0.01		$	0.00		$	0.01		$	0.00		$	(0.03	)	$	(0.12	)

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The following table sets forth selected consolidated statements of operations data as a percentage of revenue for each of the periods indicated.

	For the Three Months Ended
	May 31,			Aug. 31,			Nov. 30,			Feb. 28,			May 31,			Aug. 31,			Nov. 30,			Feb. 28,
	2005			2005			2005			2006			2006			2006			2006			2007
Revenue		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Cost of revenue		46			43			36			34			33			30			31			37
Gross margin		54			57			64			66			67			70			69			63
Operating expenses:
Research and development		44			36			29			30			32			34			36			39
Sales and marketing		41			33			26			29			28			28			27			28
General and administrative		8			8			7			7			5			6			7			6
Amortization of acquired intangible assets		—			—			—			—			—			—			—			1
Total operating expenses		93			77			62			66			65			68			70			74
Income (loss) from operations		(39	)		(20	)		2			—			2			2			(1	)		(11	)
Other income (expense), net		13			(1	)		—			1			1			(1	)		(2	)		(2	)
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle		(26	)		(21	)		2			1			3			1			(3	)		(13	)
Provision for (benefit from) income taxes		—			—			—			—			—			—			—			—
Income (loss) before cumulative effect of change in accounting principle		(26	)		(21	)		2			1			3			1			(3	)		(13	)
Cumulative effect of change in accounting principle		—			—			(1	)		—			—			—			—			—
Net income (loss)		(26	)		(21	)		3			1			3			1			(3	)		(13	)
Accretion to redemption value of preferred stock		—			—			—			—			—			—			—			—
Net income (loss) attributable to common stockholders		(26	)%		(21	)%		3	%		1	%		3	%		1	%		(3	)%		(13	)%

Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. If we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our common stock could decline.

Revenue increased sequentially in each quarter presented due primarily to additional customers and the recognition of revenue ratably over the term of our customer agreements.

Gross profit increased sequentially in each quarter presented as a result of our expanded customer base and our ability to spread our data center operations and support costs across a larger customer base. Gross margin also generally increased in each quarter presented. Gross margin decreased in the third and fourth quarters of fiscal 2007 due to the inclusion of a partial quarter’s and a full quarter’s results, respectively, of TradePoint, which resulted in customer fulfillment requirements with significantly lower gross margins and related amortization of acquired intangible assets.

Total operating expenses increased sequentially in each quarter presented because of higher salaries and benefits and other personnel costs associated with the hiring of additional personnel and third-party contractors to support the growth of our business. The increase in research and development expenses from the third quarter to the fourth quarter of fiscal 2007 resulted from our acquisition of TradePoint, whose personnel were predominantly engaged in research and development. The increase in sales and marketing expenses from the third quarter to the fourth quarter in each of fiscal 2006 and fiscal 2007 was due to increased marketing program and related travel expenses associated with trade shows, which historically are highest in our fourth fiscal quarter. The decrease in general and administrative expenses from the fourth quarter of fiscal 2006 to the first quarter of fiscal 2007 was due to lower third-party professional services expenses, primarily legal expenses.

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We achieved operating profit in three of the last six fiscal quarters in the period ended February 28, 2007 as a result of the growth in our business and associated increases in revenue, and our historic focus on managing our business to a breakeven or small operating profit basis in order to devote a significant amount of capital toward our ongoing operations. In the fourth quarter of fiscal 2007, our operating loss was the result of our acquisition of TradePoint. While we expect to continue to invest significantly in our business, we anticipate that, if our revenue continues to grow, we will be able to generate improved profit margins.

Liquidity and Capital Resources

At February 28, 2007, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of $25.5 million, accounts receivable of $14.3 million and available borrowing capacity under our credit facilities of $2.0 million. We have historically funded our operations primarily through private sales of our convertible preferred stock, customer payments for our software and proceeds from our bank loans and lines of credit.

In May 2006, we entered into a $5.0 million revolving line of credit with a financial institution that expires in May 2008. Under the line of credit, we may borrow the lesser of (i) $5.0 million or (ii) an amount up to $3.0 million, plus 80% of eligible accounts receivable. Borrowings under the line of credit accrue interest at the greater of (i) the prime rate plus 0.5% and (ii) 8% per year. At February 28, 2007, we had $3.0 million outstanding under this line of credit.

In July 2006 we borrowed $10.0 million from financial institutions under a four-year term loan. The loan accrues interest at 9.5% per year, with interest-only payments during the first year and monthly principal and interest payments due in years two through four. The loan also requires a $400,000 final interest payment at maturity.

	Year Ended February 28,
	2005			2006			2007
	(in thousands)
Cash provided by operating activities	$	7,054		$	3,445		$	5,230
Cash used in investing activities		(437	)		(4,000	)		(7,944	)
Cash provided by (used in) financing activities		(1,558	)		1,331			11,395

Operating Activities

Our cash flows from operating activities are significantly influenced by the number of customers using our software and the amount and timing of payments by these customers. Our cash flows from operating activities will continue to be significantly affected by the extent to which we add new customers and renew existing customers and increase spending as a result of personnel increases to grow our business.

In fiscal 2007, we generated $5.2 million of net cash from operating activities. This cash was provided primarily by a $16.0 million increase in amounts billed to customers in advance of when we recognized revenue, a $1.2 million increase in accounts payable and accrued compensation expenses and $1.1 million in non-cash depreciation, offset by an $11.1 million increase in accounts receivable, a $1.5 million net loss and a $1.1 million increase in commissions paid but not yet recognized as expense.

In fiscal 2006, we generated $3.4 million of net cash from operating activities. This cash was provided primarily by a $2.9 million increase in accounts payable and accrued expenses, a $2.2 million decrease in accounts receivable, a $588,000 increase in amounts billed to customers in advance of when we recognized revenue and $441,000 of non-cash depreciation, offset by a $2.8 million net loss.

In fiscal 2005, we generated $7.1 million of net cash from operating activities. This cash was provided primarily by a $13.9 million increase in amounts billed to customers in advance of when we recognized revenue, a $1.6 million decrease in accounts receivable and a $1.3 million increase in accrued compensation, offset by a $9.3 million net loss and a $1.2 million decrease in commissions paid but not yet recognized as expense.

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Investing Activities

Our primary investing activities have been capital equipment purchases for our data center, net purchases of marketable securities and payments for an acquisition.

In fiscal 2007, we used $7.9 million of net cash in investing activities. This use of cash was primarily the result of $3.6 million in net cash used for our acquisition of TradePoint, $2.3 million used for capital expenditures and $2.0 million used for net purchases of marketable securities.

In fiscal 2006, we used $4.0 million of net cash in investing activities. This use of cash resulted from $2.5 million used for net purchases of marketable securities and $1.5 million used for capital expenditures.

In fiscal 2005, we used $437,000 of net cash in investing activities, all for capital expenditures.

Financing Activities

Our primary financing activities have been our issuances of convertible preferred stock and common stock, our issuance of notes payable and advances taken under our line of credit.

In fiscal 2007, we generated $11.4 million of net cash in financing activities. This cash was provided primarily by a $10.0 million issuance of notes payable to lending institutions, $697,000 in net advances under our line of credit and $698,000 from issuance of common and convertible preferred stock.

In fiscal 2006, we generated $1.3 million of net cash in financing activities. This cash was provided primarily by $1.4 million of net issuances of notes payable and $631,000 from issuance of common stock, offset by $800,000 in payments on our line of credit.

In fiscal 2005, we used $1.6 million of net cash in financing activities. This use of cash resulted from $923,000 in payments under our notes payable and $700,000 of net payments under our line of credit.

We believe that cash provided by operating activities, together with our cash, cash equivalents and marketable securities balance at February 28, 2007, will be sufficient to fund our projected operating requirements for at least the next 12 months. We may need to raise additional capital or incur additional indebtedness to continue to fund our operations in the future. Our future capital requirements will depend on many factors, including our rate of revenue growth, our rate of expansion of our workforce, the timing and extent of our expansion into new markets, the timing of introductions of new functionality and enhancements to our software, and the continuing market acceptance of our software. We may enter into arrangements for potential acquisitions of complementary businesses, services or technologies, which also could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Contractual Obligations

The following table summarizes our contractual obligations as of February 28, 2007:

	Payments Due by Period
			Less Than						More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(in thousands)
Operating leases	$	2,438	$	860	$	1,578	$	—	$	—
Line of credit		3,000		—		3,000		—		—
Notes payable to former TradePoint shareholders(1)		1,800		1,800		—		—		—
Notes payable		12,354		2,643		7,706		2,005		—
Total contractual obligations	$	19,592	$	5,303	$	12,284	$	2,005	$	—

(1) This note is subject to reduction based on indemnification claims we may make.

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Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes, nor do we have any undisclosed material transactions or commitments involving related persons or entities.

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, or FIN No. 48, which clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN No. 48 also provides guidance on derecognition, measurements, classification, interest and penalties, accounting for interim periods and disclosure for uncertain tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. We will adopt FIN No. 48 in the first quarter of fiscal 2008 and are currently evaluating the impact, if any, on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, or SFAS No. 157, which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact that the adoption of SFAS No. 157 will have on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115, which allows an entity to choose to measure certain financial instruments and liabilities at fair value. Subsequent measurements for the financial instruments and liabilities an entity elects to measure at fair value will be recognized in earnings. SFAS No. 159 also establishes additional disclosure requirements. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted provided that the entity also adopts SFAS No. 157. We are currently evaluating the impact of adopting SFAS No. 159.

Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

To date, the foreign currency effect on our cash and cash equivalents has been minimal. As we fund our international operations, our cash and cash equivalents could be affected by changes in exchange rates.

Generally, our international sales contracts are denominated in the country of origin currency, and therefore our revenue is subject to foreign currency risk. Our operating expenses and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the exchange rates for British pound and the Euro. We operate internationally and entered into foreign exchange forward contracts during fiscal 2005 to reduce exposure in non-U.S. dollar denominated receivables. We designated these forward contracts as accounting hedges of foreign-currency-denominated firm commitments; their objective was to negate the impact of currency exchange rate movements on our operating results. In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, we excluded the implicit interest in the forward contracts when assessing hedge effectiveness. For fiscal 2005, implicit interest costs totaled approximately $70,000 and were included within other income (expense), net. We formally assess, both at a hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in negating currency risk. All forward contracts entered during fiscal 2005 were deemed highly effective. As of February 28, 2006 and 2007, we had no outstanding foreign exchange forward contracts. We do not enter into derivative financial instruments for speculative or trading purposes.

We apply SFAS No. 52, Foreign Currency Translation, with respect to our international operations, which are primarily sales and marketing support entities. We have remeasured our accounts denominated in non-U.S. currencies using the U.S. dollar as the functional currency, with adjustments recorded as foreign currency transaction gains (losses) in other income (expense) for the period. We remeasure all monetary assets and liabilities at the current exchange rate at the end of the period, non-monetary assets and liabilities at historical exchange rates,

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and revenue and expenses at average exchange rates in effect during the period. Foreign currency transaction gains (losses) were approximately ($186,000), ($89,000) and $70,000 for fiscal 2005, 2006 and 2007, respectively.

Interest Rate Sensitivity

We had unrestricted cash and cash equivalents totaling $12.3 million and $21.0 million at February 28, 2006 and 2007, respectively. A majority of these amounts was invested in money market funds. These unrestricted cash and cash equivalents were held for working capital purposes. We do not enter into investments for trading or speculative purposes. We do not believe that we have any material exposure to changes in the fair value of these cash equivalents as a result of changes in interest rates. Declines in interest rates, however, will reduce future investment income.

Effects of Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to offset these higher costs fully through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

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BUSINESS

Overview

We are the leading provider of consumer demand management, or CDM, software. Our software enables retailers and consumer products, or CP, companies to define merchandising and marketing strategies based on a scientific understanding of consumer behavior and makes actionable pricing, promotion and other merchandising and marketing recommendations to achieve revenue, profitability and sales volume objectives. We deliver our applications by means of a software-as-a-service, or SaaS, model, which allows us to capture and analyze the most recent retailer and market-level data and rapidly enhance our software to address our customers’ ever-changing merchandising and marketing needs.

Our CDM software is comprised of a suite of integrated applications — DemandTec Price, DemandTec Promotion, DemandTec Markdown and DemandTec TradePoint. DemandTec Price combines price optimization functionality with price management features to enable retailers and CP companies to create multiple pricing scenarios, evaluate tradeoffs and optimize everyday prices. DemandTec Promotion enables retailers and CP companies to create and simulate multiple promotional plans based on mathematical forecasts. DemandTec Markdown enables retailers to optimize plans and prices for items they intend to remove from their assortments, such as end-of-season items, discontinued product lines or overstocked merchandise. DemandTec TradePoint provides retailers and their CP trading partners with a platform to automate and streamline the presentation, negotiation and reconciliation of trade promotion offers in a secure, web-based environment.

Our software as a service is used by over 135 customers worldwide, including Advance Auto Parts, Best Buy, Casino, Circle K Stores, General Mills Sales, Kraft Foods Global, Monoprix, Office Depot, Procter & Gamble, Safeway and Wal-Mart.

Industry Background

Retail trade is one of the world’s most widespread activities. In 2005, retail trade represented approximately 23% of worldwide gross domestic product. There are more than 1,500 retailers worldwide that have annual sales in excess of $500 million. Retailing is highly competitive and generally characterized by low profit margins. For example, according to the Food Marketing Institute, the average after-tax profit margin for U.S. grocery store chains has been below 1.5% in each of the past 25 years.

There are thousands of CP companies that sell to retailers. According to an industry report, in 2004 the CP industry generated revenues in the United States of more than $2 trillion. The CP industry is becoming increasingly competitive due to factors such as retailer consolidation, more discerning and less loyal consumers and the growing impact of private label products. To counter these trends, CP companies are making substantial investments in product innovation, market research, branding, and consumer and brand marketing.

Consumer Demand and Pricing Challenges

Retailers compete for consumers who are becoming more knowledgeable, more selective and, in many instances, more price sensitive. Consumers today devote considerable time to researching products and comparing prices prior to shopping and have a greater array of choices in price, size, brand, color and features. The growth of discount stores, warehouse clubs and dollar stores and the emergence of the Internet as a viable retail alternative offer consumers further alternatives when purchasing goods. For retailers to compete effectively, they need to better understand and respond to these changes in consumer demand and behavior through targeted pricing, marketing and merchandising strategies.

A basic principle of economics is that a change in the price of an item will affect demand for that item. Every item in a store has a unique “price elasticity,” or sensitivity between sales volume and price. Small decreases or increases in the prices of items may lead to significant changes in the demand for those items, whereas larger decreases or increases in the prices of other items may have little effect on demand. In addition, changes in the prices of items in a store often have an impact on the sales volumes of other items in that store. This interdependence is referred to as the “cross elasticity” of demand. Demand is influenced by a wide variety of additional factors,

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including store location, customer demographics, advertising, in-store displays, the availability of complementary or substitute products, seasonality, competitive activity and loyalty and marketing programs. These variables make calculating price elasticity for even a single item an extremely data-intensive and complex process. Calculating the cross-elasticity of demand for thousands of items is exponentially more difficult.

Applying these economic concepts to make day-to-day pricing decisions presents enormous challenges to retailers of all sizes, particularly to large retailers that sell tens of thousands of items and have hundreds, if not thousands, of stores. These retailers must determine how to price each particular item and whether to vary the price among regions or individual locations. They also must determine the price of each item relative to competing products and the likely impact on their aggregate profitability if the prices of that item or competing items are increased or decreased. In addition, retailers may want to consider whether promoting an item would result in increased sales volume and, if so, whether that increase would represent incremental revenue or merely cannibalize sales of other items. These pricing and marketing decisions must also strike a balance between the retailer’s financial goals and its desired price image in order to enhance consumer loyalty and maximize sustainable, long-term value from the retailer’s targeted consumer segments.

CP companies make similar, complex decisions when pricing and promoting their products. Like retailers, CP companies are faced with intense competition, less loyal consumers and an operating environment in which it is difficult to raise prices. CP companies must understand how consumers will respond to promotions, how price changes will affect sales volumes, and how often to promote their brands. CP companies also must decide when and how to use trade funds in the form of discounts, offsets or direct cash payments to compensate retailers for offering temporary price reductions on their products. According to Capgemini, most CP companies’ trade promotion budgets represent 15% or more of their net sales, which is second only to their cost of goods sold. In 2003, CP companies in the grocery channel alone spent over $25 billion on trade promotions according to Accenture, and we believe trade promotion budgets continue to rise across the CP industry. Despite the pervasive use of trade funds, studies suggest that over 90% of trade promotions have negative returns on investment after taking into consideration execution costs and unintended cannibalization.

The trade promotion process is not only generally unprofitable, but also largely inefficient. Submitting and negotiating trade promotions historically has been handled through a combination of fax, voicemail and manual, paper-based processes. This has led to frequent inaccuracies and increasing costs for both CP companies and retailers. CP companies and retailers have lacked an accurate, integrated technology platform for improving the efficiency of their trading relationships.

In order to attain higher revenue growth, improve profit margins and increase market share, while maintaining proper price and brand image, retailers and CP companies must better understand and predict consumer behavior across geographic, demographic, gender, age, income and other segments. However, achieving these objectives through day-to-day pricing and other merchandising and marketing decisions is extremely complex.

Existing Approaches to Understanding Consumer Demand

Retailers and CP companies have made significant investments in information technology, or IT. According to Frost & Sullivan, spending on application software by retailers alone exceeded $5.2 billion in 2005, and is expected to increase to over $8.2 billion by 2010, representing a 9.5% compound annual growth rate. Most of these IT investments have focused on achieving cost reductions through increased operational efficiencies and transaction automation, including supply chain management, POS systems and marketing automation software.

As a result of these IT investments, retailers have accumulated vast amounts of sales data. A number of academic techniques have existed to analyze this data. Incorporating advanced statistical analytics into a commercially-useful solution that yields meaningful and actionable insights for retailers and CP companies, however, presents significant scientific, engineering, processing and cost challenges due to the vast amounts of data and the complexities of mathematical computing. Consequently, existing approaches to incorporate an understanding of consumer demand into retail and CP pricing decisions generally have been limited to modeling sample

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data sets to provide limited insights. As a result, retailers and CP companies historically have made merchandising decisions based on simpler approaches such as:

•  cost-plus or competitor-matching pricing;

•  national pricing of items, regardless of local consumer demand and competitive dynamics;

•  “one-size-fits-all” assortments of goods, regardless of the unique preferences of consumers who shopped in each location;

•  habitual promotions, advertisements, mailers and other marketing programs; and

•  engaging business consultants to provide isolated category-based analyses.

In today’s environment, retailers and CP companies need scalable enterprise software that is capable of modeling the numerous variables that affect consumer demand and processing massive data sets in a cost-effective manner and that delivers actionable merchandising and marketing recommendations to achieve their revenue, profitability and sales volume objectives.

DemandTec Solution

We are the leading provider of CDM software. Our software enables retailers CP companies to define merchandising and marketing strategies based on a scientific understanding of consumer behavior and makes actionable pricing, promotion and other merchandising and marketing recommendations to achieve revenue, profitability and sales volume objectives. We deliver our applications by means of a SaaS model, which allows us to capture and analyze the most recent retailer and market-level data and rapidly enhance our software to address our customers’ ever-changing merchandising and marketing needs.

Understand and predict consumer behavior to make merchandising and marketing recommendations to achieve revenue, profitability and sales volume objectives

Our software enables retailers and CP companies to incorporate a scientific understanding of consumer demand into their day-to-day merchandising and marketing activities. By using our software, our customers can achieve their revenue, profitability and sales volume objectives, while striking a balance with their desired price and brand images in order to enhance consumer loyalty. Specifically, our software allows retailers and CP companies to:

•  make daily pricing, promotion and other merchandising and marketing decisions based on consumer demand;

•  balance financial goals with price and brand image in order to maximize the lifetime value of their targeted consumer segments;

•  enforce pricing rules consistently;

•  forecast sales more accurately;

•  devise more targeted promotions based on consumer segmentation insights; and

•  allocate trade funds more effectively and efficiently.

Incorporate scalable science into merchandising and marketing decision-making processes

We incorporate advanced econometric modeling techniques and optimization theory into scalable software that our customers use to make day-to-day merchandising and marketing decisions. Our software automates the process of predicting consumer response to various merchandising and marketing activities, such as pricing, promotion, assortment, loyalty programs and media. Our proprietary demand models quantify consumer response at the individual store and item levels based on a number of factors, including store location, consumer demographics, advertising, in-store displays, the availability of complementary and substitute products, seasonality and competitive activity, as well as other elements of consumer behavior such as the pantry-loading (stock-up) effect and product switching. Our software incorporates optimization science that uses a combination of complex

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algorithms to help customers determine in real-time the optimal prices, promotions and markdowns that best accomplish their merchandising and marketing objectives, while complying with their business rules.

Leverage technological advancements through a SaaS delivery model that enables us to adapt to our customers’ changing business needs rapidly and to deliver results quickly

Our SaaS model leverages a set of pervasive technology trends that includes the availability of greater amounts of computing power at commercially affordable and decreasing prices, dramatic reductions in the cost of data storage and inexpensive and secure access to broadband communication networks. This model represents a dramatic shift from developing and delivering static, highly-customized software code that is installed at the customer’s site. Due to the dynamic nature of consumer demand and the changing merchandising and marketing objectives of retailers and CP companies, we believe a CDM solution is delivered most effectively through a SaaS model. By delivering our software as a service, we are able to:

•  capture and analyze the most recent POS data, transaction log data and loyalty program data from retailers, as well as up-to-date market-level data, syndicated data and other third-party demographic content in order to better understand the dynamic nature of consumer behavior;

•  intimately understand how our customers use our software to make their day-to-day merchandising and marketing decisions so we can continuously enhance our offering to address our customers’ business needs;

•  deliver technical enhancements to our software on a frequent and predictable schedule and with little or no disruption to our customers’ operations;

•  utilize grid computing and service-oriented-architecture, or SOA, techniques to maximize scalability and processing capacity; and

•  enable interoperability across our customers’ diverse legacy systems.

By delivering our software as a service, we quickly enable our customers to make better pricing, promotion, trade funds management and other day-to-day merchandising decisions. With our SaaS model, our customers are able to begin to achieve measurable financial results within a matter of months.

Strategy

Our objective is to extend our position as the leading provider of CDM software. Key elements of our strategy include:

•  Continuing to invest in our state-of-the-art scientific technology.  We are constantly incorporating new data sources and enhancing our core science and software to adjust for changes in consumer behavior. We plan to continue to invest aggressively in our statistical modeling capabilities, advanced optimization techniques and comprehensive business rules management capabilities to help our customers determine the best pricing, promotion and markdown plans to meet their revenue, profit and sales volume objectives.

•  Developing new software and enhancing existing software to address a broader set of consumer demand management business requirements.  In the last two years, we have expanded our software applications beyond base pricing to address promotions and markdowns for our customers. A key element of our strategy is to leverage our domain expertise, proprietary software platform and advanced analytical capabilities to expand our “complete lifecycle pricing” solution in the retail and CP markets.

•  Capitalizing on the convergence of merchandising and marketing.  Leading retailers are integrating their merchandising functions (pricing, promotion, assortment and space planning) and marketing strategies (customer segmentation, loyalty programs, advertising and direct marketing) in an effort to maximize the lifetime value of their targeted customer segments. We intend to continue to enhance our software to support this trend with new applications and analytics that provide a unified understanding of consumer behavior for both merchants and marketers.

•  Delivering additional software to CP companies.  We intend to leverage our customer base of CP companies currently using DemandTec TradePoint and our industry-leading retail customers to develop

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and deliver targeted add-on applications and analytics through an efficient trading environment that generates value for both CP companies and retailers based on a shared software platform and a common understanding of consumer behavior. The infrastructure of the DemandTec TradePoint collaborative system can also be leveraged to facilitate other communications and negotiations between retailers and their trading partners.

•  Broadening our customer base internationally.  Given the large number of retailers worldwide, we believe there are substantial opportunities to sell our software internationally. Our software currently is available in English, French and Japanese, which languages we believe cover a substantial majority of the worldwide retail and CP markets. A key element of our strategy is to expand our international customer base in the English, French and Japanese-speaking markets through focused direct sales efforts and joint selling opportunities with our partners and by leveraging cross-selling opportunities with our existing customers, many of which have substantial international operations.

Products

Overview

Our CDM software is comprised of a suite of integrated applications — DemandTec Price, DemandTec Promotion, DemandTec Markdown and DemandTec TradePoint. Customers can purchase any combination of these offerings, which are configurable to accommodate their individual needs.

Our proprietary software platform is the foundation for our merchandising applications. We have developed this platform to transform vast amounts of raw and underutilized business data into actionable insights in an efficient and cost-effective manner. Our platform provides scalability, advanced analytics and an integrated view of demand for each of the DemandTec merchandising applications. Retailers can use our suite of merchandising applications to support a “complete lifecycle pricing” solution that enables them to strategically price and promote all items in the store, including new items, regular items, promoted items and clearance or markdown items. CP companies use DemandTec Price and DemandTec Promotion to provide manufacturer-specific functionality, views and metrics. DemandTec TradePoint provides CP companies, sales agencies and retailers a platform to automate the presentation, negotiation and reconciliation of trade promotions in a secure, web-based environment.

MyDemandTec is the common, configurable dashboard for all of our applications. Based on industry-standard portal technology, MyDemandTec consolidates web-based content and information through a common portal, providing users with context to make pricing and merchandising decisions and to organize tasks. MyDemandTec can incorporate third-party content within its windows or can exist within a customer’s broader corporate intranet or other portal system.

DemandTec Price

DemandTec Price enables retailers and CP companies to establish everyday prices for their products based on a scientific understanding of consumer behavior. Customers create scenarios in which they define strategic objectives such as increased revenues, profits and/or sales volume and optimize prices to best achieve these objectives. A typical strategic objective might be to maximize net margins, while not sacrificing more than a certain defined percentage of sales volume. Our software contains a library of configurable business rules that act as constraints on the optimization by limiting the set of possible outcomes. For example, a customer can ensure that larger size items always cost more than smaller size items but are a better value, or that an optimized price is within a given percentage of a competitor’s price.

Key features of DemandTec Price include:

•  Optimization and forecasting — full category price optimization, with store/item level forecasting of revenue, profitability and sales volume at various price points;

•  Rules management and rules-based pricing — a set of retail pricing rules with a rules editor and rules relaxation capabilities to handle conflicts;

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•  Advanced price maintenance — operational price management features to handle frequent vendor cost changes and competitive price changes;

•  Price delivery — regularly scheduled delivery of optimized prices to customers; and

•  Benefits reporting — the ability to validate the effects of price optimization on actual sales of a particular item and to understand the degree to which factors such as promotions, seasonality and macro-economic shifts contributed to sales.

Retailers use DemandTec Price to optimize and set retail prices in their stores based on their unique cost structure and strategic goals. DemandTec Price would likely generate different optimized prices for the same item carried by competing retailers in stores located in the same geographic location, since consumer behavior varies between competitors and each retailer has its own vendor costs and strategic pricing objectives. CP companies use DemandTec Price to optimize and set the wholesale prices at which they sell their products to their customers, the retailers.

DemandTec Promotion

DemandTec Promotion enables retailers and CP companies to create and simulate multiple scenarios based on mathematical forecasts of results in order to evaluate tradeoffs among various promotions such as discounts, advertisements and displays. Key features of DemandTec Promotion include:

•  Category plan and master calendar management — the ability to generate, view and forecast promotion calendars, taking into account factors such as cannibalization of regular priced items, concurrent promotions and the pantry-loading effect of successive promotions;

•  Event and tactic management — the ability to plan and manage different promotional events and capture individual performance details such as holidays, features and in-store displays;

•  DemandTec TradePoint integration — the ability of all vendor offers entered into DemandTec TradePoint to flow directly into DemandTec Promotion for analysis, simulation and forecasting; and

•  Pre-configured outbound interfaces — the ability to export promotional forecast information to supply chain systems, promotional details to advertisement execution systems, and other details to other customer systems.

Retailers use DemandTec Promotion to evaluate and forecast incoming vendor offers as well as to plan private label and other promotions. CP companies use DemandTec Promotion to maximize the effectiveness and efficiency of the trade spend investment they make with retailers by developing plans that are effective for both their brands and the retailers’ product categories.

DemandTec Markdown

DemandTec Markdown enables retailers to optimize plans and prices for items they intend to remove from their assortments, such as end-of-season items, discontinued product lines or overstocked merchandise. Key features of DemandTec Markdown include:

•  Scenario management — the ability to create and forecast multiple scenarios in order to evaluate tradeoffs between timing and depth of markdown prices, as well as other factors such as the number of markdowns taken within a time period;

•  Rules management — the ability to configure markdown-specific rules; and

•  Re-optimization — the ability to re-optimize plans and prices on a weekly basis to adjust for changes in demand and inventory position.

Retailers use DemandTec Markdown to eliminate excess inventory by a specified date after which an item will no longer be sold and to maximize profitability of items sold before that date.

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DemandTec TradePoint

DemandTec TradePoint enables retailers and CP companies to automate and streamline the presentation, negotiation and reconciliation of trade promotion offers. Offers entered in DemandTec TradePoint can be automatically routed into DemandTec Promotion and DemandTec Price for analysis, optimization and forecasting. Key features of DemandTec TradePoint for the retailer include:

•  Proprietary offer sheet mapping — uses retailer’s existing paper-based offer sheet format to ease adoption by retailers;

•  Online deal center for both parties — provides a common platform for retailers and their trading partners to present and negotiate the terms of trade promotion offers;

•  Retailer item catalog-based entry — provides vendors use of retailer-specific item catalogs in order to eliminate data-entry errors;

•  Deal history — provides version control of offers, final contract terms, user activity and communications in order to facilitate dispute resolution; and

•  Accounting and reconciliation — provides for reconciliation of invoicing and deduction notices with CP trading partners.

When a retailer implements DemandTec TradePoint, that retailer requires that all of its CP trading partners submit and negotiate their future trade promotion offers electronically through DemandTec TradePoint. We offer two editions of DemandTec TradePoint for CP companies: “VendorBasic,” which is offered for no charge and allows vendors to submit promotion offers by selecting valid items from the retailer’s item catalog; and “VendorPlus,” which is a paid upgrade that includes additional features specific to the CP company, such as accounting and reconciliation, transaction and workflow reporting, catalog management, vendor item catalog synchronization and deal history archive.

Professional Services

Our professional services organization works closely with our customers to implement our software so our customers can rapidly begin to achieve their merchandising and marketing objectives. The organization consists of field consultants and project managers, technology integration specialists, modeling experts, and training specialists with experience in implementing software in various retail and CP segments. Depending on a specific customer’s requirements, we also may engage third parties to assist with implementations. We generally make our software available to the customer within two weeks, with several of their product categories being fully operational within a matter of months.

The analytical services group within our professional services organization works with prospects and customers to identify actionable insights in order to improve our customers’ returns on investment from using our software. Leveraging our software platform, retailer POS and loyalty data, and additional third-party data sources, we offer a number of strategic analytical insights both as part of our software and as customer-specific services. For example, we offer an affinity analysis, which summarizes millions of transaction-level records to identify sets of products frequently purchased together and recommend subsequent strategies for maximizing consumer purchases.

The education group within our professional services organization provides education and training services to our customers and partners. The education group works closely with each customer or partner to design and deliver a training curriculum to match its needs. We deliver courses through lectures, written materials and e-learning modules. We also offer a “train-the-trainer” program for customers with extensive or ongoing training requirements.

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Science and Technology

Science

Our science-based CDM software applies advanced statistical analytics in the following areas:

Demand Modeling.  Our CDM software uses complex econometric models designed to predict accurately the sales volume of products under varying merchandising conditions and at various prices, which enables customers to determine the factors that influence consumer demand for a given product and location, and to what extent. Our proprietary demand models quantify consumer response to different merchandising and marketing activities, environmental factors and elements of consumer behavior across various consumer segments. Since our models are non-linear, they are able to capture the complex underlying relationships between consumer demand and the factors that influence that demand.

Consumer-Centric Merchandising and Marketing.  Individual consumers and particular consumer segments respond differently to price changes for different items. By applying various data mining and statistical techniques to analyze sales data and combining the results with additional data such as demographic, buying history and item affinity data, our software enables our customers to understand consumer and product segmentation more fully, to determine more effective product assortments, and to design more individualized promotion offers. These techniques enable our customers to make more granular, and therefore more effective, merchandising and marketing decisions.

Forecasting and Simulation.  Our forecasting software enables our customers to determine the likely revenue, volume and profit for specific product categories, brands or promoted groups on an store/item level for a given set of prices and merchandising conditions. Our software does this by incorporating and analyzing factors such as product distribution, assortment and complementarity, cannibalization, stockpiling by consumers, equivalent volumes and discrete events such as holidays and localized merchandising categories. Our software also includes an activity-based costing model to quantify and forecast the store/item level margin impact caused by varying supply chain costs.

Optimization and Rules Enforcement.  While demand modeling is a powerful tool that can provide quantifiable benefits, achieving those benefits would be difficult if our software relied solely upon modeling, because of the large number of possibilities that our models create. Our optimization science uses a combination of complex algorithms to help customers determine the set of prices, promotional tactics and markdowns that best achieves their merchandising and marketing objectives while complying with their business rules. These algorithms are designed to ensure accurate results and incorporate rule relaxation that automatically resolves conflicts in business rules according to the user’s preferences.

Technology

Data Processing.  We receive and process terabytes of customer data. This information is provided by retailers, manufacturers and syndicated data providers on a daily or weekly basis and usually includes all of a retailer’s POS transactions. We process data through our proprietary software platform, which integrates, validates and cleanses multiple data types and enhances data quality by identifying and correcting common data problems.

Grid Computing.  The implementation of our advanced mathematical software requires substantial computing resources. To address this challenge, our software is distributed across a scalable grid of servers. This approach allows us automatically to partition large computational problems into smaller computations and to execute those computations in parallel across the grid. Our grid architecture is designed to ensure that optimizations are completed reliably and that computing resources are allocated dynamically across our customers.

Enterprise Application Technology.  Since our customers access our software through a web browser, no software is installed on our customers’ premises. Our portal technology allows us to incorporate content from other sources and allows our content to be shown in other applications and portals. Customers can configure the user interface, customer-specific fields, customer-specific workflow behavior and portal layout and content. Our scalable architecture allows us to add new customers without requiring us to make substantial incremental investments in IT infrastructure.

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Enterprise Integration.  We provide multiple integration points with our customers’ IT systems. Large incoming and outgoing data feeds use data-level integration to transfer bulk files on an automated basis. We use industry-standard web services protocols to communicate with customer systems and to process customer system requests. Our MyDemandTec portal technology enables user interface-layer integration between our system and our customers’ systems, allowing us to display content served by customer systems and to serve content to customer systems using industry-standard protocols.

SaaS Operations

Our operations organization is responsible for delivering our software as a service to our customers, which includes quality assurance, release deployment, database management and application tuning, systems monitoring and proactive problem detection and prevention, application availability and customer support.

Under our SaaS model, we release a new software version approximately every six weeks. Since June 1, 2004, we have released 25 new versions of our software, each one containing significant new functionality. Releases are deployed simultaneously to all of our customers. Prior to deployment, each release undergoes multi-stage testing and substantial quality assurance, including build acceptance tests, regression test cases, customer integration tests and final system verification tests.

Our software is hosted in two data centers, one in San Jose, California and one in Sacramento, California. Each of these facilities includes advanced security, power redundancy, and disaster mediation safeguards and procedures such as biometric access control, onsite power generation and earthquake hardening.

We have implemented a comprehensive information security management program. As part of this program, our processes and procedures include: logical access controls such as certificate authentication, role-based authorization and detailed system logging; vulnerability management assessment and remediation; network security measures including encryption, firewalls and monitoring; strict data and software back-up procedures with regular rotations to a secure, offsite storage location; and network and system redundancy to provide application resiliency.

In January 2007, an independent accounting and auditing firm completed an audit of our controls over information technology and processes, in accordance with Statement on Auditing Standards No. 70, or SAS 70. This firm issued a SAS 70 Type II report confirming that suitably-designed controls were in place and operating effectively.

Superior customer support is critical to customer satisfaction and to retaining and expanding our customer base. To this end, we provide customer support 24 hours a day, seven days a week through our support web portal and by telephone. Since we manage our software for our customers, we often are able to detect and resolve delivery problems or processing capacity needs well in advance of when a customer might actually notice the problem.

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Our Customers

Today, our software as a service is used by over 135 customers worldwide. The following table sets forth all retailers with which we currently have an agreement with an initial term of one year or more. Retailers together accounted for 94% of our revenue in fiscal 2007.

Advance Auto Parts	The Kroger Co.
Alimentation Couche-Tard (Circle K Stores)	Longs Drugs Stores of California, Inc.
Almacenes Exito S.A.	Monoprix S.A.
Best Buy Stores, L.P.	Office Depot, Inc.
Big Y Foods, Inc.	Pathmark Stores, Inc.
BI-LO LLC	The Penn Traffic Company
Brookshire Grocery Company	Piggly Wiggly Carolina Co. Inc.
Casino Supermarkets/Hypermarkets	RadioShack Corporation
Companhia Brasileira de Distribuição	Safeway Inc.
Food Lion, LLC	Save Mart Supermarkets
Giant Food Stores, LLC	Stop & Shop Supermarkets
Giant Eagle, Inc.	Target Corporation
Hannaford Bros. Co.	Toys ‘‘R” Us
HEB Grocery Company, LP	Wal-Mart Stores, Inc.

The following table sets forth our ten largest CP customers based on annual contract value:

Acosta Sales and Marketing*	Kraft Foods Global, Inc.
Advantage Sales & Marketing LLC*	Nestlé USA, Inc.
ConAgra Foods, Inc.	The Procter & Gamble Company
Crossmark, Inc.*	Tyson Foods, Inc.
General Mills Sales, Inc.	Unilever Best Foods, North America

* Sales agency that brokers items on behalf of CP companies.

Sales and Marketing

We sell our CDM software through our direct sales organization, often in cooperation with partners such as systems integration firms, strategy consultants and syndicated data providers. Our sales organization is comprised of two distinct teams, one for retailers and one for the CP industry. We assign our sales directors to specific named target accounts. Solution consultants assist our sales directors to provide detailed technical and business expertise. After the first year of a customer’s contract term, we assign a strategic account executive who is responsible for managing the customer’s satisfaction, contract renewals and sales of additional software and services. Outside the U.S., we have employee sales directors located in the United Kingdom, France and Japan.

Our marketing group assists our direct sales, partner and professional services organizations by providing sales tools, programs and training. Our outbound marketing programs are designed to develop awareness of DemandTec and to build our brand through participation in a variety of industry events, public relations, web-based seminar campaigns and other activities targeted at key executives and decision-makers in the industries we serve.

Every year, we host DemandBetter, a two-day conference for our customers that brings together executives from retailers and CP companies to share strategies and best practices. The conference features in-depth product, science and customer case study sessions.

Strategic Relationships

We continually seek to develop and foster alliances with third parties whose products, technologies and services complement our offerings. We work with industry leaders that assist in joint sales activities and software

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implementation. These relationships vary in complexity and scope and range from formal global alliances to informal regional relationships. Three firms with which we collaborate globally are ACNielsen, Inc., International Business Machines Corporation, or IBM, and Accenture LLP. We have had success working with these companies and we believe that we can continue to work together to provide complementary solutions.

•  ACNielsen is a leading marketing information provider. In 2005, we entered into an exclusive agreement with ACNielsen to deliver consumer-centric merchandising solutions to fast moving consumer goods (FMCG) retailers around the globe. Retailers utilizing both our and ACNielsen’s offerings can access a combination of consumer and market information, demand-modeling science and optimization software to generate merchandising plans.

•  The Global Business Services division of IBM provides business process outsourcing, systems integration and general consulting services. IBM has pre-existing relationships with many of our retail customers and prospects. We have worked with IBM to jointly sell and implement our solutions in multiple geographies.

•  Accenture has a strong retail industry practice that includes expertise and solutions focused on precision pricing. We have successfully collaborated with Accenture on joint sales and implementation efforts for a number of retail customers around the globe.

Research and Development

Under our SaaS model, we maintain and support only one version of our software. This enables us to focus our research and development expenditures on researching new methodologies for understanding and predicting consumer demand and developing new features and functionality. We concentrate our research and development efforts on:

•  improving our statistical modeling capabilities and advanced optimization techniques to enhance our understanding of consumer demand and consumer segmentation;

•  enhancing existing applications and developing new applications that leverage our existing software platform to address a broader set of CDM business requirements; and

•  enhancing our existing analytical services and developing new analytics and tools.

We have assembled an experienced science and modeling organization comprised of experts in econometrics and advanced mathematics, as well as a core group of engineers with experience working with massive amounts of data and backgrounds in scientific engineering. Our engineering design team is located in San Carlos, California, but we also utilize a group of software engineers employed by Sonata Services in Shanghai, China. As of February 28, 2007, we had 89 employees in our science, product management and engineering groups located in California, and an additional 50 engineers in China dedicated to our projects. Our research and development expenses were approximately $9.7 million in fiscal 2005, $11.0 million in fiscal 2006 and $15.3 million in fiscal 2007.

Competition

The market for CDM software varies greatly by industry and business application, is rapidly evolving and fragmented, and is subject to shifting customer needs and changing technology. We compete primarily with vendors of packaged software, whose software is installed by customers on their own premises. We also compete with internally-developed solutions. Our current principal competitors include:

•  enterprise software application vendors such as SAP AG and Oracle Corporation;

•  niche retail software vendors such as KSS Group and Athens Group that target smaller retailers;

•  statistical tool vendors such as SAS, Inc.;

•  marketing information providers for the CP industry such as ACNielsen and Information Resources, Inc.; and

•  business consulting firms such as McKinsey & Company, Inc., Deloitte & Touche LLP and Accenture.

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Many of our current and potential competitors have a larger installed base of users, longer operating histories, greater brand recognition and substantially greater financial, technical, marketing, service and other resources. Competitors with greater financial resources may be able to offer lower prices, additional products or services or other incentives that we cannot match or offer. In addition, niche retail software vendors may compete with us on price with smaller retailers. Lastly, larger retailers and CP companies historically have tended to invest in in-house applications and advanced analytics provided by business consulting firms, marketing information providers and tools vendors.

We believe the principal competitive factors in our markets include the following:

•  demonstrated customer successes and the attendant retail and CP domain expertise;

•  the quality and comprehensiveness of science and technology to manage large data sets, model consumer demand accurately, and optimize merchandising and pricing decisions;

•  the ability to drive predictable revenue, profitability and sales volume improvements;

•  the ease and speed of software implementation and use;

•  the ability to enhance science and technology rapidly to meet a broader set of consumer behavior dynamics;

•  the performance, scalability and flexibility of the software;

•  the confidentiality, integrity and availability of the solution; and

•  the vendor’s reputation.

We believe that we compete favorably with our competitors on the basis of these factors. However, if we are not able to compete successfully against our current or future competitors, it would be difficult to acquire and retain customers, and our business, financial condition and operating results would be impacted.

Intellectual Property

We believe that our proprietary mathematical algorithms, statistical models and techniques and unique software architecture differentiate us from other CDM companies, as they enable us to understand and forecast consumer behavior more completely. Our continued success depends on our ability to continue to innovate in science and engineering and to protect our core intellectual property. Our intellectual property strategy relies on a combination of trade secrets, patents, copyrights, trademarks and contractual confidentiality agreements.

We currently have seven issued patents and 19 patent applications in the United States, and three issued patents and seven patent applications internationally. Of the 19 United States patent applications, four have been allowed for issuance. We focus our patent efforts in the United States, but from time to time we will file corresponding foreign patent applications in strategic areas such as Europe and Asia. Our patent strategy balances strategic importance, competitive assessment and the need to maintain costs at a reasonable level. We may not receive competitive advantages from any rights granted under our existing patents. We do not know whether any of our patent applications will result in the issuance of any further patents or whether the examination process will require us to narrow the scope of our claims. To the extent any of our applications proceeds to issuance as a patent, the future patent may be opposed, contested, circumvented, designed around by a third party, or found to be unenforceable or invalidated. In addition, our future patent applications may not be issued with the scope of the claims sought by us, if at all, or the scope of claims we are seeking may not be sufficiently broad to protect our proprietary technologies. Others may develop technologies that are similar or superior to our proprietary technologies, duplicate our proprietary technologies or design around patents owned or licensed by us. If our products, patents or patent applications are found to conflict with any patent held by third parties, we could be prevented from selling our products, our patents could be declared invalid or our patent applications might not result in issued patents.

We have registered the trademark DemandTec in the United States, China, Japan, the European Union and certain other countries. We have also registered the DemandTec logo in the United States and the European Union. We have filed other trademark applications in the United States and certain other countries.

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In addition to filing patent applications and registering trademarks, we also rely in part on United States and international copyright laws to protect our software. Furthermore, we control access to and use of our proprietary software and other confidential information through the use of internal and external controls, including signing non-disclosure agreements with contractors, customers and partners. In addition, all of our employees and consultants are required to execute proprietary information and invention assignment agreements in connection with their employment and consulting relationships with us, pursuant to which they agree to maintain the confidentiality of our proprietary information and they grant us ownership rights in all inventions they reduce to practice in the scope of performing their employment or consulting services. However, we cannot provide any assurance that employees and consultants will abide by these agreements.

Despite our efforts to protect our trade secrets and proprietary rights through patents, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and technology. In addition, we intend to expand our international operations, and effective patent, copyright, trademark and trade secret protection may not be available or may be limited in foreign countries. If we fail to protect our intellectual property and other proprietary rights, our business could be harmed.

Employees

As of February 28, 2007, we employed 198 full-time employees, including 89 in research and development, 44 in professional services, 31 in sales and marketing, 21 in general and administrative and 13 in operations and support. We have never had a work stoppage, and none of our employees is represented by a labor organization or under any collective-bargaining arrangements. We consider our employee relations to be good.

Facilities

Our corporate headquarters and our primary facilities occupy approximately 40,000 square feet in San Carlos, California under a lease that expires in 2010. In addition, we lease property in Pleasanton, California as a result of our TradePoint acquisition. We also lease small office spaces around the United States and in Japan and Europe for use as sales and marketing offices. The size and location of these properties change from time to time on the basis of business requirements. We do not own any real property. We believe our facilities are adequate for our current needs and that suitable additional or substitute space will be available to accommodate foreseeable expansion of our operations.

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MANAGEMENT

Executive Officers and Directors

Our executive officers and directors, and their ages and positions as of February 28, 2007, are set forth below:

Name	Age		Position
Daniel R. Fishback		45	President, Chief Executive Officer and Director
Mark A. Culhane		47	Executive Vice President and Chief Financial Officer
John C. Crouch		45	Senior Vice President of Worldwide Sales
James H. Dai		43	Senior Vice President of Engineering and Operations
Michael L. Frandsen		45	Senior Vice President of Products and Product Strategy
Ronald E. F. Codd(1)		51	Director
Linda Fayne Levinson(2)		65	Director
Victor L. Lund(2)(3)		59	Chairman of the Board of Directors
Joshua W. R. Pickus(3)		45	Director
Charles J. Robel(1)		57	Director
James D. Sayre(1)(2)		46	Director

(1)	Member of Audit Committee.
(2)	Member of Compensation Committee.
(3)	Member of Nominating/Corporate Governance Committee.

Daniel R. Fishback has served as a member of our board of directors and as our President and Chief Executive Officer since June 2001. From January 2000 to March 2001, Mr. Fishback served as Vice President of Channels for Ariba, Inc., a provider of solutions to help companies manage their corporate spending. Mr. Fishback’s experience also includes senior executive positions at Trading Dynamics, Inc. (prior to its acquisition by Ariba in January 2000) and Hyperion Solutions Corporation. Mr. Fishback holds a B.A. in Business Administration from the University of Minnesota.

Mark A. Culhane has served as our Executive Vice President and Chief Financial Officer since August 2001. From September 1998 to August 2001, Mr. Culhane served as Chief Financial Officer of iManage, Inc., a provider of e-business content and collaboration software. From July 1992 to December 1997, Mr. Culhane served as Chief Financial Officer for SciClone Pharmaceuticals, Inc., an international biopharmaceutical company. From July 1982 to July 1992, Mr. Culhane served as an accountant and senior manager at PricewaterhouseCoopers LLP, where he managed numerous client accounts across a variety of high technology industries. Mr. Culhane holds a B.A. in Business Administration from the University of South Dakota.

John C. Crouch has served as our Senior Vice President of Worldwide Sales since November 2003. From May 2003 to November 2003, Mr. Crouch served as Vice President of Sales of Spoke Software, Inc, a software company. From May 1999 to April 2003, Mr. Crouch served as Vice President of European Operations for Blue Martini Software, Inc., a sales interaction software company. Mr. Crouch’s experience also includes senior positions at Portivity, Inc., Chordiant Software, Inc. and Scopus Technology, Inc. (acquired by Siebel Systems, Inc.). Mr. Crouch holds a B.S. in Industrial Engineering from the University of Michigan.

James H. Dai has served as our Senior Vice President of Engineering and Operations since March 2004. From July 2001 to March 2004, Mr. Dai served as a Senior Director at Siebel Systems, Inc. (acquired by Oracle Corporation), a provider of customer relationship management applications. From November 1998 to June 2001, Mr. Dai served as the Vice President of Engineering and Operations at Vivant Corporation, a software company. Mr. Dai’s experience also includes executive positions at DoubleTwist, Inc. and Informix Corp. Mr. Dai holds a B.A. in Computer Science from the University of California at Berkeley and an M.S. in Engineering Management from Stanford University.

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Michael L. Frandsen has served as our Senior Vice President of Products and Product Strategy since November 2006. From September 2004 to November 2006, Mr. Frandsen served as the Chief Executive Officer and President of TradePoint Solutions, Inc., prior to our acquisition of TradePoint in November 2006. From January 2003 through August 2004, Mr. Frandsen was an independent consultant advising technology companies on corporate development matters. From November 1995 to December 2002, Mr. Frandsen served as Vice President and General Manager of Supply Chain Management for PeopleSoft, Inc., an enterprise software company. From January 1990 to November 1995, Mr. Frandsen served as an Associate Partner with Andersen Consulting, a consulting firm. Mr. Frandsen holds a B.S. in Finance/Information Systems from the University of Colorado.

Ronald E. F. Codd has been a member of our board of directors since March 2007. Mr. Codd has been an independent business consultant since April 2002. From January 1999 to April 2002, Mr. Codd served as President, Chief Executive Officer and a director of Momentum Business Applications, Inc., an enterprise software company. From September 1991 to December 1998, Mr. Codd served as Senior Vice President of Finance and Administration and Chief Financial Officer of PeopleSoft, Inc. Mr. Codd currently serves on the boards of directors of Interwoven, Inc., a provider of enterprise content management software, and Agile Software Corporation, an enterprise software company. Mr. Codd holds a B.S. in Accounting from the University of California at Berkeley and an M.M. from the Kellogg Graduate School of Management at Northwestern University.

Linda Fayne Levinson has been a member of our board of directors since June 2005. Ms. Levinson has been Executive Chair of X1 Technologies, Inc., a provider of secure enterprise desktop search solutions, since November 2006. She is also the Non-Executive Chair of Connexus Corporation (formerly Vendare Media Corporation), an online media and marketing company, where she served as both Chair and Interim Chief Executive Officer from February 2006 through July 2006. From 1997 to December 2004, Ms. Levinson was a partner at GRP Partners, a venture capital fund investing in start-up and early-stage retail and electronic commerce companies. From 1994 to 1997, Ms. Levinson was President of Fayne Levinson Associates, an independent consulting firm. Ms. Levinson has also served as an executive with Creative Artists Agency Inc., as a partner in the merchant banking operations of Alfred Checchi Associates, Inc., as a Senior Vice President of American Express and as a Partner at McKinsey & Co. Ms. Levinson also serves as a member of the board of directors of Ingram Micro Inc., Jacobs Engineering Group, Inc., NCR Corporation and Western Union, Inc. Ms. Levinson holds an A.B. in Russian Studies from Barnard College, an M.A. in Russian Literature from Harvard University and an M.B.A. from the NYU Stern School of Business.

Victor L. Lund has been a member of our board of directors since April 2005, and has been Chairman of the board of directors since December 2006. From May 2002 to December 2004, Mr. Lund served as Chairman of the board of directors of Mariner Health Care, Inc., a long-term health care services company. From June 1999 to June 2002, Mr. Lund served as Vice Chairman of Albertson’s, Inc., a food and drug retailer. From 1995 until its acquisition by Albertson’s in June 1999, Mr. Lund served as Chair of the board of directors of American Stores Company and as Chief Executive Officer of American Stores Company from 1992 until 1999. Mr. Lund was President of American Stores Company from 1992 to 1995. Prior to joining American Stores Company in 1977, Mr. Lund was a practicing certified public accountant. Mr. Lund also currently serves on the board of directors of Borders Group, Inc., Del Monte Foods Company, Delta Air Lines, Inc., Service Corporation International and NCR Corporation. Mr. Lund holds a B.A. in Accounting and an M.B.A. from the University of Utah.

Joshua W. R. Pickus has been a member of our board of directors since March 2007. Mr. Pickus has served as President and Chief Executive Officer of SupportSoft, Inc., a software company, since April 2006. Prior to that time, Mr. Pickus was Senior Vice President and General Manager of the Clarity Division at Computer Associates International, Inc., an IT management software company, from August 2005 until April 2006. From November 2002 until August 2005, Mr. Pickus served as President and Chief Executive Officer of Niku Corporation (acquired by Computer Associates), a software company, and the Chair of the board of directors of Niku from February 2003 until August 2005. From February 2001 to November 2002, Mr. Pickus served as Chief Financial Officer of Niku, and from November 1999 to January 2001 as President of Vertical Markets for Niku. Prior to joining Niku, Mr. Pickus was a partner in the private equity group at Bowman Capital Management, a technology investment firm, and a partner at Venture Law Group, a Silicon Valley law firm. Mr. Pickus holds an A.B. in Public and International Affairs from Princeton University and a J.D. from the University of Chicago Law School.

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Charles J. Robel has been a member of our board of directors since September 2006. Mr. Robel has been a private investor since December 2005. From June 2000 to December 2005, Mr. Robel was a Managing Member and Chief of Operations for Hummer Winblad Venture Partners, a venture capital firm. From 1995 to 2000, Mr. Robel led the High Technology Transaction Services Group of PricewaterhouseCoopers LLP in Silicon Valley and served as the partner in charge of the Software Industry Group at PricewaterhouseCoopers from 1985 to 1995. Mr. Robel also serves as a member of the board of directors and Chair of the audit committee for Adaptec, Inc., as Chair of the board of directors and Chair of the audit committee at McAfee, Inc., and as a member of the board of directors and audit committee of Informatica Corp. Mr. Robel holds a B.S. in Accounting from Arizona State University.

James D. Sayre has been a member of our board of directors since November 2001. Mr. Sayre is President of Cargill Ventures, the venture capital business unit of Cargill, Incorporated. He served on Cargill’s I/T Strategy Corporate Steering Committee from September 2003 through August 2006. Prior to his current position, Mr. Sayre was the Director of Mergers and Acquisitions for Cargill. Prior to joining Cargill, Mr. Sayre was a senior manager for Deloitte Consulting, a consulting firm, from August 1988 to December 2004, working in its business reorganization group. In addition, Mr. Sayre has worked in the U.S. Department of Agriculture and for the U.S. Senate. Mr. Sayre holds a B.A. in Economics from the University of California at Davis and an M.B.A. from Harvard University.

Board Composition

Independent Directors

Our board of directors is currently composed of seven members. Messrs. Codd, Lund, Pickus, Robel and Sayre and Ms. Levinson qualify as independent directors in accordance with the published listing requirements of The NASDAQ Global Market, or NASDAQ. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his or her family members has engaged in various types of business dealings with us. In addition, as further required by the NASDAQ rules, our board of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Selection Arrangements

Messrs. Fishback and Sayre were elected pursuant to a voting agreement that we entered into with certain holders of our common and preferred stock. This voting agreement will terminate upon the closing of this offering and there will be no further contractual obligations regarding the election of our directors. Our directors hold office until their successors have been elected and qualified or their earlier death, resignation or removal.

Classified Board

Our restated certificate of incorporation and our amended and restated bylaws that will become effective immediately prior to the closing of this offering provide for a classified board of directors consisting of three classes of directors, each serving a staggered three-year term. As a result, only one class of our board of directors will be elected each year from and after the closing. Ms. Levinson and Mr. Sayre have been designated Class I directors whose terms will expire at the first annual meeting of stockholders after the closing of this offering. Messrs. Lund and Pickus have been designated Class II directors whose terms will expire at the second annual meeting of stockholders after the closing of this offering. Messrs. Codd, Fishback and Robel have been designated Class III directors whose terms will expire at the third annual meeting of stockholders after the closing of this offering. Our restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the closing of this offering provide that the number of authorized directors may be changed only by resolution of a majority of the number of directors then authorized (including any vacancies), and that, except as otherwise required by law or by resolution of our board of directors, any vacancies or new directorships on our board of directors may be filled only by vote of the directors and not by stockholders. The classification of our board of directors may have the effect of delaying or preventing changes in control of our company. See “Description of Capital Stock — Anti-Takeover Effects of Our Charter and Bylaws and Delaware Law.”

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Board Committees

Our board of directors has established an audit committee, a compensation committee and a nominating/corporate governance committee. Our board of directors and its committees set schedules to meet throughout the year and also can hold special meetings and act by written consent under certain circumstances. The independent members of our board of directors also regularly will hold separate executive session meetings at which only independent directors are present. Our board of directors has delegated various responsibilities and authority to its committees as generally described below. The committees will regularly report on their activities and actions to the full board of directors. Each member of each committee of our board of directors qualifies as an independent director in accordance with the NASDAQ standards described above. Each committee of our board of directors has a written charter approved by our board of directors. Upon the effectiveness of the registration statement of which this prospectus forms a part, copies of each charter will be posted on our website at www.demandtec.com under the Investor Relations section. The inclusion of our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus.

Audit Committee

The audit committee of our board of directors oversees our accounting practices, system of internal controls, audit processes and financial reporting processes. Among other things, our audit committee is responsible for reviewing our disclosure controls and processes and the adequacy and effectiveness of our internal controls. It also discusses the scope and results of the audit with our independent registered public accounting firm, reviews with our management and our independent registered public accounting firm our interim and year-end operating results and, as appropriate, initiates inquiries into aspects of our financial affairs. Our audit committee has oversight for our code of business conduct and is responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, or matters related to our code of business conduct, and for the confidential, anonymous submission by our employees of concerns regarding these matters. In addition, our audit committee has sole and direct responsibility for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, including approving services and fee arrangements. Our audit committee also is responsible for reviewing and approving all related party transactions in accordance with our related party transactions approval policy.

The current members of our audit committee are Messrs. Codd, Robel and Sayre. The composition of our audit committee meets the requirements for independence under the rules and regulations of the SEC and the listing standards of NASDAQ, including their transitional rules. Each of Messrs. Codd, Robel and Sayre is financially literate. Mr. Robel chairs the audit committee.

Our board of directors has determined that each of Messrs. Codd and Robel is an “audit committee financial expert” as defined in Item 407(d)(5)(i) of Regulation S-K. The designation does not impose on Messrs. Codd or Robel any duties, obligations or liability that are greater than are generally imposed on them as members of our audit committee and our board of directors.

Compensation Committee

The purpose of our compensation committee is to have primary responsibility for discharging the responsibilities of our board of directors relating to executive compensation policies and programs. Among other things, specific responsibilities of our compensation committee include evaluating the performance of our chief executive officer and determining our chief executive officer’s compensation. In consultation with our chief executive officer, it will also determine the compensation of our other executive officers. In addition, our compensation committee will administer our equity compensation plans and has the authority to grant equity awards and approve modifications of those awards under our equity compensation plans, subject to the terms and conditions of the equity award policy adopted by our board of directors. Our compensation committee also reviews and approves various other compensation policies and matters.

The current members of our compensation committee are Ms. Levinson and Messrs. Lund and Sayre. Ms. Levinson chairs the compensation committee. Each of Ms. Levinson and Messrs. Lund and Sayre is an “independent director” under the applicable rules and regulations of NASDAQ, a “non-employee director” within

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the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, and an “outside director,” as that term is defined under Section 162(m) of the Internal Revenue Code of 1986.

Nominating/Corporate Governance Committee

The nominating/corporate governance committee of our board of directors oversees the nomination of directors, including, among other things, identifying, evaluating and making recommendations of nominees to our board of directors, and evaluates the performance of our board of directors and individual directors. Our nominating/corporate governance committee is also responsible for reviewing developments in corporate governance practices, evaluating the adequacy of our corporate governance practices and making recommendations to our board of directors concerning corporate governance matters.

The current members of our nominating/corporate governance committee are Messrs. Lund and Pickus. Mr. Lund chairs the nominating/corporate governance committee. Each of Messrs. Lund and Pickus is an “independent director” under the applicable rules and regulations of NASDAQ.

Fiscal 2007 Director Compensation

The following table sets forth the total compensation earned by each person who served as a director during fiscal 2007, other than a director who also served as a named executive officer.

	Fees Earned
	or Paid in		Option
Name	Cash(1)		Awards(2)		Total
James A. Dorrian(3)	$	—	$	—	$	—
Linda Fayne Levinson		16,000		6,366		22,366
Victor L. Lund		16,000		6,625		22,625
Charles J. Robel		8,000		13,334		21,334
James D. Sayre		—		—		—

(1)	During fiscal 2007, our non-employee directors, other than James D. Sayre, received a cash retainer of $4,000 per quarter.
(2)	Amount reflects the total compensation expense for fiscal 2007, calculated in accordance with SFAS No. 123R and using the modified prospective method for unvested awards as of March 1, 2006. See note 9 of the notes to our consolidated financial statements, included elsewhere in this prospectus, for a discussion of the assumptions made in determining the grant date fair value and compensation expense of equity awards.
(3)	Mr. Dorrian resigned from our board of directors in February 2007.

The following table describes option grants that we have made to our non-employee directors that were outstanding as of February 28, 2007.

			Number of Shares
			Subject to
			Options		Exercise Price
Name	Date of Grant		Granted		per Share
Linda Fayne Levinson		6/17/2005		200,000	$	0.75
		8/5/2005		25,000		0.75
Victor L. Lund		4/15/2005		200,000		0.75
		8/5/2005		25,000		0.75
Charles J. Robel		9/19/2006		150,000		1.60
		12/20/2006		15,000		1.90

Messrs. Codd and Pickus joined our board of directors after the end of fiscal 2007. Upon joining our board of directors, they each received an option to purchase 165,000 shares of our common stock at an exercise price of $3.35 per share.

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All options have a ten year term, subject to earlier termination if the director’s service terminates earlier. One-quarter of the shares subject to each option vest on the first anniversary of the vesting commencement date, and the balance vests in equal monthly installments over the next 36 months of continuous service. If DemandTec is subject to a change in control and a director’s service terminates, then all of the shares subject to that director’s options vest immediately.

Our board of directors has adopted a compensation program for non-employee directors that will become effective upon the closing of this offering. Pursuant to this program, our non-employee directors will receive the following compensation:

•  Each non-employee director will receive an annual cash retainer of $25,000. In addition, the chair of the audit committee of our board of directors will receive an annual cash retainer of $20,000, and the other members of the audit committee will receive an annual cash retainer of $10,000. All retainers will be paid quarterly.

•  The amount of cash compensation paid to non-employee directors (including committee chairs and members) will be reviewed each year at the time of the annual meeting of our stockholders, starting in 2008.

•  At the first regular board meeting after the closing of this offering, each non-employee director will receive an option to purchase 15,000 shares of our common stock, except that Mr. Lund, the non-executive chair of our board of directors, will receive an option to purchase 30,000 shares. The exercise price will be equal to the closing price of our common stock on The NASDAQ Global Market on the date of grant. These options will vest and become exercisable in full on the date of the 2008 annual meeting of our stockholders. In addition, these options will vest and become exercisable in full if DemandTec is subject to a change in control and the director’s service terminates. Each option will have a ten-year term, except that it will expire 12 months after the director’s service terminates for any reason.

•  On the date of each annual meeting of our stockholders, starting in 2008, each non-employee director will receive an additional option to purchase shares of our common stock. The number of shares will be determined by the compensation committee of our board of directors in consultation with an independent compensation expert. We expect that the number of shares granted to the non-executive chair of our board of directors will be larger than those granted to other non-employee directors.

•  A new non-employee director will receive an option to purchase 40,000 shares of our common stock upon joining our board of directors. The exercise price will be equal to the closing price of our common stock on The NASDAQ Global Market on the date of grant. The option will vest and become exercisable in installments over a four-year period, except that it will vest and become exercisable in full in the event that DemandTec is subject to a change in control and the director’s service terminates. The option will have a ten-year term, except that it will expire 12 months after the director’s service terminates for any reason.

Code of Business Conduct

Our board of directors has adopted a code of business conduct. The code of business conduct will apply to all of our employees, officers and directors. Upon the effectiveness of the registration statement of which this prospectus forms a part, the full text of our code of business conduct will be posted on our website at www.demandtec.com under the Investor Relations section. We intend to disclose future amendments to certain provisions of our code of business conduct, or waivers of these provisions, at the same location on our website identified above and also in public filings. The inclusion of our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus.

Compensation Committee Interlocks and Insider Participation

As noted above, the compensation committee of our board of directors currently consists of Ms. Levinson and Messrs. Lund and Sayre. None of our executive officers has ever served as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our board of directors or our compensation committee.

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Limitation of Liability and Indemnification

Prior to the closing of this offering, we will have entered into an indemnification agreement with each of our directors and executive officers and certain other key employees. The agreement will provide that we will indemnify him or her against any and all expenses that he or she incurs because of his or her status as one of our directors, executive officers or key employees, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and our amended and restated bylaws, except in a proceeding initiated by that person without the approval of our board of directors. In addition, the agreement will provide that, to the fullest extent permitted by Delaware law, we will advance all expenses incurred by him or her in connection with a legal proceeding.

Our restated certificate of incorporation and amended and restated bylaws contain provisions relating to the limitation of liability and indemnification of directors and officers. The restated certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:

•  for any breach of the director’s duty of loyalty to us or our stockholders;

•  for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

•  in respect of unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•  for any transaction from which the director derives any improper personal benefit.

Our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred in connection with their service for or on our behalf. Our amended and restated bylaws provide that we must advance the expenses incurred by a director or officer in advance of the final disposition of an action or proceeding. Our amended and restated bylaws also authorize us to indemnify any of our employees or agents and permit us to secure insurance on behalf of any officer, director, employee or agent for any liability arising out of his or her action in that capacity, whether or not Delaware law would otherwise permit indemnification.

Compensation Discussion and Analysis

Introduction

We operate in the intensely competitive technology industry, addressing the needs of retailers and CP companies operating on a global scale. Our business, like the businesses of our customers, is characterized by evolving technology, rapidly changing industry trends and customer needs and aggressive competitors. In this environment, our success depends on assembling and maintaining a leadership team with the integrity, skills and dedication needed to manage a dynamic organization and the vision to anticipate and respond to future market developments. We use our executive compensation program to help us achieve this objective. As described below, portions of the program have been designed to enable us to recruit and retain a group of executives who have the collective and individual abilities necessary to run our business to meet these challenges. Other portions are intended to focus these executives on achieving financial results that enhance the value of our stockholders’ investment. At the same time, we have structured the program to be flexible, so that we can meet the changing needs of our business over time.

Our officers discussed in this Compensation Discussion and Analysis section are Messrs. Fishback, Culhane, Crouch, Dai and Frandsen, who are referred to below as the named executive officers.

Compensation Philosophy

Our goal is to attract, motivate and retain key leadership. We believe that, to be successful, we need to be competitive not only in our software offerings, but also in the quality of our executives. This, in turn, requires that we pay our executives competitively. Historically, we have set our total executive compensation at levels that, we believe, have enabled us to hire and retain individuals in a competitive environment and to reward both individual performance and contribution to our overall business goals. In setting these compensation levels, we have

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benchmarked against companies with which we compete for talent, taking into account the experience level of our executives. The hallmark of our compensation philosophy is performance-based compensation. For fiscal 2008, we have engaged an independent compensation consultant, Frederick W. Cook & Co., Inc., to assist the compensation committee of our board of directors in establishing a comprehensive set of programs and guidelines for our executive compensation.

Our executive compensation program is guided by the following four principles:

1. We strive to pay at competitive market levels.  When setting targeted total compensation for our executive officers, we seek to ensure that both the cash (base salary and annual target bonus) and equity components of their packages are competitive with the market in which we compete for talent. This supports our objective of attracting and retaining high-quality executives and ensures that the overall economic cost of compensation is reasonable and, therefore, sustainable in relation to our peers. Historically, we have set the base salary and annual bonus components of pay at competitive levels, using survey and proxy statement data and market data acquired during recruiting. We also have considered relative cash compensation levels within the executive team.

2. While we use both current cash compensation and long-term equity incentives, we skew our compensation toward the long-term incentives.  We use our base salary to ensure that our executives have a stable source of income. Our annual bonus plan is designed to focus our executive team on those financial goals that we believe are most closely related to stockholder value. Historically, the biggest portion of our annual compensation has been stock options, which we considered an appropriate way to encourage executives to build the value of a private company. Starting with fiscal 2008, we will introduce a performance-based equity compensation program for our named executive officers and other key employees, which is described below.

3. We have structured our compensation program to align executives with stockholders and reward superior performance.  Although we provide our executive officers with a competitive base salary, we also pay an annual bonus based on the achievement of specific financial and operational goals. For fiscal 2007, this was primarily accomplished through the use of performance-based annual cash bonuses rewarding the achievement of goals based on individual performance, the annual contract value of our bookings and our cash flow. Under the annual bonus program, above-target performance resulted in above-target annual bonus awards. For fiscal 2008, we have increased the performance-based focus of our compensation plan by taking the following steps:

•  weighting the annual cash compensation so that the annual bonus is a larger proportion of the total cash compensation and leveraging it to a greater extent in order to reward above-target performance, and

•  granting performance share units that will only vest in full if a two-year financial target is achieved and an additional service requirement is satisfied.

4. To encourage high-performing executives to stay with us, key program elements are structured to enable them to share in our long-term growth and success.  The compensation of our executives is structured to ensure that DemandTec, our stockholders and our executives all benefit. Our executives must stay with us to vest in their long-term incentive awards. The size of their awards is structured so that they build net worth as we build stockholder value.

We believe that by implementing these measures, we are able to reinforce our goal of maintaining a results-oriented culture that provides above-target rewards only when performance is also above-target. Thus, we believe that the interests of our executives are directly aligned with those of our stockholders, as the financial success of both is contingent upon performance.

The compensation committee of our board of directors, which oversees our executive compensation program, evaluates these four principles regularly to ensure that they are consistent with our goals and needs. The committee believes that the executive compensation program is an important tool for our chief executive officer in managing DemandTec. Accordingly, in the course of structuring the executive compensation program, the committee works closely with Mr. Fishback and our board of directors to ensure that all constituencies agree upon how compensation programs need to be integrated with our other business goals. The committee then works with Mr. Fishback and, in

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the future, the compensation consultant that has been retained by the committee to structure an appropriate program. After reviewing peer group data, the committee will receive recommendations independently from both Mr. Fishback and the consultant regarding compensation levels for executive officers other than Mr. Fishback. For Mr. Fishback’s own pay, the committee will work directly with the consultant and our board of directors to establish the appropriate level of pay, based on a performance evaluation by the committee that has been discussed with the full board of directors. Neither Mr. Fishback nor other members of management make any recommendation on this subject.

Overall Compensation Levels

Each year, we intend to review the base salaries and annual and long-term incentive opportunities offered to our executive officers to ensure that they are competitive with market practices, support our executive recruitment and retention objectives, and are internally equitable among executives. While we do not set specific total compensation targets, our process essentially results in a total amount of compensation that we will pay an executive if all corporate and individual performance objectives are fully met. While we strive to pay at market median for on-target performance, we always consider the impact of compensation charges, cash and non-cash, on our operating results to ensure that these two goals are balanced.

As part of this process, for fiscal 2008 and subsequent years, the compensation committee will consider market data and input provided by its compensation consultant. The market data are derived from both analysis of peer companies’ publicly filed proxy statements and technology industry compensation surveys. We use the data to match our specific executive positions to similar positions at comparable companies, which are discussed below. We also take into consideration market trends to determine how base salary and annual cash incentives are changing from year to year and how each component relates to the others as a percentage of total compensation. We generally start by setting base salaries at the relevant market median and build on that, factoring in performance and the experience and skills of each executive officer. In other words, we use the market data only to provide context, and the cash compensation decisions also take into account individual experience and internal fairness. Accordingly, base salaries vary among the executive officers. We set annual cash incentive target awards as a percentage of base salary. Through this process, we believe that we have balanced the cash compensation package for our executive officers for both internal and external fairness.

Peer Group and Benchmarking

For fiscal 2008, we benchmarked the various elements of our executive compensation program in order to gauge where we stood versus the market and our competitors. We used several methods to benchmark our executive compensation practices against other companies. First, we used publicly available market surveys, such as the 2006 Radford Technology Survey, to match the roles of our executive officers to roles in the surveys; the Radford Technology Survey reports on public and private technology companies with sales between $50 million and $200 million. We then compared the actual base salary and annual cash incentives for our executive officers to those disclosed in the surveys. In addition, we conducted a total compensation study, which was reviewed for accuracy and appropriateness by the compensation committee’s consultant. The consultant also conducted an analysis of the executive officers to assist us with establishing a budget for overall long-term incentive awards and assisted the compensation committee with setting compensation for the executive officers. To gain additional perspective, we evaluated the base salary, annual incentive awards and long-term incentives provided to the named executive officers of the companies in our peer group. We extracted these data from publicly available sources.

We selected our public peer companies for competitive pay comparisons because they are major labor and/or capital market competitors, are roughly similar to us in revenue and potential market capitalization, and have similar growth or market performance potential. All of our peers are in Global Industry Classification System Code 451030 (software). Many institutional investors use this classification system to find peers for assessing the reasonableness of a company’s compensation program. For fiscal 2008, our primary peer group, as identified by Frederick W. Cook & Co., includes the following companies:

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•  Actuate

•  Agile Software

•  Applix

•  Bottomline Technologies

•  Callidus Software

•  EPIQ Systems

•  ESpeed

•  FalconStor Software

•  Interactive Intelligence

•  Intervoice

•  MapInfo

•  NetScout Systems

•  OPNET Technologies

•  Radiant Systems

•  Renaissance Learning

•  Secure Computing

•  SumTotal Systems

•  VA Software

Elements of Executive Compensation

We used several elements in our executive compensation program in fiscal 2007, including:

•  cash compensation, consisting of base salary and annual cash bonus; and

•  long-term equity incentives in the form of stock option awards.

For fiscal 2008 and subsequent years, we intend to use performance stock units, or PSUs, as the principal form of long-term equity incentive for our executive officers. We selected PSUs because we believe that they offer the best opportunity to align the interests of our executive officers with the interests of our stockholders. While PSUs can be effective wealth creation vehicles, they have two triggers for payout: first, we have to deliver on predetermined performance metrics before the shares are earned; and second, the executive has to remain employed beyond the performance period before the shares vest. Accordingly, PSUs drive both performance and retention. Because several of our named executive officers and other members of our senior management team have significant tenure with us and already are vested in a substantial portion of their prior stock option awards, it is important that our long-term program focus on retention. At the same time, we did not want to make large grants that were not closely tied to those performance metrics that we believe drive value. We believe that PSUs meet both needs. Stock options have served us well in our executive compensation programs as a private company, and we expect that we may continue to grant stock options to new members of our senior management team as necessary to make competitive employment offers. However, in the case of our existing management team, we believe that PSUs offer the best opportunity to align the interests of our executive officers with the interests of our stockholders.

Base Salary.  For fiscal 2007, four of our named executive officers were long-term employees. The base salaries paid to the named executive officers during fiscal 2007 are reported in the “Fiscal 2007 Summary Compensation Table” below. They were broadly the same as the base salaries paid in fiscal 2006, and we have determined that no material changes in the base salary amounts of our named executive officers are required for fiscal 2008. Therefore, their 2008 base salaries are as follows:

Daniel R. Fishback	$	450,000
Mark A. Culhane		350,000
John C. Crouch		225,000
James H. Dai		250,000
Michael L. Frandsen		250,000

Annual Cash Bonus.  In fiscal 2007, our executive officers were entitled to earn annual cash bonuses under our Executive Management Team Compensation Plan. We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our long-term objectives. This plan ensures that a significant portion of each executive officer’s cash compensation is at risk and payable only when our stockholders have also benefited from his efforts.

For fiscal 2007, the compensation committee established a series of objectives for our executive officers based on bookings, cash flow and individual performance objectives, or MBOs, to be evaluated in determining the bonus amounts. These metrics were given various weights for each executive officer, based on his different role and responsibilities. For Messrs. Fishback and Culhane, the compensation committee determined the cash bonus in its discretion on the basis of a subjective review of their performance. For Mr. Crouch, who is our Senior Vice President

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of Worldwide Sales, the compensation committee determined the cash bonus giving equal weight to bookings and cash collections objectives. For Mr. Dai, the compensation committee determined the cash bonus on the basis of a bookings objective (35%), a cash balance objective (35%) and his individual MBOs (30%). Mr. Frandsen was not subject to our Executive Management Team Compensation Plan during fiscal 2007. Instead, his bonus was determined under the plan of his former employer, TradePoint, which we acquired in November 2006.

We exceeded our bookings and cash collections or cash balance objectives for fiscal 2007, and the compensation committee took our over-performance into account in determining the discretionary cash bonuses of Messrs. Fishback and Culhane. The cash bonuses of Messrs. Crouch and Dai were calculated under the formula set forth in the Executive Management Team Compensation Plan. Mr. Frandsen’s bonus was calculated under the formula set forth in the TradePoint plan. The actual cash bonuses earned by the executive officers for fiscal 2007 are reported in the “Fiscal 2007 Summary Compensation Table” below, in the columns entitled “Bonus” and “Non-Equity Incentive Plan Compensation.”

On the basis of the peer group data described above, the compensation committee’s consultant recommended modifications in the target bonuses of the named executive officers for fiscal 2008. Accordingly, the annual target bonuses are now as follows:

Daniel R. Fishback	$	250,000
Mark A. Culhane		175,000
John C. Crouch		225,000
James H. Dai		87,500
Michael L. Frandsen		87,500

The actual bonuses can range from 0% to 150% of the target amounts, except that the maximum bonus is 250% of the target amount for Mr. Crouch. The payout percentage depends on the degree to which we attain or exceed corporate performance objectives. These objectives are based on performance criteria that include bookings, non-GAAP free cash flow and non-GAAP operating margin. The compensation committee believes these performance criteria are challenging but attainable. The compensation committee retains the authority to pay discretionary bonuses in addition to the amounts produced by the formula or to reduce the bonus amounts produced by the formula.

Long-Term Equity Incentives.  We provide a substantial portion of our executives’ total compensation in the form of equity compensation. Our equity compensation varies directly with each executive’s role and degree of responsibility. Through fiscal 2007, we used only one vehicle — stock options — to provide long-term equity compensation to our executive officers. For fiscal 2008 and beyond, we intend to use performance-based stock units as long-term incentives for our current executive officers, although we may continue using stock options as necessary to attract new executive officers.

Stock Options.  During fiscal 2007, we made stock option grants to Messrs. Fishback, Culhane and Frandsen under our 1999 Equity Incentive Plan. These grants are described in the “Fiscal 2007 Grants of Plan-Based Awards” table below. The options granted to Messrs. Fishback and Culhane during fiscal 2007 vest through continuous service over four years, with 12.5% of the underlying shares vesting after six months of continuous service and the remainder vesting in equal monthly installments over the next 42 months. The options granted to Mr. Frandsen during fiscal 2007 vest under two different vesting schedules. One award vests through continuous service over four years, with 12.5% of the underlying shares vesting after six months of continuous service and the remainder vesting in equal monthly installments over the next 42 months. The other award vests through continuous service over two years, with 25% of the underlying shares vesting after six months of continuous service and the remainder vesting in equal monthly installments over the next 18 months. We departed from our standard vesting schedule for the second grant to Mr. Frandsen as a result of negotiations that occurred when we acquired his former employer, TradePoint. The vesting feature is intended to ensure that the named executive officer will realize meaningful value from his option only if he remains employed with us for an extended period of time and the market price of our common stock appreciates over that time.

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The options that we granted to the named executive officers during fiscal 2007 are exercisable only after the shares vest. The options that we granted to our executive officers prior to fiscal 2007 are immediately exercisable for unvested as well as vested shares. If an optionee exercised an option to purchase unvested shares, we may then repurchase the remaining unvested shares at the exercise price if the optionee’s service terminates for any reason before all of the shares have vested. Exercising an option before the underlying shares vest may be attractive to the optionee, because the optionee may make an election under Section 83(b) of the Internal Revenue Code and obtain capital gains treatment for any increase in the value of the shares that occurs after the option exercise. If the appreciation in the value of the stock occurs before the option is exercised, it is taxable as ordinary income or may be subject to the alternative minimum tax, depending on the type of option.

The exercise price per share of our stock options has always been equal to the fair market value per share of our common stock on the date of grant. Prior to this offering, our board of directors set the exercise price using factors it considered appropriate, which since December 2005 included a written report of a third party valuation firm. Following this offering, the compensation committee of our board of directors will set the exercise price at the closing price of our common stock on The NASDAQ Global Market on the date of the grant.

Performance Stock Units.  Our 2007 Equity Incentive Plan, which is described under “Management — Equity Benefit Plans” below, provides for the grant of stock units. Stock units are contractual rights that entitle the recipient to receive one share of our common stock per unit once the stock units have vested. In general, stock units may vest on the basis of length of service, the attainment of performance-based milestones, or a combination of both, as determined by the compensation committee. The 2007 Equity Incentive Plan provides that the compensation committee may establish performance milestones based on one or more of the criteria described in the plan summary under “Management — Equity Benefit Plans” below.

Immediately after this offering, we expect our compensation committee to make grants of PSUs to our named executive officers and other key employees under our 2007 Equity Incentive Plan. PSUs are stock units that vest first on the basis of performance and then on the basis of length of service. The initial PSU grants will be divided into two tranches. The first tranche is expected to consist of 30% of each grant, for fiscal 2008 performance. The second tranche is expected to consist of the remaining 70%, for fiscal 2009 performance.

•  The first tranche will not vest unless we attain performance milestones for fiscal 2008. If these milestones are attained, the officer must then remain employed by us for a period of time after the end of fiscal 2008 in order to vest in the first tranche. The required period of time has not been determined but is not expected to exceed one year after the close of fiscal 2008. If the performance milestones are attained, the actual payout of the first tranche is expected to range up to 30% of the total number of PSUs included in the grant, depending on the actual results achieved. If the performance milestones are not attained, there will be no payout of the first tranche.

•  The second tranche will not vest unless we attain performance milestones for fiscal 2009. If these milestones are attained, the officer must then remain employed by us for a period of time after the end of fiscal 2009 in order to vest in the second tranche. The required period of time has not been determined but is not expected to exceed one year after the close of fiscal 2009. If the performance milestones are attained, the actual payout of the second tranche is expected to range up to 100% of the total number of PSUs included in the grant, depending on the actual results achieved. However, the payout of the second tranche will be reduced by the number of PSUs that was paid out as part of the first tranche. The total payout can in no event exceed 100% of the PSUs included in the award. If the performance milestones are not attained, there will be no payout of the second tranche.

For example, assume that a named executive officer receives an award of 10,000 PSUs immediately after this offering. Assume further that the service-based vesting requirement is six months for the first half of each tranche and 12 months for the second half. The first tranche would consist of 3,000 PSUs. This tranche could not fully vest unless we satisfy the highest level of performance metrics for fiscal 2008. If we attain the highest level of our performance metrics, the officer would then vest in 1,500 PSUs if he is still employed on August 31, 2008 (six months after the end of the performance period). He would vest in an additional 1,500 PSUs if he is still employed on February 28, 2009 (12 months after the end of the performance period). The second tranche would consist of 7,000 PSUs. This tranche could not fully vest unless we satisfy the highest level of performance metrics for fiscal

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2009. Assuming that we again attain the highest level of our performance metrics, the officer would then vest in 3,500 PSUs if he is still employed on August 31, 2009, and he would vest in the last 3,500 PSUs if he is still employed on February 28, 2010.

We anticipate that the performance-based vesting metrics of the initial PSU grants will be based on revenue growth, as determined under GAAP, and growth in free cash flow. Each metric would be weighted equally. The compensation committee may make appropriate adjustments in the performance goals to account for one-time extraordinary occurrences. While the committee intends to take a rigorous approach to any changes in the metrics, this flexibility ensures that the compensation program will not interfere with management’s desire to serve the interests of our stockholders.

If the PSUs vest, they will be converted into shares of our common stock and issued to the officer who received the award. In the event of an officer’s death or total disability, the service-based vesting requirement will be waived, and the PSUs will be paid out after the end of the applicable performance period to the extent that the performance objectives have been satisfied. If an officer’s employment terminates due to resignation or involuntary termination, his or her PSUs will be forfeited. In the event that DemandTec is subject to a change in control, all PSUs for which performance objectives have been met will vest immediately, regardless of whether the service-based vesting requirement has been met. All other PSUs will also vest when the change in control occurs, unless the acquiring company assumes the PSUs or replaces them with equivalent awards that vest solely on the basis of a service requirement. In addition, certain named executive officers are parties to agreements with us that provide for accelerated vesting of their options in the event of a change in control. See “Management — Employment Agreements and Offer Letters” below. We expect that the PSU awards of these officers would contain substantially the same acceleration provisions.

Financial Restatement.  Our compensation committee has not adopted a policy with respect to whether we will make retroactive adjustments to any cash or equity-based incentive compensation paid to officers or others where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement.

Tax Treatment.  Section 162(m) of the Internal Revenue Code places a limit of $1.0 million per person on the amount of compensation that we may deduct in any one year with respect to each of our named executive officers. There is an exemption from the $1.0 million limitation for performance-based compensation that meets certain requirements. All grants of options or stock appreciation rights under our 2007 Equity Incentive Plan are intended to qualify for the exemption. Grants of restricted shares or stock units under our 2007 Equity Incentive Plan may qualify for the exemption if vesting is contingent on the attainment of objectives based on the performance criteria set forth in the plan and if certain other requirements are satisfied. Grants of restricted shares or stock units that vest solely on the basis of service cannot qualify for the exemption. The initial PSU grants described above will not be exempt from the $1.0 million limitation, because the performance metrics will not be approved by the compensation committee within the first 90 days of the fiscal year. PSU grants for fiscal years after 2008 may qualify for the exemption. Our current cash incentive plan is not designed to qualify for the exemption. To maintain flexibility in compensating officers in a manner designed to promote varying corporate goals, our compensation committee has not adopted a policy requiring all compensation to be deductible. Although tax deductions for some amounts that we pay to our named executive officers as compensation may be limited by section 162(m), that limitation does not result in the current payment of increased federal income taxes by us due to our significant net operating loss carryforwards. Our compensation committee may approve compensation or changes to plans, programs or awards that may cause the compensation or awards to exceed the limitation under section 162(m) if it determines that action is appropriate and in our best interests.

Change in Control Arrangements

As described elsewhere in this prospectus, our named executive officers have entered into agreements with us that provide them with additional benefits and vesting acceleration in the event that DemandTec is subject to a change in control. See “Management — Employment Agreements and Offer Letters” below. These agreements were individually negotiated with each named executive officer. They are intended to preserve employee morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in

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control of DemandTec. In addition, the agreements are intended to align executive and stockholder interests by enabling an executive officer to consider a corporate transaction that is in the best interests of the stockholders and other constituents of DemandTec without undue concern about whether the transaction may jeopardize the officer’s own employment.

Executive Compensation

Fiscal 2007 Summary Compensation Table

The following table sets forth the total compensation earned by our “principal executive officer,” “principal financial officer” and our other executive officers for all services rendered in all capacities to us in fiscal 2007.

									Non-Equity
							Option		Incentive Plan
Name and Principal Position	Year		Salary		Bonus(1)		Awards(2)		Compensation(1)			Total
Daniel R. Fishback		2007	$	450,000	$	185,000	$	68,437	$	—		$	703,437
President and Chief Executive Officer
Mark A. Culhane		2007		350,000		158,000		29,022		—			537,022
Executive Vice President and Chief Financial Officer
John C. Crouch		2007		200,000		—		6,635		568,400(4	)		775,035
Senior Vice President of Worldwide Sales
James H. Dai		2007		250,000		—		11,378		147,529(4	)		408,907
Senior Vice President of Engineering and Operations
Michael L. Frandsen(3)		2007		73,300		—		12,268		68,288(4	)		153,856
Senior Vice President of Products and Product Strategy

(1)	See “Management — Compensation Discussion and Analysis” above for a summary of our bonus and non-equity incentive programs.
(2)	Amounts reflect the total compensation expense for fiscal 2007, calculated in accordance with SFAS No. 123R under the modified prospective transition method. See note 9 of the notes to our consolidated financial statements, included elsewhere in this prospectus, for a discussion of the assumptions made in determining the grant date fair value and compensation expense of equity awards.
(3)	Mr. Frandsen’s employment with us started on November 9, 2006.
(4)	The amounts in this column represent bonus payments under our Executive Management Team Compensation Plan.

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Fiscal 2007 Grants of Plan-Based Awards

The following table sets forth each plan-based award granted to our named executive officers during fiscal 2007.

									All Other
									Option
									Awards:
									Number of				Grant
									Securities		Exercise		Date Fair
			Estimated Future Payouts Under						Underlying		Price of		Value of
	Grant		Non-Equity Incentive Plan Awards(1)						Options(2)		Option		Option
Name	Date		Threshold		Target		Maximum		(#)		Awards(3)		Awards(4)
Daniel R. Fishback		12/20/2006	$	—	$	—	$	—		650,000	$	1.90	$	463,840
Mark A. Culhane		12/20/2006		—		—		—		300,000		1.90		214,080
John C. Crouch		—				200,000		—		—		—		—
James H. Dai		—				75,000		—		—		—		—
Michael L. Frandsen		12/20/2006		—		—		—		66,000		1.90		47,098
		12/20/2006		—		—		—		92,260		1.90		65,837

(1)	The amounts in these columns represent target payments under our 2007 Executive Management Team Compensation Plan. There was no minimum or maximum bonus payable to any named executive officer under this plan. For Mr. Crouch, the bonus was determined giving equal weight to bookings and cash collections objectives. For Mr. Dai, the bonus was determined on the basis of a bookings objective (35%), a cash balance objective (35%) and his individual MBOs (30%). The fiscal 2007 bonuses of Messrs. Fishback and Culhane were determined on a discretionary basis. Mr. Frandsen also did not participate in our 2007 Executive Management Team Compensation Plan. Instead, his bonus was determined under the plan of his former employer, TradePoint, which we acquired in November 2006.
(2)	The amounts in this column represent options granted under our 1999 Equity Incentive Plan. The options granted to Messrs. Fishback and Culhane become exercisable for 1/8th of the total shares when the optionee completes six months of continuous service following the grant date. These options become exercisable for 1/48th of the total shares when the optionee completes each subsequent month of continuous service. The same vesting schedule applies to the option for 92,260 shares granted to Mr. Frandsen. The option for 66,000 shares granted to Mr. Frandsen becomes exercisable for 1/4 of the total shares when he completes six months of continuous service following the grant date and for 1/24th of the total shares when he completes each subsequent month of continuous service. For a description of the vesting acceleration provisions applicable to the options held by our executive officers, please see the section titled “Management — Employment Agreements and Offer Letters” below.
(3)	The amounts in this column represent the fair market value of one share of our common stock, as determined by our board of directors, on the date of grant. Our board of directors determined the fair market value based on a written report prepared by a third-party valuation firm.
(4)	The amounts in this column represent the aggregate grant date fair value of the stock options, computed in accordance with SFAS No. 123R. See note 9 of the notes to our consolidated financial statements, included elsewhere in this prospectus, for a discussion of the assumptions made in determining the grant date fair value and compensation expense of equity awards.

Outstanding Equity Awards at Fiscal 2007 Year-End

The following table sets forth information regarding the number of unexercised options and the number of unvested option shares held by each of our named executive officers as of February 28, 2007.

The options granted to all of our named executive officers prior to fiscal 2007 were immediately exercisable for unvested as well as vested shares. If an optionee exercised an option to purchase unvested shares, we may repurchase the remaining unvested shares at the exercise price if the optionee’s service terminates for any reason before all shares vest. Optionees may wish to exercise an option before the underlying shares vest in order to make an election under Section 83(b) of the Internal Revenue Code and obtain capital gain treatment for any increase in the value of the shares that occurs after the option exercise. The numbers reported in the “Number of Securities Underlying Unexercised Options” columns indicate the number of shares underlying unexercised options that were, respectively, vested and unvested as of February 28, 2007. If an officer held unvested shares of our common stock

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that he acquired by exercising an option, the number of unvested option shares held as of February 28, 2007, is reported in the “Number of Securities Underlying Exercised Options That Have Not Vested” column.

The vesting schedule applicable to each outstanding option is described in the footnotes to the table below. For a description of the vesting acceleration provisions applicable to the options held by our named executive officers, please see the section titled “Management — Employment Agreements and Offer Letters” below.

	Option Awards
								Number of
								Securities
								Underlying
								Exercised
			Number of Securities					Options
	Vesting		Underlying					that Have		Option		Option
	Commencement		Unexercised Options(1)					Not Vested		Exercise		Expiration
Name	Date		Vested (#)		Unvested (#)			(#)(1)		Price		Date
Daniel R. Fishback		6/4/2001		868,750		—			—	$	0.20		6/4/2011
		3/15/2002		700,000		—			—		0.50		5/21/2012
		3/1/2004		160,416		59,584			—		0.50		3/19/2014
		6/1/2004		146,666		73,334			—		0.65		7/23/2014
		9/1/2004		132,916		87,084			—		0.65		9/10/2014
		3/1/2005		196,458		213,542			—		0.65		2/11/2015
		12/2/2005		160,416		389,584			—		1.25		12/2/2015
		12/20/2006		—		650,000	(3)		—		1.90		12/20/2016
Mark A. Culhane		3/15/2002		65,000		—			—		0.50		5/21/2012
		3/1/2003		146,875		3,125			—		0.50		3/21/2013
		3/1/2004		58,333		21,667			—		0.50		3/19/2014
		6/1/2004		53,333		26,667			—		0.65		7/23/2014
		9/1/2004		48,333		31,667			—		0.65		9/10/2014
		3/1/2005		81,458		88,542			—		0.65		2/11/2015
		12/2/2005		58,333		141,667			—		1.25		12/2/2015
		12/20/2006		—		300,000	(3)		—		1.90		12/20/2016
John C. Crouch		11/17/2003		385,125		88,875			—		0.50		12/12/2013
		3/1/2004		36,458		13,542			—		0.50		3/19/2014
		03/1/2005		11,979		13,021			—		0.65		2/11/2015
James H. Dai		3/19/2004		—		—			116,459		0.50		N/A
		03/1/2005		—		—			20,834		0.65		N/A
		12/2/2005		—		—			70,834		1.25		N/A
Michael L. Frandsen		11/9/2006		—		66,000	(2)		—		1.90		12/12/2016
		11/9/2006		—		92,260	(3)		—		1.90		12/12/2016

(1)	Except as indicated in footnote (2) below, all option shares vest with respect to 1/8th of the total shares six months after the date set forth in the “Vesting Commencement Date” column and with respect to 1/48th of the total shares each month thereafter, subject to the optionee’s continuing service.
(2)	This option vests and becomes exercisable with respect to 1/4 of the total shares six months after the date set forth in the “Vesting Commencement Date” column and with respect to 1/24th of the total shares each month thereafter, subject to the optionee’s continuing service.
(3)	This option becomes exercisable as it vests.

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Stock Vested During Fiscal 2007

The options granted to all of our employees prior to December 2005 were immediately exercisable for unvested as well as vested shares. If an optionee exercised an option to purchase unvested shares, we may repurchase the remaining unvested shares at the exercise price if the optionee’s service terminates for any reason before all shares vest.

No named executive officer exercised options during fiscal 2007. However, certain named executive officers exercised options in prior years in order to purchase unvested shares. The following table shows the number of such option shares owned by each named executive officer that vested during fiscal 2007. The numbers reported in the “Number of Shares That Vested” column indicate the number of all unvested option shares that vested during fiscal 2007. The numbers reported in the “Value Realized on Vesting” column represent the fair market value at the time of vesting of all unvested option shares that vested during fiscal 2007. Because there was no public market for our common stock on the dates the option shares vested, we have assumed that the fair market value of our common stock on the relevant vesting dates was equal to $          , which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus.

	Option Awards
	Number of		Value Realized
Name	Shares That Vested (#)		on Vesting
Daniel R. Fishback		4,167	$
Mark A. Culhane		—		—
John C. Crouch		—		—
James H. Dai		142,500
Michael L. Frandsen		—		—

Employment Agreements and Offer Letters

Daniel R. Fishback.  We entered into a letter agreement with Daniel R. Fishback in June 2001 and supplemented that agreement in 2005. Under the letter agreements, Mr. Fishback’s salary and bonus opportunity are determined each year by the compensation committee of our board of directors. If we terminate Mr. Fishback’s employment without cause at any time or if he is subject to a constructive termination within 12 months after an acquisition of DemandTec, he is entitled to a lump sum payment equal to six months of his base salary at the rate in effect at the time of termination. In addition, he is entitled to reimbursement of his premiums for medical and dental insurance coverage under COBRA or to continued coverage under our medical, dental, life and disability insurance programs, in either case for six months after the date of termination. If we terminate Mr. Fishback’s employment without cause, the vested portion of his stock options will be calculated as if he had completed an additional six months of service. If we are subject to a change in control, 50% of Mr. Fishback’s remaining unvested shares underlying his stock options will immediately vest. The balance of the unvested shares will vest in equal monthly installments over the 12 months following the change in control. If Mr. Fishback is subject to an actual termination without cause or constructive termination within 12 months after the change in control, all of his unvested shares will vest. These vesting acceleration rules apply to all of Mr. Fishback’s options, including options granted in the future.

Mark A. Culhane.  We entered into a letter agreement with Mark A. Culhane in August 2001 and supplemented that agreement in 2005. Mr. Culhane’s salary and bonus opportunity are determined each year by the compensation committee of our board of directors. If we terminate Mr. Culhane’s employment without cause at any time or if he is subject to a constructive termination within 12 months after a change in control, he is entitled to a lump sum payment equal to six months of his base salary at the rate in effect at the time of termination. In addition, he is entitled to reimbursement of his premiums for medical and dental insurance coverage under COBRA or to continued coverage under our medical, dental, life and disability insurance programs, in either case for six months after the date of termination. If we terminate Mr. Culhane’s employment without cause, the vested portion of his stock options will be calculated as if he had completed an additional six months of service. If we are subject to a

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change in control, the following percentage of Mr. Culhane’s remaining unvested shares underlying his stock options will immediately vest:

Year in Which Change in Control	Percentage of
Occurs Following Date of Grant	Unvested Shares Accelerated
Year 1		50	%
Year 2		66.66
Year 3		75
Year 4		100

The balance of the unvested shares will vest in equal monthly installments over the 12 months following the change in control. If Mr. Culhane is subject to an actual termination without cause or constructive termination within 12 months after the change in control, all of his unvested shares will vest. These vesting acceleration rules apply to all of Mr. Culhane’s options, including options granted in the future.

John C. Crouch.  We entered into a letter agreement with John C. Crouch in November 2003. Mr. Crouch’s salary and variable-compensation target are determined each year by the compensation committee of our board of directors. If we terminate Mr. Crouch’s employment without cause prior to November 17, 2007, he is entitled to the continuation of his base salary for four months at the rate in effect at the time of termination. In addition, he is entitled to reimbursement of his premiums for health insurance coverage under COBRA for four months after the date of termination. If we are subject to a change in control and Mr. Crouch is subject to an actual termination without cause or constructive termination within 12 months after the change in control, then 50% of his remaining unvested shares subject to his stock options will vest.

James H. Dai.  We entered into a letter agreement with James H. Dai in February 2004. Mr. Dai’s salary and variable-compensation target are determined each year by the compensation committee of our board of directors. If we terminate Mr. Dai’s employment without cause prior to March 19, 2008, he is entitled to the continuation of his base salary for three months at the rate in effect at the time of termination. In addition, he is entitled to reimbursement of his premiums for health insurance coverage under COBRA for three months after the date of termination. If we are subject to a change in control and Mr. Dai is subject to an actual termination without cause or constructive termination within 12 months after the change in control, then 50% of his remaining unvested shares subject to his stock options will vest.

Michael L. Frandsen.  We entered into a letter agreement with Michael L. Frandsen in November 2006 in connection with the acquisition of TradePoint, where he was employed as President and Chief Executive Officer. The letter agreement provided for an annual starting salary of $225,000 and for a potential performance bonus of $75,000 for the period ended December 31, 2006, determined in accordance with TradePoint’s incentive compensation plan. In the future, Mr. Frandsen’s salary and variable-compensation target will be determined each year by the compensation committee of our board of directors. In May 2007, we supplemented the letter agreement to make the terms of Mr. Frandsen’s employment comparable to those applicable to Messrs. Crouch and Dai. If we terminate Mr. Frandsen’s employment without cause, he is entitled to the continuation of his base salary for three months at the rate in effect at the time of termination. In addition, he is entitled to reimbursement of his premiums for health insurance coverage under COBRA for three months after the date of termination. If we are subject to a change in control and Mr. Frandsen is subject to an actual termination without cause or constructive termination within 12 months after the change in control, then 50% of his remaining unvested shares subject to his stock options will vest.

The letter agreements described above do not impose material conditions on the receipt of benefits, other than the execution of a release of claims. For example, the agreements do not include non-competition covenants.

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Potential Payments upon Termination or Change in Control

The following table describes the potential payments and benefits upon termination of our named executive officers’ employment before or after a change in control of DemandTec, as if each officer’s employment terminated as of February 28, 2007. For purposes of valuing the severance and vacation payments in the table below, we used each officer’s base salary rate in effect on February 28, 2007, and the number of accrued but unused vacation days on February 28, 2007.

The value of the vesting acceleration shown in the table below was calculated based on the assumption that the change in control, if applicable, occurred and the officer’s employment terminated on February 28, 2007, and that the fair market value per share of our common stock on that date was $     , which represents the assumed initial public offering per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus. The value of the option vesting acceleration was calculated by multiplying the number of unvested shares subject to each option by the difference between the fair market value per share of our common stock as of February 28, 2007, and the exercise price per share of the option. The value of the stock vesting acceleration was calculated by multiplying the number of unvested shares by the fair market value per share of our common stock as of February 28, 2007. The severance and option acceleration amounts listed for Mr. Frandsen assume that the terms of the May 2007 supplement to his letter agreement with us were applicable as of February 28, 2007.

								Termination
		Voluntary		Termination				Without		Constructive
		Resignation or		Without Cause				Cause after		Termination
		Termination for		Prior to Change		Change in		Change in		after Change in
Name	Benefit	Cause		in Control		Control		Control		Control
Daniel R. Fishback	Severance	$	—	$	225,000		—	$	225,000	$	225,000
	Option Acceleration		—
	COBRA Premiums		—		7,856		—		7,856		7,856
	Vacation Payout		41,683		41,683		—		41,683		41,683
	Total Value		41,683
Mark A. Culhane	Severance		—		175,000		—		175,000		175,000
	Option Acceleration		—
	COBRA Premiums		—		7,856		—		7,856		7,856
	Vacation Payout		35,337		35,337		—		35,337		35,337
	Total Value		35,337
John C. Crouch	Severance		—		66,667		—		66,667		—
	Option Acceleration		—		—		—
	COBRA Premiums		—		5,237		—		5,237		—
	Vacation Payout		20,192		20,192		—		20,192		20,192
	Total Value		20,192		92,096		—
James H. Dai	Severance		—		62,500		—		62,500		—
	Stock Acceleration		—		—		—
	COBRA Premiums		—		3,672		—		3,672		0
	Vacation Payout		15,785		15,785		—		15,785		15,785
	Total Value		15,785		81,956		—				216,599
Michael L. Frandsen	Severance		—		56,250		—		56,250		—
	Option Acceleration		—		—		—
	COBRA Premiums		—		3,928		—		3,928		3,928
	Vacation Payout		8,523		8,523		—		8,523		8,523
	Total Value		8,523		68,701		—

Equity Benefit Plans

1999 Equity Incentive Plan

Our 1999 Equity Incentive Plan was adopted by our board of directors on December 1, 1999, and has been approved by our stockholders. No further awards will be made under our 1999 Equity Incentive Plan after this

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offering, but options outstanding under the 1999 Equity Incentive Plan will continue to be governed by their existing terms.

Share reserve.  We reserved 21,785,000 shares for issuance under the 1999 Equity Incentive Plan. As of February 28, 2007, 12,351,742 shares were subject to outstanding options and 635,251 remained available for issuance. The exercise prices of outstanding options range from $0.05 to $2.70 per share, with a weighted average per share exercise price of $0.99. After this offering, if options or shares awarded under the 1999 Equity Incentive Plan are forfeited or repurchased, then those options or shares will no longer be available for awards.

Administration.  Our board of directors and its compensation committee have administered the 1999 Equity Incentive Plan and have complete discretion to make all decisions relating to this plan.

Eligibility.  Employees, members of our board of directors who are not employees and consultants are eligible to participate in our 1999 Equity Incentive Plan.

Types of awards.  Our 1999 Equity Incentive Plan provides for the following types of awards:

•  incentive and nonstatutory stock options to purchase shares of our common stock; and

•  restricted shares of our common stock.

Options.  The exercise price for incentive stock options and nonstatutory stock options granted under the 1999 Equity Incentive Plan may not be less than 100% and 85%, respectively, of the fair market value of our common stock on the option grant date. Optionees may pay the exercise price by using:

•  cash;

•  shares of common stock that the optionee already owns;

•  a deferred-payment arrangement; or

•  any other method of payment permitted by law.

Any method of payment other than cash requires the approval of the compensation committee. In most cases, our options vest over a four-year period following the date of grant and expire ten years after they are granted, unless the optionee separates from service with us.

Restricted shares.  Restricted shares may be awarded under the 1999 Equity Incentive Plan in return for services already provided to us, cash or, with the approval of the compensation committee, a deferred-payment arrangement or any other method of payment permitted by law. Restricted shares vest at the times determined by our board of directors or its compensation committee.

Change in control.  If a change in control of DemandTec occurs, the vesting of an option under the 1999 Equity Incentive Plan will generally not accelerate unless the surviving corporation does not assume the option or replace it with a comparable award. If the surviving corporation does not assume the option or replace it with a comparable option, then vesting will accelerate as to all of the shares of common stock subject to the option. In addition, individual agreements provide for accelerated vesting in the event of a change in control. Please see “Management — Employment Agreements and Offer Letters” above for a description of the severance arrangements for our named executive officers.

Amendments or termination.  Our board of directors may amend or terminate the 1999 Equity Incentive Plan at any time. If our board of directors amends the plan, it does not need to ask for stockholder approval of the amendment unless required by applicable law. No further awards will be made under the 1999 Equity Incentive Plan after this offering, and this plan will automatically terminate on December 1, 2009.

2007 Equity Incentive Plan

Our board of directors adopted our 2007 Equity Incentive Plan on May 22, 2007, and our stockholders approved it on          , 2007. The 2007 Equity Incentive Plan will become effective on the date of this prospectus. Our 2007 Equity Incentive Plan replaces the 1999 Equity Incentive Plan, our prior plan. No further

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grants will be made under our 1999 Equity Incentive Plan after this offering. However, the options outstanding after this offering under the 1999 Equity Incentive Plan will continue to be governed by their existing terms.

Share reserve.  We have reserved 6,000,000 shares of our common stock for issuance under the 2007 Equity Incentive Plan. The number of shares reserved for issuance under the plan will be increased automatically on March 1 of each fiscal year, starting with fiscal 2009, by a number equal to the smallest of:

•  7,500,000 shares;

•  5% of our shares of common stock outstanding at that time; or

•  the number of shares determined by our board of directors.

In general, to the extent that awards under the 2007 Equity Incentive Plan are forfeited or lapse without the issuance of shares, those shares will again become available for awards. All share numbers described in this summary of the 2007 Equity Incentive Plan are automatically adjusted in the event of a stock split, a stock dividend or a reverse stock split.

Administration.  The compensation committee of our board of directors will administer the 2007 Equity Incentive Plan. The committee will have complete discretion to make all decisions relating to the plan and outstanding awards.

Eligibility.  Employees, members of our board of directors who are not employees, and consultants will be eligible to participate in our 2007 Equity Incentive Plan.

Types of awards.  Our 2007 Equity Incentive Plan provides for the following types of awards:

•  incentive and nonstatutory stock options to purchase shares of our common stock;

•  stock appreciation rights;

•  restricted shares of our common stock; and

•  stock units.

Options and stock appreciation rights.  The exercise price for options granted under the 2007 Equity Incentive Plan may not be less than 100% of the fair market value of our common stock on the option grant date. Optionees may pay the exercise price by using:

•  cash;

•  shares of common stock that the optionee already owns;

•  an immediate sale of the option shares through a broker approved by us; or

•  a promissory note, if permitted by applicable law.

All forms of payment other than cash require the consent of the compensation committee. A participant who exercises a stock appreciation right will receive the increase in value of our common stock over the base price. The base price for stock appreciation rights may not be less than 100% of the fair market value of our common stock on the grant date. The settlement value of a stock appreciation right may be paid in cash, shares of common stock or a combination of both. Options and stock appreciation rights will vest at the time or times determined by the compensation committee. In most cases, they will vest over a four-year period following the date of grant. Options and stock appreciation rights also will expire at the time determined by the compensation committee, but in no event more than ten years after they are granted. They generally will expire earlier if the participant’s service terminates earlier. No participant may receive options or stock appreciation rights under the 2007 Equity Incentive Plan covering more than 2,000,000 shares in any period of three consecutive fiscal years, except that a new employee may receive options or stock appreciation rights covering up to 4,000,000 shares in the three-year period in which his or her employment starts.

Restricted shares and stock units.  Restricted shares and stock units may be awarded under the 2007 Equity Incentive Plan in return for any lawful consideration, and participants who receive restricted shares or stock units

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generally will not be required to pay for their awards in cash. In general, these awards will be subject to vesting. Vesting may be based on length of service, the attainment of performance-based milestones, or a combination of both, as determined by the compensation committee. No participant may receive restricted shares or stock units with performance-based vesting covering more than 2,000,000 shares in any period of three consecutive fiscal years, except that a new employee may receive restricted shares or stock units covering up to 4,000,000 shares in the three-year period in which his or her employment starts.

The compensation committee may establish performance milestones based on one or more of the following criteria:

•  backlog

•  bookings, including annual or total contract value bookings

•  cash

•  cash and short-term investments

•  cash flow return on investment

•  comparisons with various stock market indices

•  deferred revenue

•  earnings and earnings per share, including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization

•  free cash flow

•  free cash flow per share

•  gross profits

•  headcount

•  implementation, completion or attainment of measurable objectives with respect to research, development, products, projects or recruiting and maintaining personnel

•  improvement in, or attainment of, expense levels or working capital levels

•  market share

•  net income before or after taxes

•  operating margin or cash margin

•  operating profit/loss on a GAAP or non-GAAP basis

•  pre- or after-tax income before or after allocation of corporate overhead and bonus

•  reductions in costs

•  return on equity

•  revenue

•  revenue growth

•  solution delivery margin contribution

•  solution delivery utilization

•  stock price

•  total expenses

•  total stockholder return

Settlement of vested stock units may be made in the form of cash, shares of common stock, or a combination of both.

Change in control.  The compensation committee may determine that an award under the 2007 Equity Incentive Plan will vest on an accelerated basis if a change in control of DemandTec occurs or if the participant is subject to an involuntary termination after the change in control. In addition, an award will generally vest in full if the surviving corporation does not assume the award, replace it with a comparable award or settle it for cash or securities. A change in control includes:

•  a merger after which our own stockholders own 50% or less of the surviving corporation or its parent company;

•  a sale of all or substantially all of our assets;

•  a proxy contest that results in the replacement of more than one-half of our directors over a 24-month period; or

•  an acquisition of 50% or more of our outstanding stock by any person or group, other than a person related to the company, such as a holding company owned by our stockholders.

Amendments or termination.  Our board of directors may amend or terminate the 2007 Equity Incentive Plan at any time. If our board of directors amends the plan, it does not need to ask for stockholder approval of the amendment unless required by applicable law. The 2007 Equity Incentive Plan will continue in effect for 10 years from its adoption date, unless our board of directors decides to terminate the plan earlier.

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2007 Employee Stock Purchase Plan

Our board of directors adopted our 2007 Employee Stock Purchase Plan on May 22, 2007, and our stockholders approved it on          , 2007. The 2007 Employee Stock Purchase Plan will become effective on the date of this prospectus. Our 2007 Employee Stock Purchase Plan is intended to qualify for preferential tax treatment under Section 423 of the Internal Revenue Code.

Share reserve.  We have reserved 1,000,000 shares of our common stock for issuance under the 2007 Employee Stock Purchase Plan. The number of shares reserved for issuance under the plan will be increased automatically on March 1 of each fiscal year, starting with fiscal 2009, by a number equal to the smallest of:

•  750,000 shares;

•  1% of the shares of common stock outstanding at that time; or

•  the number of shares determined by our board of directors.

All share numbers described in this summary of the 2007 Employee Stock Purchase Plan are automatically adjusted in the event of a stock split, a stock dividend or a reverse stock split.

Administration.  The compensation committee of our board of directors will administer the 2007 Employee Stock Purchase Plan. The committee has the complete discretion to make all decisions relating to the plan.

Eligibility.  All of our employees are eligible to participate in the 2007 Employee Stock Purchase Plan if we employ them for more than 20 hours per week and for more than five months per year. The compensation committee may determine that all highly compensated employees, or particular groups of highly compensated employees, will be excluded from participation. In addition, all 5% stockholders are excluded. Eligible employees may begin participating at the start of any offering period.

Offering periods.  The first offering period under the 2007 Employee Stock Purchase Plan starts on the date of this prospectus and ends on          , 2008. Each subsequent offering period will consist of six consecutive months.

Amount of contributions.  The 2007 Employee Stock Purchase Plan permits each eligible employee to purchase common stock through payroll deductions. Each employee’s payroll deductions may not exceed 15% of his or her total cash compensation. Participants may reduce, but not increase, their contribution rate during an offering period. Participants may also withdraw their contributions at any time before stock is purchased. Lump sum contributions are not permitted.

Purchases of shares.  Purchases of our common stock under the 2007 Employee Stock Purchase Plan will occur on           and           of each year. Each participant may purchase as many shares as his or her contributions permit, but not more than 1,000 shares per six-month offering period. The value of the shares purchased in any calendar year may not exceed $25,000, with a limited carry-over of unused amounts.

Purchase price.  The price of each share of common stock purchased under the 2007 Employee Stock Purchase Plan will be equal to 85% of the lower of:

•  the fair market value per share of our common stock on the last trading day before the start of the applicable six-month offering period or, in the case of the first offering period, the price at which shares are sold to the public in this offering, or

•  the fair market value per share of our common stock on the last trading day in the applicable offering period, which is the purchase date.

Other provisions.  Employees may end their participation in the 2007 Employee Stock Purchase Plan at any time. Participation ends automatically upon termination of employment with DemandTec. If a change in control of DemandTec occurs, the plan will end and shares will be purchased with the payroll deductions accumulated to date by participating employees, unless the surviving corporation agrees to continue the plan. Our board of directors may amend or terminate the plan at any time, and the plan terminates automatically 20 years after its adoption. If our board of directors increases the number of shares of common stock reserved for issuance under the plan, except for the automatic increases described above, it must seek the approval of our stockholders. Other amendments require stockholder approval only to the extent required by law.

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RELATED PARTY TRANSACTIONS

In addition to the compensation arrangements with directors and executive officers and the registration rights described elsewhere in this prospectus, the following is a description of each transaction since March 1, 2004 and each currently proposed transaction in which:

•  we have been or are to be a participant;

•  the amount involved exceeds $120,000; and

•  any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.

Acquisition of TradePoint Solutions, Inc.

In November 2006, we acquired TradePoint in exchange for approximately $3.7 million in cash, a $1.8 million promissory note, which is due and payable on November 9, 2007, and an aggregate of 2,149,960 shares of our common stock. In connection with that transaction, Michael L. Frandsen, who became one of our executive officers following the acquisition of TradePoint, received 112,656 shares of our common stock and $26,949 of cash.

Indemnification Agreements

Prior to the closing of this offering, we will have entered into an indemnification agreement with each of our directors and executive officers and certain other key employees. The agreement will provide that we will indemnify him or her against any and all expenses that he or she incurs because of his or her status as one of our directors, executive officers or key employees to the fullest extent permitted by Delaware law, our restated certificate of incorporation and our amended and restated bylaws, except in a proceeding initiated by that person without the approval of our board of directors. In addition, the agreement will provide that, to the fullest extent permitted by Delaware law, we will advance all expenses incurred by him or her in connection with a legal proceeding.

Review, Approval or Ratification of Transactions with Related Parties

Our board of directors adopted certain policies and procedures with respect to related party transactions on May 22, 2007. These policies and procedures require that certain transactions, subject to specified exceptions and other than one that involves compensation, between us and any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, be consummated only if (i) approved or ratified by our audit committee and only if the terms of the transaction are comparable to those that could be obtained in arms-length dealings with an unrelated third party or (ii) approved by the disinterested members of our board of directors. Our policies and procedures with respect to related party transactions also apply to certain charitable contributions by us or our executive officers and to the hiring of any members of the immediate family of any of our directors or executive officers as our permanent full-time employees. The approval of our compensation committee is required to approve any transaction that involves compensation to our directors and executive officers.

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PRINCIPAL STOCKHOLDERS

The following table provides information concerning beneficial ownership of our capital stock as of April 30, 2007, and as adjusted to reflect the sale of shares of common stock in this offering, by:

•  each stockholder, or group of affiliated stockholders, that we know owns more than 5% of our outstanding capital stock;

•  each of our named executive officers;

•  each of our directors; and

•  all of our directors and executive officers as a group.

The following table lists the number of shares beneficially owned and the applicable percentage beneficial ownership based on 40,384,626 shares of common stock outstanding as of April 30, 2007 and           shares of common stock outstanding upon the completion of this offering, which include the automatic conversion of all outstanding shares of preferred stock into an aggregate of 27,022,234 shares of common stock.

Beneficial ownership is determined in accordance with the rules of the SEC, and generally includes voting power and/or investment power with respect to the securities held. Shares of common stock subject to options and warrants currently exercisable or exercisable within 60 days of April 30, 2007 are deemed outstanding and beneficially owned by the person holding those options or warrants for purposes of computing the number of shares and percentage of shares beneficially owned by that person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, and subject to applicable community property laws, the persons or entities named have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them.

Unless otherwise indicated in the footnotes, the principal address of each of the stockholders below is c/o DemandTec, Inc., One Circle Star Way, Suite 200, San Carlos, California 94070.

	Shares Beneficially Owned
			Percent
Name of Beneficial Owner	Number		Before Offering			After Offering
5% Stockholders
Entities affiliated with Crosspoint Venture Partners(1)		14,045,141		34.8	%			%
Cargill, Incorporated(2)		6,425,554		15.9
Entities affiliated with Altos Ventures(3)		3,342,288		8.3
Michael Neal(4)		2,400,000		5.9
Directors and Named Executive Officers
Daniel R. Fishback(5)		4,071,250		9.3
Mark A. Culhane(6)		1,441,500		3.5
John C. Crouch(7)		549,000		1.3
James H. Dai(8)		570,000		1.4
Michael L. Frandsen(9)		145,361		*			*
Ronald E. F. Codd		—		—			—
Linda Fayne Levinson(10)		225,000		*			*
Victor L. Lund(11)		225,000		*			*
Joshua W. R. Pickus		—		—			—
Charles J. Robel		—		—			—
James D. Sayre(12)		6,425,554		15.9
All current directors and executive officers as a group (11 persons)(13)		13,652,665		29.9

(footnotes on following page)

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*	Less than 1% of the outstanding shares of common stock.
(1)	Represents 12,596,633 shares held by Crosspoint Venture Partners 2000 (Q), L.P. and 1,448,508 shares held by Crosspoint Venture Partners 2000, L.P. James Dorrian is the general partner of Crosspoint Venture Partners 2000 (Q), L.P. and Crosspoint Venture Partners 2000, L.P. and has voting and investment power over these shares. The address of Crosspoint Venture Partners is 2925 Woodside Road, Woodside, California 94062.
(2)	Mr. Sayre, one of our directors, is the president of Cargill Ventures, the venture capital business unit of Cargill, Incorporated. Cargill, Incorporated has the voting and investment power over those shares. The address of Cargill, Incorporated is 15407 McGinty Road West, Wayzata, Minnesota 55391.
(3)	Represents 3,318,103 shares held by Altos Ventures and 24,185 shares held by Altos Ventures II, LP. Han J. Kim is the general partner of Altos Ventures and Altos Ventures II, LP and has sole voting and investment power over these shares. The address of Altos Ventures is 2882 Sand Hill Road, Suite 100, Menlo Park California, 94025.
(4)	Represents 2,400,000 shares held by the Michael and Susan Neal 2004 Trust. The address of Micheal Neal is c/o SignalDemand, Inc., 301 Howard Street, Suite 1950, San Francisco, California 94105.
(5)	Represents 125,384 shares held by the Daniel Fishback Grantor Retained Annuity Trust, 125,384 shares held by the Lady Bess Fishback Grantor Retained Annuity Trust, 550,482 shares held by the Fishback Family Revocable Trust u/d/t March 5, 2001 and 3,270,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 688,126 shares, if these options are exercised in full, would be subject to vesting and a lapsing right of repurchase in our favor upon Mr. Fishback’s cessation of service on the date 60 days from April 30, 2007.
(6)	Represents 494,600 shares held by the Culhane Family Revocable Trust dtd 12/16/99, 18,000 shares held by the Maxwell A.R. Culhane 1999 Irrevocable Trust, 18,000 shares held by the Michael D. Culhane 1999 Irrevocable Trust, 18,000 shares held by the Monica G. Culhane 1999 Irrevocable Trust, 30,400 shares held by USB Piper Jaffray as custodian FBO Mark Culhane IRA and 862,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 259,375 shares, if these options are exercised in full, would be subject to vesting and a lapsing right of repurchase in our favor upon Mr. Culhane’s cessation of service on the date 60 days from April 30, 2007.
(7)	Represents 549,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 69,689 shares, if these options are exercised in full, would be subject to vesting and a lapsing right of repurchase in our favor upon Mr. Crouch’s cessation of service on the date 60 days from April 30, 2007.
(8)	Includes 184,377 shares subject to our lapsing right of repurchase as of April 30, 2007.
(9)	Represents 112,656 shares held by Mary G. and Michael L. Fransden, as community property and 32,705 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007.
(10)	Represents 225,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 105,469 shares, if these options are exercised in full, would be subject to vesting and a lapsing right of repurchase in our favor upon Ms. Levinson’s cessation of service on the date 60 days from April 30, 2007.
(11)	Represents 225,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 102,139 shares, if these options are exercised in full, would be subject to vesting and a lapsing right of repurchase in our favor upon Mr. Lund’s cessation of service on the date 60 days from April 30, 2007.
(12)	Represents 6,425,554 shares held by Cargill, Incorporated. Mr. Sayre does not have voting or dispositive power with respect to any of the shares held by Cargill, Incorporated, and disclaims beneficial ownership of any securities held by it, except to the extent of his proportionate pecuniary interests in this entity.
(13)	Includes 184,377 shares subject to our lapsing right of repurchase as of April 30, 2007 and 5,164,205 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 30, 2007, of which 1,224,798 shares would be subject to vesting and a lapsing right of repurchase in our favor upon the cessation of service by the executive officers and directors on the date 60 days from April 30, 2007.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of our capital stock and certain provisions of our restated certificate of incorporation and amended and restated bylaws, which will become effective immediately prior to the closing of this offering. This summary does not purport to be complete and is qualified in its entirety by the provisions of our restated certificate of incorporation and amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part.

Following the closing of this offering, our authorized capital stock will consist of           shares of common stock, par value $0.001 per share, and           shares of preferred stock, par value $0.001 per share.

Common Stock

As of February 28, 2007, there were 40,331,446 shares of common stock outstanding held of record by approximately 316 stockholders, which reflects the automatic conversion of all outstanding shares of preferred stock into an aggregate of 27,022,234 shares of common stock. There will be           shares of common stock outstanding following the closing of this offering, assuming no exercise of the underwriters’ over-allotment option and assuming no exercise of outstanding options or warrants.

The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of common stock are entitled to receive ratably these dividends, if any, as may be declared from time to time by our board of directors out of funds legally available, subject to preferences that may be applicable to preferred stock, if any, then outstanding. See “Dividend Policy.” In the event of a liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and non-assessable.

Preferred Stock

Upon the closing of this offering, our outstanding shares of Series A convertible preferred stock will be converted into 4,200,000 shares of common stock, our outstanding shares of Series B redeemable convertible preferred stock will be converted into 10,376,689 shares of common stock and our outstanding shares of Series C redeemable convertible preferred stock will be converted into 12,445,545 shares of common stock. There will be no shares of preferred stock outstanding upon completion of this offering.

Upon completion of this offering, our board of directors will be authorized to issue preferred stock in one or more series, to establish the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of these shares and any qualifications, limitations or restrictions thereof. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others. At present, we have no plans to issue any of the preferred stock.

Warrants

As of February 28, 2007, we had outstanding warrants to purchase an aggregate of 363,495 shares of our common stock at a weighted average exercise price of $1.91 per share. These warrants will continue to be exercisable following the closing of this offering. They have expiration dates ranging from October 2008 to July 2016.

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Registration Rights

After this offering, holders of approximately 27,235,729 shares of common stock will be entitled to rights with respect to the registration of those shares under the Securities Act. Under the terms of the amended and restated investors’ rights agreement between us and the holders of these registrable securities, if we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders exercising registration rights, certain of these holders are entitled to notice of registration and are entitled to include their shares of common stock in the registration. The holders of 27,085,729 shares of the registrable securities are also entitled to specified demand registration rights under which they may require us to file a registration statement under the Securities Act at our expense with respect to our shares of common stock, and we are required to use our commercially reasonable efforts to effect this registration. Further, the holders of these registrable securities may require us to file additional registration statements on Form S-3. All of these registration rights are subject to conditions and limitations, among them the right of the underwriters of an offering to limit the number of shares included in the registration and our right not to effect a requested registration within six months following the initial offering of our securities, including this offering. All registration rights in connection with this offering have been waived. This is not a complete description of the amended and restated investors rights agreement and is qualified by the full text of the amended and restated investors’ rights agreement filed as Exhibit 4.3 to the registration statement of which this prospectus is a part.

Anti-Takeover Effects of Our Charter and Bylaws and Delaware Law

Some provisions of Delaware law and our restated certificate of incorporation and amended and restated bylaws, effective upon closing of this offering, could make the following transactions more difficult:

•  acquisition of our company by means of a tender offer, a proxy contest or otherwise; and

•  removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage and prevent coercive takeover practices and inadequate takeover bids. These provisions are designed to encourage persons seeking to acquire control of our company to negotiate first with our board of directors. They are also intended to provide our management with the flexibility to enhance the likelihood of continuity and stability if our board of directors determines that a takeover is not in the best interests of our stockholders. These provisions, however, could have the effect of discouraging attempts to acquire us, which could deprive our stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices. We believe that the benefits of these provisions, including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

Election and removal of directors.  Our restated certificate of incorporation and our amended and restated bylaws contain provisions that establish specific procedures for appointing and removing members of our board of directors. Under our restated certificate of incorporation and amended and restated bylaws, effective upon closing of this offering, our board will be classified into three classes of directors. Only one class will stand for election at each annual meeting, and directors will be elected to serve three-year terms. In addition, our restated certificate of incorporation and amended and restated bylaws will provide that vacancies and newly created directorships on our board of directors may be filled only by a majority of the directors then serving on our board of directors, except as otherwise required by law or by resolution of our board of directors. Under our restated certificate of incorporation and amended and restated bylaws, directors may be removed by the stockholders only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class.

Special stockholder meetings.  Under our restated certificate of incorporation and amended and restated bylaws, only the chairman of the board, our chief executive officer or our board of directors may call special meetings of stockholders.

Requirements for advance notification of stockholder nominations and proposals.  Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates

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for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors.

Delaware anti-takeover law.  After this offering, we will be subject to Section 203 of the Delaware General Corporation Law, which is an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date that the person became an interested stockholder, unless the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a business combination includes a merger, asset or stock sale, or another transaction resulting in a financial benefit to the interested stockholder. Generally, an interested stockholder is a person who, together with affiliates and associates, owns 15% or more of the corporation’s voting stock. The existence of this provision may have an anti-takeover effect with respect to transactions that are not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Elimination of stockholder action by written consent.  Our restated certificate of incorporation and amended and restated bylaws eliminate the right of stockholders to act by written consent without a meeting after this offering.

No cumulative voting.  Under Delaware law, cumulative voting for the election of directors is not permitted unless a corporation’s certificate of incorporation authorizes cumulative voting. Our restated certificate of incorporation do not provide for cumulative voting in the election of directors. Cumulative voting allows a minority stockholder to vote a portion or all of its shares for one or more candidates for seats on our board of directors. Without cumulative voting, a minority stockholder will not be able to gain as many seats on our board of directors based on the number of shares of our stock the stockholder holds as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence its decision regarding a takeover.

Undesignated preferred stock.  The authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company.

Amendment of charter provisions.  The amendment of certain of the above provisions in our amended and restated certificate of incorporation and our amended and restated bylaws requires approval by holders of at least two-thirds of our outstanding capital stock entitled to vote generally in the election of directors.

These and other provisions could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be          . Its telephone number is          .

NASDAQ Global Market Listing

We have applied to list our common stock on The NASDAQ Global Market under the symbol “DMAN.”

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and we cannot assure you that a significant public market for our common stock will develop or be sustained after this offering. As described below, no shares currently outstanding will be available for sale immediately after this offering due to certain contractual and securities law restrictions on resale. Sales of substantial amounts of our common stock in the public market after the restrictions lapse could cause the prevailing market price to decline and limit our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of           shares of common stock. The shares of common stock being sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless purchased by our affiliates. The remaining 40,384,626 shares of common stock held by existing stockholders are restricted securities as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Section 4(1) or Rules 144, 144(k) or 701 promulgated under the Securities Act. We describe these rules in greater detail below.

The following table shows approximately when the shares of our common stock that are not being sold in this offering, but which will be outstanding when this offering is complete, will be eligible for sale in the public market:

Days After Date of	Shares Eligible
This Prospectus	for Sale		Comment
Date of prospectus		0	Shares sold by us in the offering
180 days after the date of this prospectus		40,331,446	Lock-ups terminate, subject to possible extension; shares saleable under Rules 144 and 701

Resale of 22,584,601 of the restricted shares that will become available for sale in the public market starting 180 days after the date of this prospectus (or longer period described below) will be limited by volume and other resale restrictions under Rule 144 because the holders of those shares are our affiliates. In addition, resale of 399,861 of the restricted shares that will become available for sale in the public market starting 180 days after the date of this prospectus (or longer period described below) will be limited by restrictions on sale related to our right of repurchase on unvested shares.

Lock-up Agreements and Market Stand-off Agreements

Our officers, directors and holders of substantially all of our common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock for a period that extends through the date 180 days after the date of this prospectus, except with the prior written consent of Morgan Stanley & Co. Incorporated and Credit Suisse Securities (USA) LLC. In addition, substantially all holders of our common stock and options and warrants to purchase our common stock have previously entered into market stand-off agreements with us not to sell or otherwise transfer any of their common stock or securities convertible into or exchangeable for shares of common stock for a period that extends through the date 180 days after the date of this prospectus.

The 180-day restricted period under the lock-up agreements with the underwriters described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

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Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an affiliate of ours, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•  1% of the number of shares of common stock then outstanding, which will equal approximately           shares immediately after the completion of this offering; or

•  the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to that sale.

Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for a least two years, including the holding period of any prior owner except an affiliate of ours, is entitled to sell these shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. All Rule 144 shares are, however, subject to lock-up agreements or market stand-off agreements and will only become eligible for sale upon the expiration of these contractual agreements.

Rule 701

Rule 701, as currently in effect, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions, including the holding period requirement, of Rule 144. Any employee, officer or director of or consultant to us who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell such shares in reliance on Rule 144 without having to comply with the holding period, public information, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling such shares. All Rule 701 shares are, however, subject to lock-up or market stand-off agreements and will only become eligible for sale upon the expiration of the contractual lock-up agreements.

Registration Rights

Beginning six months after the completion of this offering, the holders of 27,235,729 shares of our common stock or warrants to purchase shares of our common stock will be entitled to the registration rights described in “Description of Capital Stock — Registration Rights.” All of these shares are covered by lock-up or market stand-off agreements. Following the expiration of the lock-up and market stand-off agreements described above, registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by our affiliates.

Form S-8 Registration Statements

Prior to the expiration of the lock-up period, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of our common stock that are issuable pursuant to our 1999 Equity Incentive Plan, 2007 Equity Incentive Plan and 2007 Employee Stock Purchase Plan. See “Management — Equity Benefit Plans.” Subject to the lock-up and market stand-off agreements described above and any applicable vesting restrictions, shares registered under these registration statements will be available for resale in the public market immediately upon the effectiveness of these registration statements, except with respect to Rule 144 volume limitations that apply to our affiliates.

87

UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus among us and the underwriters, the underwriters named below, for whom Morgan Stanley & Co. Incorporated and Credit Suisse Securities (USA) LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, the number of shares indicated below:

	Number of
Name	Shares
Morgan Stanley & Co. Incorporated
Credit Suisse Securities (USA) LLC
William Blair & Company, L.L.C.
JMP Securities LLC
Montgomery & Co., LLC
Pacific Crest Securities Inc.
Total

The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $      a share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of     shares of common stock at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table. If the underwriters’ option is exercised in full, the total price to the public would be $     , the total underwriters’ discounts and commissions paid by us would be $      and the total proceeds to us would be $     .

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed five percent of the total number of shares of common stock offered by them.

The following table shows the per share and total underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of our common stock.

	No Exercise	Full Exercise
Per share	$	$
Total	$	$

The estimated offering expenses, exclusive of underwriting discounts and commissions, are approximately $      million.

88

We, all of our directors and officers and holders of substantially all our outstanding common stock have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated and Credit Suisse Securities (USA) LLC, on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock, whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. Subject to certain exceptions, these restrictions do not apply to:

•  the transfer of shares of common stock or other securities acquired by a stockholder in open market transactions after the closing of this offering if no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended, is required or voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions;

•  the exercise by a stockholder of an option or warrant to purchase shares of common stock or any security convertible into or exercisable or exchangeable for common stock, provided that the exercise price for such shares is fully paid and, provided further, that the shares of common stock obtained upon such exercise or conversion will be subject to the 180-day restricted period;

•  the entry by a stockholder into a written trading plan established in accordance with Rule 10b5-1 under the Exchange Act, provided that sales under any such plan may not occur during the 180-day restricted period and we may not make a public announcement regarding the entry by the stockholder into such plan;

•  the transfer of shares of common stock or any security convertible into common stock by a stockholder as a bona fide gift;

•  the transfer of shares of common stock or any security convertible into common stock to limited partners, limited liability company members or stockholders of the stockholder;

•  the transfer of shares of common stock or any security convertible into common stock by a stockholder by will or intestacy or to a trust for the direct or indirect benefit of the stockholder or the immediate family of the stockholder; and

•  distributions by a trust to its beneficiaries,

provided that, in the case of each of the last four types of transactions, each donee, distributee, transferee or recipient agrees to accept the restrictions described in this paragraph and no filing under Section 16 of the Exchange Act reporting a reduction of beneficial ownership of shares of common stock is required or voluntarily made in connection with these transactions during this 180-day restricted period.

The 180-day restricted period described in the preceding paragraph will be extended if:

•  during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or

•  prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period or we announce that material news or a material event will occur during this period.

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the release or the occurrence of the material news or material event.

In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-

89

allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. In addition, to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in the offering, if the syndicate repurchases previously distributed common stock to cover syndicate short positions or to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities, and may end any of these activities at any time.

We have applied to have our common stock approved for quotation on The NASDAQ Global Market under the symbol “DMAN.”

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Pricing of the Offering

Prior to this offering, there has been no public market for the shares of common stock. The initial public offering price will be determined by negotiations among us and the representatives of the underwriters. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors.

LEGAL MATTERS

The validity of the common stock being offered hereby will be passed upon for the company by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo Park, California, and Fenwick & West LLP, Mountain View, California, will act as counsel for the underwriters. As of the date of this prospectus, certain partners and employees of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP beneficially owned an aggregate of 207,439 shares of our common stock.

EXPERTS

The consolidated financial statements of DemandTec, Inc. at February 28, 2006 and 2007 and for each of the three years in the period ended February 28, 2007, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The financial statements of TradePoint Solutions, Inc. at December 31, 2004 and 2005 and for each of the two years in the period ended December 31, 2005, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

90

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering. The registration statement includes exhibits to which you should refer for additional information about us.

You may inspect a copy of the registration statement and the exhibits to the registration statement without charge at the offices of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549 upon the payment of the prescribed fees. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants like us that file electronically with the SEC. You can also inspect our registration statement on this website.

91

INDEX TO FINANCIAL STATEMENTS

	Page
DemandTec, Inc. Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders’ Deficit		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7
TradePoint Solutions, Inc. Financial Statements
Report of Ernst & Young LLP, Independent Auditors		F-31
Balance Sheets		F-32
Statements of Operations		F-33
Statement of Redeemable Convertible Preferred Stock and Stockholders’ Deficit		F-34
Statements of Cash Flows		F-35
Notes to Financial Statements		F-36
DemandTec, Inc. and TradePoint Solutions, Inc.
Unaudited Pro Forma Combined Condensed Financial Information		F-50
Unaudited Pro Forma Combined Condensed Statement of Operations		F-51
Notes to Unaudited Pro Forma Combined Condensed Financial Information		F-52

F-1

Report of Ernst & Young LLP,
Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

DemandTec, Inc.

We have audited the accompanying consolidated balance sheets of DemandTec, Inc., the “Company,” as of February 28, 2006 and 2007, and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows for each of the three years in the period ended February 28, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DemandTec, Inc. at February 28, 2006 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended February 28, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, under the heading “Stock-Based Compensation,” the Company adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” effective March 1, 2006 using the prospective transition method. As discussed in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board, or FASB, Staff Position 150-5, “Issuer’s Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable,” during the year ended February 28, 2006.

/s/ Ernst & Young LLP

San Francisco, California
May 15, 2007

F-2

DemandTec, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)

							Pro Forma as of
							February 28,
	As of February 28,						2007
	2006			2007			(See Note 1)
							(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,288		$	21,036
Marketable securities		2,483			4,442
Accounts receivable, net of allowances of $31 and $62 as of February 28, 2006 and 2007, respectively		2,865			14,338
Deferred commissions, current		981			2,167
Prepaid expenses and other current assets		423			1,035
Total current assets		19,040			43,018
Property, equipment and leasehold improvements, net		1,602			2,941
Restricted cash		200			200
Deferred commissions, non-current		174			122
Goodwill		—			5,290
Acquired intangible assets		—			4,729
Other assets		—			495
Total assets	$	21,016		$	56,795
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	4,007		$	4,538
Accrued compensation		2,357			3,258
Deferred revenue, current		22,021			31,143
Note payable, current		981			1,585
Note payable to former TradePoint shareholders		—			1,800
Liability for early exercise of stock options, current		191			168
Redeemable convertible preferred stock warrant liability		214			592		$	—
Total current liabilities		29,771			43,084
Liability for early exercise of stock options, non-current		303			130
Deferred revenue, non-current		3,103			11,029
Note payable, non-current		1,238			8,678
Line of credit		—			3,000
Other long-term liabilities		154			461
Commitments (see Note 5)
Redeemable convertible preferred stock:
Series B, $0.001 par value — 10,438 shares authorized as of February 28, 2006 and 2007, 10,376 shares issued and outstanding as of February 28, 2006 and 2007, aggregate liquidation preference of $17,018 as of February 28, 2007. No shares outstanding pro forma (unaudited)		16,997			17,005			—
Series C, $0.001 par value — 12,598 shares authorized as of February 28, 2006 and 2007, 12,421 and 12,446 shares issued and outstanding as of February 28, 2006 and 2007, respectively, aggregate liquidation preference of $32,109 as of February 28, 2007. No shares outstanding pro forma (unaudited)		31,979			32,068			—
Total redeemable convertible preferred stock		48,976			49,073			—
Stockholders’ deficit:
Convertible preferred stock, Series A, $0.001 par value — 4,200 shares authorized as of February 28, 2006 and 2007, 4,200 shares issued and outstanding as of February 28, 2006 and 2007, aggregate liquidation preference of $2,100 as of February 28, 2007. No shares outstanding pro forma (unaudited)		2,071			2,071			—
Common stock, $0.001 par value — 46,300 and 100,000 shares authorized as of February 28, 2006 and 2007, 9,544 and 12,909 shares issued and outstanding, excluding 699 and 400 shares subject to repurchase, as of February 28, 2006 and 2007, respectively; 39,931 shares issued and outstanding pro forma (unaudited)		10			13			40
Additional paid-in capital		1,783			7,197			58,906
Accumulated deficit		(66,393	)		(67,941	)		(67,941	)
Total stockholders’ deficit		(62,529	)		(58,660	)	$	(8,995	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	21,016		$	56,795

See Notes to Consolidated Financial Statements.

F-3

DemandTec, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

	Year Ended February 28,
	2005			2006			2007
Revenue	$	19,537		$	32,539		$	43,485
Cost of revenue(1),(2)		8,881			12,584			14,230
Gross profit		10,656			19,955			29,255
Operating expenses:
Research and development(2)		9,737			11,021			15,340
Sales and marketing(2)		8,105			10,170			12,108
General and administrative(2)		1,798			2,388			2,673
Amortization of acquired intangible assets		—			—			118
Total operating expenses		19,640			23,579			30,239
Loss from operations		(8,984	)		(3,624	)		(984	)
Interest income		123			385			735
Interest expense		(216	)		(194	)		(1,091	)
Other income (expense), net		(191	)		659			(124	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(9,268	)		(2,774	)		(1,464	)
Provision for income taxes		8			14			52
Loss before cumulative effect of change in accounting principle		(9,276	)		(2,788	)		(1,516	)
Cumulative effect of change in accounting principle		—			(54	)		—
Net loss		(9,276	)		(2,734	)		(1,516	)
Accretion to redemption value of preferred stock		32			32			32
Net loss attributable to common stockholders	$	(9,308	)	$	(2,766	)	$	(1,548	)
Net loss per common share, basic and diluted	$	(1.15	)	$	(0.31	)	$	(0.14	)
Shares used in computing basic and diluted net loss per common share		8,078			8,899			11,061
Pro forma net loss per common share, basic and diluted (unaudited)							$	(0.03	)
Shares used in computing pro forma basic and diluted net loss per common share (unaudited)								38,073

(1) Includes $203 of amortization of acquired intangible assets in fiscal 2007.
(2) Includes stock-based compensation expense as follows:
Cost of revenue	$	—	$	—	$	41
Research and development		14		6		62
Sales and marketing		11		1		74
General and administrative		6		64		156
Total stock-based compensation expense	$	31	$	71	$	333

See Notes to Consolidated Financial Statements.

F-4

DemandTec, Inc.

Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(in thousands, except per share data)

																		Note
	Redeemable Convertible														Additional			Receivable						Total
	Preferred Stock					Convertible Preferred Stock				Common Stock					Paid-In			From			Accumulated			Stockholders’
	Shares		Amount			Shares		Amount		Shares			Amount		Capital			Stockholders			Deficit			Deficit
Balance at February 29, 2004		22,797	$	49,179			4,200	$	2,071		8,070		$	9	$	977		$	(117	)	$	(54,319	)	$	(51,379	)
Issuance of common stock for cash upon exercise of stock options		—		—			—		—		291			—		104			—			—			104
Vesting of common stock related to early exercise of stock options		—		—			—		—		39			—		13			—			—			13
Repurchase of common stock		—		—			—		—		(194	)		—		(47	)		—			—			(47	)
Accrued interest on note receivable from stockholder		—		—			—		—		—			—		—			(9	)		—			(9	)
Non-employee stock-based compensation		—		—			—		—		—			—		31			—			—			31
Accretion of preferred stock to redemption value		—		32			—		—		—			—		—			—			(32	)		(32	)
Net loss		—		—			—		—		—			—		—			—			(9,276	)		(9,276	)
Balance at February 28, 2005		22,797		49,211			4,200		2,071		8,206			9		1,078			(126	)		(63,627	)		(60,595	)
Issuance of common stock for cash upon exercise of stock options		—		—			—		—		1,222			1		568			—			—			569
Vesting of common stock related to early exercise of stock options		—		—			—		—		163			—		92			—			—			92
Repurchase of common stock		—		—			—		—		(47	)		—		(26	)		—			—			(26	)
Accrued interest on note receivable from stockholder		—		—			—		—		—			—		—			(2	)		—			(2	)
Payment of note receivable from stockholder		—		—			—		—		—			—		—			128			—			128
Non-employee stock-based compensation		—		—			—		—		—			—		71			—			—			71
Reclassification of preferred stock warrants to liabilities		—		(267	)		—		—		—			—		—			—			—			—
Accretion of preferred stock to redemption value		—		32			—		—		—			—		—			—			(32	)		(32	)
Net loss		—		—			—		—		—			—		—			—			(2,734	)		(2,734	)
Balance at February 28, 2006		22,797		48,976			4,200		2,071		9,544			10		1,783			—			(66,393	)		(62,529	)
Issuance of Series C redeemable preferred stock		25		65			—		—		—			—		—			—			—			—
Issuance of common stock for TradePoint acquisition		—		—			—		—		2,150			2		4,083			—			—			4,085
Issuance of common stock for cash		—		—			—		—		908			1		625			—			—			626
Vesting of common stock related to early exercise of stock options		—		—			—		—		332			—		218			—			—			218
Repurchase of common stock		—		—			—		—		(25	)		—		(16	)		—			—			(16	)
Issuance of common stock warrants		—		—			—		—		—			—		171			—			—			171
Employee stock-based compensation		—		—			—		—		—			—		202			—			—			202
Non-employee stock-based compensation		—		—			—		—		—			—		131			—			—			131
Accretion of preferred stock to redemption value		—		32			—		—		—			—		—			—			(32	)		(32	)
Net loss		—		—			—		—		—			—		—			—			(1,516	)		(1,516	)
Balance at February 28, 2007		22,822	$	49,073			4,200	$	2,071		12,909		$	13	$	7,197		$	—		$	(67,941	)	$	(58,660	)

See Notes to Consolidated Financial Statements.

F-5

DemandTec, Inc.

Consolidated Statements Of Cash Flows

(in thousands)

	Year Ended February 28,
	2005			2006			2007
Operating activities:
Net loss attributable to common stockholders	$	(9,308	)	$	(2,766	)	$	(1,548	)
Adjustment to reconcile net loss attributable to common stockholders to net cash provided by operating activities:
Depreciation		451			441			1,060
Accrued interest on notes receivable from stockholders		(9	)		(2	)		—
Non-employee stock-based compensation		31			71			131
Employee stock-based compensation expense		—			—			202
Amortization of warrants issued in conjunction with debt		—			—			99
Revaluation of warrants to fair value		—			(53	)		206
Amortization of purchased intangible assets		—			—			321
Amortization of financing costs		10			25			125
Provision for accounts receivable allowances		—			31			31
Other		229			125			(32	)
Changes in operating assets and liabilities:
Accounts receivable		1,642			2,240			(11,099	)
Prepaid expenses and other current assets		(177	)		26			(187	)
Restricted cash		100			—			—
Deferred commissions		(1,168	)		211			(1,135	)
Other assets		(5	)		(10	)		(113	)
Accounts payable and accrued expenses		93			2,876			515
Accrued compensation		1,293			(358	)		700
Deferred revenue		13,872			588			15,954
Net cash provided by operating activities		7,054			3,445			5,230
Investing activities:
Acquisition of TradePoint, net of cash acquired		—			—			(3,649	)
Purchases of property, equipment and leasehold improvements		(437	)		(1,517	)		(2,336	)
Purchases of marketable securities		—			(2,483	)		(6,200	)
Maturities of marketable securities		—			—			4,241
Net cash used in investing activities		(437	)		(4,000	)		(7,944	)
Financing activities:
Proceeds from issuance of common stock, net of repurchases		65			631			633
Proceeds from issuance of convertible preferred stock		—			—			65
Payment of note receivable from stockholder		—			128			—
Proceeds from advances on line of credit		150			—			3,000
Payments on line of credit		(850	)		(800	)		(2,303	)
Proceeds from issuance of notes payable		—			3,000			10,000
Principal payments on notes payable		(923	)		(1,628	)		—
Net cash (used in) provided by financing activities		(1,558	)		1,331			11,395
Effect of exchange rate changes on cash and cash equivalents		(227	)		(82	)		67
Net increase in cash and cash equivalents		4,832			694			8,748
Cash and cash equivalents at beginning of year		6,762			11,594			12,288
Cash and cash equivalents at end of year	$	11,594		$	12,288		$	21,036
Supplemental information:
Cash paid for interest	$	223		$	174		$	780
Cash paid for income taxes	$	4		$	13		$	21
Common stock issued in connection with acquisition of TradePoint	$	—		$	—		$	4,085
Reclassification of preferred stock warrant to liability	$	—		$	267		$	—
Issuance of warrants for common stock	$	—		$	—		$	171
Issuance of warrants for preferred stock	$	—		$	—		$	172
Deferred financing costs on note payable	$	—		$	—		$	400
Note payable to former TradePoint shareholders	$	—		$	—		$	1,800

See Notes to Consolidated Financial Statements.

F-6

DemandTec, Inc.

Notes To Consolidated Financial Statements

1.   Business Summary and Significant Accounting Policies

DemandTec, Inc., or “we,” were incorporated in Delaware on November 1, 1999. We sell and market Consumer Demand Management, or CDM, software that enables retailers and consumer product companies to better understand consumer demand and improve pricing, promotion and other merchandising and marketing decisions designed to achieve sales volume, revenue, profitability or other business objectives. We are headquartered in San Carlos, California, with additional offices in North America, Europe and Japan.

Fiscal Year

Our fiscal year ends on the last day in February. References to fiscal 2007, for example, refer to our fiscal year ended February 28, 2007.

Basis of Financial Statements

The consolidated financial statements include our accounts and those of our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segments

Our chief operating decision maker is our chief executive officer, who reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region. Accordingly, in accordance with Statement of Financial Accounting Standards, or SFAS, No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS No. 131, we have determined that we have a single reporting segment and operating unit structure.

Use of Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Significant estimates and assumptions made by management include the determination of the fair value of share-based payments, fair value of acquired intangible assets and the recoverability of long-lived assets. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that these estimates and judgments are made. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected.

Unaudited Pro Forma Stockholders’ Deficit

If a public offering is consummated, all of the convertible preferred stock outstanding will automatically convert into 27,022,234 shares of common stock, based on the shares of convertible preferred stock outstanding at February 28, 2007. In addition, the redeemable convertible preferred stock warrant liability of $592,000 outstanding as of February 28, 2007 would be reclassified to additional paid-in capital. Unaudited pro forma stockholders’ deficit, as adjusted for the assumed conversion of the convertible preferred stock and convertible preferred stock warrants, is set forth in the accompanying consolidated balance sheets.

Revenue Recognition

We generate revenue from fees under agreements that have contract terms principally of one to three years in length. Our agreements contain multiple elements, which include the use of our software, hosting services and professional services, as well as maintenance and customer support. Professional services consist of implementation, training, data and modeling, and analytical services related to our customers’ use of our software.

F-7

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Because we provide our software as a service, we follow the provisions of the Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue Recognition, and Emerging Issues Task Force, or EITF, Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, or EITF 00-21. We recognize revenue when all of the following conditions are met:

•  There is persuasive evidence of an arrangement;

•  The software as a service has been provided to the customer;

•  The collection of the fees is probable; and

•  The amount of fees to be paid by the customer is fixed or determinable.

In applying the provisions of EITF 00-21, we have determined that we do not have objective and reliable evidence of fair value for each element of our offering. As a result, the elements within our agreements do not qualify for treatment as separate units of accounting. Therefore, we account for all fees received under our agreements as a single unit of accounting and recognize them ratably over the term of the related agreement, commencing upon the later of the agreement start date or the date access to the software is provided to the customer.

Deferred Revenue

Deferred revenue consists of billings or payments received in advance of revenue recognition. For arrangements with terms of over one year, we generally invoice our customers in annual installments although certain multi-year agreements have had certain fees for all years invoiced and paid upfront. Deferred revenue to be recognized in the succeeding 12-month period is included in current deferred revenue with the remaining amounts included in non-current deferred revenue on our consolidated balance sheets.

Foreign Currency Translation

The functional currency of our international operations is the U.S. dollar. Our international operations’ financial statements are remeasured into U.S. dollars, with adjustments recorded as foreign currency gains (losses) in the consolidated statement of operations for the period. All monetary assets and liabilities are remeasured at the current exchange rate at the end of the period, non-monetary assets and liabilities are remeasured at historical exchange rates, and revenue and expenses are remeasured at average exchange rates in effect during the period. We recognized foreign currency gains (losses) of approximately $(186,000), $(89,000) and $70,000 for fiscal 2005, 2006 and 2007, respectively, in other income (expense), net.

Concentrations of Credit Risk, Significant Customers and Suppliers and Geographic Information

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable, line of credit and note payable. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable.

The following customers accounted for more than 10% of our revenue in fiscal 2005, 2006 and 2007:

	Year Ended February 28,
	2005			2006			2007
Customer A		2	%		11	%		12	%
Customer B		10			12			10
Customer C		4			11			8
Customer D		10			6			7
Customer E		36			21			—

F-8

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

At February 28, 2006 and 2007, long-lived assets located outside the United States were not significant. Revenue by geographic region, based on the billing address of the customer, was as follows:

	Year Ended February 28,
	2005		2006		2007
	(in thousands)
United States	$	10,178	$	21,500	$	40,656
United Kingdom		8,642		8,842		1,165
Other international		717		2,197		1,664
Revenue	$	19,537	$	32,539	$	43,485

At February 28, 2007, one customer accounted for 70% of our outstanding accounts receivable balance. At February 28, 2006, two customers accounted for 40% of our outstanding accounts receivable balance. The balances related to such accounts outstanding at the end of each fiscal year were collected subsequent to the respective year-ends.

The equipment hosting our software is located in two third-party data center facilities located in California. We do not control the operation of these facilities, and our operations are vulnerable to damage or interruption in the event either of these third-party data center facilities fails.

Fair Value of Financial Instruments

The carrying amounts of our cash equivalents approximate their fair values due to their short maturities. The fair value of long-term obligations is estimated based on current interest rates available to us for debt instruments with similar terms, degrees of risk and remaining maturities. The carrying values of these obligations approximate their respective fair values.

Redeemable Convertible Preferred Stock Warrants

Freestanding warrants related to shares that are redeemable are accounted for in accordance with SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, or SFAS No. 150. Under SFAS No. 150, the freestanding warrants that are related to our redeemable convertible preferred stock are classified as liabilities on our consolidated balance sheets. The warrants are subject to re-measurement at each balance sheet date, and any change in fair value is recognized as a component of other income (expense), net. We will continue to adjust the liability for changes in fair value until the earlier of (1) the exercise or expiration of the warrants or (2) the completion of a liquidation event, including the completion of an initial public offering, at which time all preferred stock warrants will be converted into warrants to purchase common stock and, accordingly, the liability will be reclassified to additional paid-in capital.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of February 28, 2006 and 2007, approximately $7.8 million and $13.1 million, respectively, of our cash equivalents were held in money market funds.

Restricted Cash

Restricted cash is comprised of a certificate of deposit under an irrevocable standby letter of credit that is required as collateral for an operating lease agreement and will automatically renew until the lease expires in February 2010.

F-9

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Marketable Securities

Our marketable securities have a remaining maturity at the time of purchase of greater than three months and less than twelve months. In accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, we classify our investments as held-to-maturity at the time of purchase and re-evaluate the classification at each balance sheet date. All of our investments were classified as held-to-maturity at February 28, 2006 and 2007 and were carried at amortized cost, which approximates fair value.

Allowance for Doubtful Accounts

We provide an allowance for uncollectible accounts based on a review of the current status of existing accounts receivable and historical collection experience. Our allowance for doubtful accounts increased by $0 in fiscal 2005, and $31,000 for each of fiscal 2006 and 2007. Write-offs of accounts receivable and recoveries were insignificant during each of the fiscal years presented.

Deferred Commissions

We capitalize certain commission costs directly related to the acquisition of customer contracts in accordance with Financial Accounting Standards Board, or FASB, Technical Bulletin 90-1, Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts. Our commission payments are paid shortly after our receipt of the related customer payment. The commissions are deferred and amortized to sales and marketing expense over the revenue recognition term of the related non-cancelable customer contract. The deferred commission amounts are recoverable through their accompanying future revenue streams under the non-cancellable customer agreements. We believe this is the appropriate method of accounting as the commission charges are so closely related to the revenue from the customer contracts that they should be recorded as an asset and charged to expense over the same period that the related revenue is recognized. We capitalized gross commission costs of approximately $1.9 million, $918,000 and $2.3 million for fiscal 2005, 2006 and 2007, respectively. Capitalized commission costs amortized to expense in fiscal 2005, 2006 and 2007 were approximately $956,000, $1.2 million and $1.5 million, respectively.

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are stated at historical cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements, which in each case is three years. Repair and maintenance costs are expensed as incurred.

Goodwill and Intangible Assets

We record as goodwill the excess of the acquisition purchase price over the fair value of the tangible and identifiable intangible assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS No. 142, we do not amortize goodwill, but will perform an annual impairment review of our goodwill during our third quarter, or more frequently if indicators of potential impairment arise. Following the criteria of SFAS No. 131 and SFAS No. 142, we have a single operating segment and consequently evaluate goodwill for impairment based on an evaluation of the fair value of our company as a whole. We record acquired intangible assets at their respective estimated fair values at the date of acquisition. Acquired intangible assets are being amortized using the straight-line method over their estimated useful lives, which range from three to ten years. We evaluate the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining estimated amortization period.

F-10

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Impairment of Long-Lived Assets

We evaluate the recoverability of our long-lived assets, including purchased intangible assets and property and equipment, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS No. 144. Long-lived assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. We measure recoverability of each asset by comparison of its carrying amount to the future undiscounted cash flows we expect the asset to generate. If we consider the asset to be impaired, we measure the amount of any impairment as the difference between the carrying value and the fair value of the impaired asset. We observed no impairment indicators through February 28, 2007.

Advertising Expenses

Advertising costs are expensed when incurred and are included in sales and marketing expenses in the accompanying consolidated statements of operations. We incurred advertising expenses of approximately $53,000, $140,000 and $68,000 for fiscal 2005, 2006 and 2007, respectively.

Research and Development and Software Development Costs

We account for internal use software costs, including web site development costs, in accordance with the American Institute of Certified Public Accountants’ Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, or SOP No. 98-1. In accordance with SOP No. 98-1, we capitalize the costs to develop software for our web site and other internal uses when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Any capitalized costs would be amortized to expense on a straight-line method over their expected lives. To date, internal software development costs eligible for capitalization have been insignificant, and accordingly we have charged all software development costs to research and development expense as incurred.

Income Taxes

We account for income taxes under SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between their financial reporting and tax bases and are measured using the enacted tax rates that are anticipated to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized. We have a valuation allowance against substantially all of our deferred tax assets as we believe it is more likely than not that the deferred tax assets will not be realized.

Derivative Instruments and Hedging Activities

We operate internationally and entered into foreign exchange forward contracts during fiscal 2005 to reduce our exposure in non-U.S. dollar denominated accounts receivable. We designated these forward contracts as cash flow hedges of foreign-currency-denominated firm commitments; their objective was to negate the impact of currency exchange rate movements on our operating results. In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, we excluded the implicit interest in the forward contracts when assessing hedge effectiveness. For fiscal 2005, implicit interest costs totaled approximately $70,000 and were included within other income (expense), net. We formally assess, both at a hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in negating currency risk. All forward contracts entered during fiscal 2005 were deemed highly effective. We did not engage in hedging activities during fiscal 2006 and 2007. We do not enter into derivative financial instruments for speculative or trading purposes.

F-11

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Stock-Based Compensation

Prior to March 1, 2006, we accounted for stock-based employee and director compensation under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB No. 25, and elected to follow the disclosure-only alternative prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under APB No. 25, stock-based employee and director compensation arrangements were accounted for using the intrinsic-value method based on the difference, if any, between the estimated fair value of our common stock and the exercise price on the date of grant.

Effective March 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123R, Share-Based Payment, using the prospective transition method, which requires us to apply the provisions of SFAS No. 123R only to new awards granted, and to awards modified, repurchased or cancelled, after the adoption date. Under this transition method, stock-based compensation expense recognized beginning March 1, 2006 is based on the grant date fair value of stock option awards granted or modified after March 1, 2006.

As a result of adopting SFAS No. 123R on March 1, 2006, our net loss for fiscal 2007 was $202,000 higher than if we had continued to account for stock-based compensation under APB No. 25. Basic and diluted loss per share for fiscal 2007 were each $0.02 higher than if we had continued to account for stock-based compensation under APB No. 25.

Options and warrants granted to consultants and other non-employees are accounted for in accordance with EITF Issue No. 96-18, Accounting for Equity Investments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, and are valued using the Black-Scholes method prescribed by SFAS No. 123. These options are subject to periodic revaluation over their vesting terms, and are charged to expense over the vesting term using the graded method.

Net Loss and Pro Forma Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period less the weighted average number of unvested common shares subject to our right of repurchase. Diluted net loss per common share is computed by giving effect to all potential dilutive common shares, including options, common stock subject to repurchase, warrants and convertible preferred stock. Basic and diluted net loss per common share were the same for all periods presented as the impact of all potentially dilutive securities outstanding was anti-dilutive.

Pro forma basic and diluted net loss per common share have been computed to give effect to the conversion of the convertible preferred stock using the if-converted method into common stock as though the conversion had occurred on the original dates of issuance.

F-12

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

The following table presents the calculation of historical and pro forma basic and diluted net loss per common share:

	Year Ended February 28,
	2005			2006			2007
	(in thousands, except per share data)
Net loss attributable to common stockholders	$	(9,308	)	$	(2,766	)	$	(1,548	)
Weighted average number of common shares outstanding		8,141			9,179			11,596
Less: Weighted average number of common shares subject to repurchase		(63	)		(280	)		(535	)
Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share		8,078			8,899			11,061
Net loss per common share, basic and diluted	$	(1.15	)	$	(0.31	)	$	(0.14	)
Pro forma net loss per common share (unaudited):
Net loss attributable to common stockholders							$	(1,548	)
Add:
Accretion of preferred stock offering costs								32
Change in the value of redeemable convertible preferred stock warrants								206
Net loss used to compute pro forma net loss per common share							$	(1,310	)
Basic and diluted weighted average shares used above								11,061
Assumed conversion of convertible preferred stock								27,012
As adjusted shares used in computing pro forma basic and diluted net loss per common share								38,073
Pro forma net loss per common share, basic and diluted (unaudited)							$	(0.03	)

F-13

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

The following weighted average outstanding shares subject to options and warrants to purchase common stock, common stock subject to repurchase, convertible preferred stock and shares subject to warrants to purchase redeemable convertible preferred stock were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an antidilutive effect:

	Year Ended February 28,
	2005		2006		2007
	(in thousands)
Shares subject to options to purchase common stock		5,556		5,480		9,782
Shares subject to warrants to purchase common stock		—		—		90
Common stock subject to repurchase		63		280		535
Shares subject to warrants to purchase redeemable convertible preferred stock		138		138		208
Convertible preferred stock (as converted basis)		26,997		26,997		27,012
Total		32,754		32,895		37,627

Recent Accounting Pronouncements

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, or FIN No. 48, which clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in financial statements. FIN No. 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods and disclosures for uncertain tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. We will adopt FIN No. 48 in our first quarter of fiscal 2008, and we are currently evaluating its impact, if any, on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, or SFAS No. 157, which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an Amendment of FASB Statement No. 115, which allows an entity to choose to measure certain financial instruments and liabilities at fair value. Subsequent measurements for the financial instruments and liabilities an entity elects to measure at fair value will be recognized in earnings. SFAS No. 159 also establishes additional disclosure requirements. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted provided that the entity also adopts SFAS No. 157. We are currently evaluating the impact of adopting SFAS No. 159.

2.   Cumulative Effect of Change in Accounting Principle

On June 29, 2005, the FASB issued Staff Position 150-5, Issuer’s Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable, or FSP 150-5, which affirms that warrants of this type are subject to the requirements of FSP 150-5, regardless of the timing of the redemption feature or the redemption price. Therefore, under FSP 150-5, the freestanding warrants to purchase our convertible preferred stock are liabilities that must be recorded at fair value. We previously accounted for freestanding warrants to purchase our convertible preferred stock under EITF Issue No. 96-18. We adopted FSP 150-5 and accounted for the cumulative effect of the change in accounting principle as of the beginning of the

F-14

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

third quarter of fiscal 2006. For fiscal 2006, the impact of the change in accounting principle was to decrease our net loss by $53,000, or $0.01 per share. The impact consisted of a $54,000 cumulative credit for adoption as of September 1, 2005, reflecting the difference between the fair value of the warrants as of that date and as of the date of issuance, and $1,000 of additional expense that was recorded in other income (expense), net to reflect the increase in fair value of the warrants between September 1, 2005 and February 28, 2006. In fiscal 2007, we recorded $126,000 of expense in other income (expense), net to reflect the increase in fair value during fiscal 2007. In May 2006, we issued warrants to purchase 75,000 shares of Series C redeemable convertible preferred stock and recorded an initial fair value of these warrants of $172,000. We recognized additional expense of $80,000 in other income (expense), net to reflect the increase in fair value of these warrants from May 2006 through the end of fiscal 2007.

The pro forma effect of the adoption of FSP No. 150-5 on our results of operations for fiscal 2005, if applied retroactively, assuming FSP No. 150-5 had been adopted in that year, would not be materially different from the reported amounts.

3.   Acquisition of TradePoint Solutions, Inc.

On November 9, 2006, we acquired all of the issued and outstanding capital stock of TradePoint Solutions, Inc., or TradePoint, a provider of on-demand promotion offer management software linking manufacturers, sales agencies and retailers on one platform. We did not assume any TradePoint outstanding options or warrants. The operating results of TradePoint have been included in the accompanying consolidated financial statements from the date of the acquisition. We accounted for the TradePoint acquisition under the purchase method of accounting.

The aggregate purchase price of TradePoint was $9.8 million, consisting of 2.1 million shares of our common stock valued at approximately $4.1 million based on a third-party valuation of our common stock using a weighted average income and market comparable approach, $3.7 million in cash, a $1.8 million promissory note issued to TradePoint shareholders and $219,000 of acquisition costs. The promissory note is subject to downward adjustment, with an offset to goodwill, for any claims for indemnification that we may make for certain breaches of representations, warranties and covenants set forth in the acquisition agreements. Any amounts remaining and available will be distributed to the former TradePoint shareholders in November 2007.

We allocated the purchase price to the estimated fair value of the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. Based on a third party valuation of all the identifiable intangible assets, the excess of the purchase price over the net tangible and intangible assets acquired was recorded as goodwill. The purchase price was allocated as follows (in thousands):

Current assets	$	808
Deferred tax asset		1,741
Property and equipment		76
Intangible assets:
Developed technology		3,050
Customer relationships		940
Non-compete covenants		500
Trade name		560
Goodwill		5,290
Current liabilities assumed		(1,387	)
Deferred tax liability		(1,741	)
Total purchase price	$	9,837

F-15

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Developed technology consists of products that had reached technological feasibility as of the acquisition date. A discount factor was applied to the projected cash flows of the technology in order to determine its present value. Goodwill will not be amortized and is not tax deductible. As part of the acquisition accounting, we established deferred income tax liabilities to reflect the tax effect of the temporary difference between the $5.1 million in fair value assigned to intangible assets acquired and their tax bases. In addition, we recognized a deferred tax asset of $1.7 million by reducing $1.7 million of our valuation allowance as part of our acquisition accounting. Intangible assets are being amortized on a straight-line basis over a weighted average period of 5.7 years. The intangible assets acquired are reported, net of accumulated amortization, as acquired intangible assets in the accompanying consolidated balance sheet as of February 28, 2007. Amortization expense related to the acquired intangible assets was $321,000 during fiscal 2007, of which $118,000 was included as a separate component of operating expenses and $203,000 was included in cost of revenue in the accompanying consolidated statements of operations.

The following unaudited pro forma financial information presents the combined results of operations of DemandTec and TradePoint as if the acquisition had occurred as of March 1, 2005. The column “Year Ended February 28, 2006” represents the combined results of DemandTec’s fiscal year ended February 28, 2006 and TradePoint’s year ended December 31, 2005. The column “Year Ended February 28, 2007” represents the combined results of DemandTec’s fiscal year ended February 28, 2007 and TradePoint’s interim nine months ended September 30, 2006.

The unaudited pro forma financial information is based upon available information and certain assumptions that management believes to be reasonable. The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations or financial condition of the combined company that would have been reported had the acquisition been completed as of the dates presented and should not be taken as representative of our future consolidated results of operations or financial condition.

	Year Ended February 28,
	2006			2007
	(in thousands, except per share data)
Revenue	$	33,875		$	45,263
Net loss attributable to common stockholders		(4,762	)		(2,348	)
Basic and diluted net loss per common share		(0.54	)		(0.19	)

F-16

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

4.   Balance Sheet Components

Marketable securities, at amortized cost, consisted of the following:

	As of
	February 28,
	2006		2007
	(in thousands)
Certificates of deposit	$	200	$	550
Commercial paper		785		350
Corporate bonds		1,001		2,698
U.S. agency bonds		497		250
Asset backed securities		—		594
	$	2,483	$	4,442

Interest income from marketable securities was $0, $20,000 and $171,000 in fiscal 2005, 2006 and 2007, respectively, and is included in interest income in the accompanying statements of operations. All investments were held to maturity and, thus, there were no recognized gains or losses during fiscal 2006 and 2007.

Property, equipment and leasehold improvements consisted of the following:

	As of
	February 28,
	2006			2007
	(in thousands)
Computers, software and equipment	$	2,729		$	5,052
Furniture and fixtures		101			115
Leasehold improvements		44			99
		2,874			5,266
Less: accumulated depreciation		(1,272	)		(2,325	)
Property, equipment and leasehold improvements, net	$	1,602		$	2,941

In fiscal 2006, we recognized a gain of $750,000 related to the sale of various computers, software and equipment, which is included in other income (expense), net.

F-17

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Accounts payable and accrued expenses consisted of the following:

	As of
	February 28,
	2006		2007
	(in thousands)
Accounts payable	$	2,799	$	2,652
Accrued professional services		908		1,159
Income taxes payable		—		40
Other accrued liabilities		300		687
Total accounts payable and accrued expenses	$	4,007	$	4,538

The carrying values at February 28, 2007 of intangible assets acquired in the TradePoint acquisition, are summarized in the following table:

								Weighted
								Average
			Accumulated					Amortization
	Gross Value		Amortization			Net Value		Period
	(in thousands)							(in years)
Developed technology	$	3,050	$	(203	)	$	2,847		5
Customer relationships		940		(45	)		895		7
Non-compete covenants		500		(56	)		444		3
Tradename		560		(17	)		543		10
Total	$	5,050	$	(321	)	$	4,729

Developed technology consisted of the fair value of products that had reached technological feasibility as of the acquisition date. Customer relationships represent the fair value of the underlying relationships and agreements with TradePoint’s installed customer base.

The estimated amortization expense related to the acquired intangible assets for each of the next five years and thereafter is summarized in the following table (in thousands):

Year Ending February 28,
2008	$	967
2009		967
2010		913
2011		800
2012		597
Thereafter		485
Total	$	4,729

5.   Commitments

We lease office space in various locations throughout the United States and Europe. Total rent expense was approximately $786,000, $794,000 and $783,000 for fiscal 2005, 2006 and 2007, respectively.

F-18

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

At February 28, 2007, future minimum lease commitments due under noncancelable operating leases were as follows (in thousands):

Year Ending February 28,
2008	$	764
2009		777
2010		801
Total	$	2,342

In connection with a noncancelable operating lease commitment, we have issued, in favor of our landlord, an irrevocable letter of credit for an aggregate amount of $200,000 that will automatically renew until the lease expires in February 2010. As of February 28, 2006 and 2007, we had a $200,000 certificate of deposit with a financial institution to secure the letter of credit, which is recorded as restricted cash on the consolidated balance sheets.

6.   Line of Credit

In May 2005, we entered into a $2.5 million line of credit with a financial institution, with interest at the prime rate plus 1.25%, that expired in May 2006. At February 28, 2006, there were no borrowings outstanding under this line of credit.

In May 2006, we entered into a new revolving line of credit with a financial institution. Amounts available for borrowing are limited to the lesser of (i) $5.0 million or (ii) $3.0 million plus 80% of eligible accounts receivable. Borrowings under this line of credit accrue interest at the greater of (i) the prime rate plus 0.5% and (ii) 8.0%. The facility expires in May 2008. During the first year, minimum monthly interest is charged based on the higher of interest based on outstanding borrowings or the interest applicable to borrowings of $2.0 million. There is no prepayment penalty, and no minimum interest is due if the line of credit is repaid in full and the facility is closed. The line of credit is collateralized by all of our assets and requires us to comply with certain non-financial covenants, including limitations on indebtedness and restrictions on dividend distributions. As of February 28, 2007, we had $3.0 million outstanding under this line of credit and we were in compliance with all covenants. We also guaranteed and pledged to the financial institution a security interest in all of our intellectual property. In connection with entering into the line of credit agreement, we issued the financial institution a warrant to purchase up to 75,000 shares of our Series C convertible preferred stock at an exercise price of $2.58 per share. The warrant was nonforfeitable, fully vested and exercisable upon grant, and expires in May 2016. In the event of a liquidation event, including the completion of an initial public offering, the warrant, if not previously exercised, will be converted into a warrant to purchase common stock. The fair value of the warrant was $172,000 using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk-free interest rate of 5.12%, contractual life of 10 years and no dividends. The fair value of the warrant was recorded as debt issuance cost and is being amortized to interest expense using the effective interest method over the loan term. A total of $64,000 was amortized to interest expense during fiscal 2007 (see Note 7).

Under FSP 150-5, the preferred stock warrant is classified in liabilities and is revalued each reporting period that it remains outstanding, with the changes in fair value recorded within other income (expense), net in the accompanying consolidated statements of operations. The change in carrying value of the Series C preferred stock warrant resulted in a charge of $80,000 in fiscal 2007.

7.   Notes Payable

In May 2005, we entered into a $3.0 million term loan facility that accrued interest at a fixed rate of 7.20%. Principal and interest payments of approximately $92,000 were due monthly over 36 months. At February 28, 2006, the outstanding loan principal balance was approximately $2.2 million. The outstanding balance of this term loan

F-19

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

was repaid when we entered into the May 2006 line of credit (see Note 6). In July 2006, we entered into a new 48-month $10.0 million term loan, the July 2006 Loan, with two financial institutions at a fixed interest rate of 9.50%. During the first 12-month interest-only period, interest is payable monthly. Following the interest-only period, we are obligated to pay principal and interest in equal monthly installments over the remaining 36 months. The final scheduled payment includes a balloon interest payment of $400,000. The balloon interest payment has been included as a deferred charge in other assets on the accompanying balance sheet and is being amortized as interest expense over the term of the loan. The loan may be prepaid without penalty. We have granted to the financial institution a security interest in all of our intellectual property. The agreement with the two financial institutions restricts or limits our ability to pay dividends.

In connection with the July 2006 Loan, we issued the financial institution warrants to purchase up to 150,000 shares of our common stock at an exercise price of $1.35 per share, which was determined to be fair value based upon a third-party valuation of our common stock. Each warrant was nonforfeitable, fully vested and exercisable upon grant, and will expire in July 2016. The fair value of the warrants was $171,000 using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk free interest rate of 4.99%, contractual life of 10 years and no dividends. The fair value of the warrants was recorded to debt issuance costs and is being amortized to interest expense using the effective interest method over the loan term. A total of $35,000 was amortized to interest expense during fiscal 2007.

In addition, one of the lenders of our July 2006 Loan purchased 25,000 shares of our Series C redeemable convertible preferred stock at $2.58 per share and 170,000 shares of our common stock at $1.35 per share. These purchases were at fair value and thus resulted in no additional debt discount being recorded. As of February 28, 2007, the future minimum loan payments under the July 2006 loan were as follows (in thousands):

Year Ending February 28,
2008	$	2,643
2009		3,853
2010		3,853
2011		2,005
Total future payments		12,354
Less portion representing interest		(2,091	)
		10,263
Less current portion		1,585
Long-term debt	$	8,678

F-20

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

8.   Convertible Preferred Stock and Preferred Stock Warrants

Our authorized, issued and outstanding shares of convertible preferred stock and aggregate liquidation preferences as of February 28, 2007 were as follows:

			Issued and		Liquidation
	Authorized		Outstanding		Preference
	(in thousands)
Series A		4,200		4,200	$	2,100
Series B, redeemable		10,438		10,376		17,018
Series C, redeemable		12,598		12,446		32,109
Total		27,236		27,022	$	51,227

The rights, privileges and preferences of the convertible preferred stock are as follows:

Dividends

The preferred stockholders are entitled to receive, when and if declared by our Board of Directors, out of funds legally available, non-cumulative cash dividends at the rate of 10%, 8% and 8% of the original issue price per annum on each outstanding share of Series A, B and C convertible preferred stock, respectively. The convertible preferred stockholders of each series of convertible preferred stock, voting as a separate series, can waive any dividend preference upon the affirmative vote or written consent of the holders of at least a majority of the outstanding convertible preferred stock in that series. No dividends have been declared to date.

Liquidation

In the event of liquidation or winding up of the company, holders of Series A, B and C convertible preferred stock are entitled to liquidation preferences of $0.50, $1.64 and $2.58 per share, respectively, together with any declared but unpaid dividends prior, and in preference to, any distribution to holders of common stock. After payment has been made to the holders of convertible preferred stock, any remaining assets will be distributed ratably among the holders of convertible preferred stock and common stock in proportion to the number of shares of common stock held by each, assuming conversion of all convertible preferred stock. If our assets are insufficient to provide for the full preferential amount for the preferred stock outstanding, then those assets will be distributed ratably among the holders of the convertible preferred stock in proportion to the full preferential amount each holder is otherwise entitled to receive. However, if the total net proceeds to be distributed exceed $260.0 million, the holders of Series A, B and C convertible preferred stock will not be entitled to any liquidation preference, and the proceeds will instead be distributed ratably to all holders of common and convertible preferred stock on an as-converted basis.

Conversion

At the option of the holder thereof, each share of our convertible preferred stock is convertible, at any time or from time to time, into the number of fully paid and non-assessable shares of common stock that is determined by dividing the applicable original issue price for the series by the applicable conversion price for that series.

Each share of convertible preferred stock will automatically be converted into shares of common stock immediately upon the earlier of (a) a date specified by the affirmative election of the holders of at least a majority of the then-outstanding shares of the convertible preferred stock, or (b) immediately upon the closing of an underwritten public offering pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, that results in gross proceeds of at least $30.0 million.

F-21

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Voting

Each holder of preferred stock is entitled to the number of votes equal to the number of shares of common stock into which that holder’s shares of preferred stock could be converted as of the record date. The holders of shares of the preferred stock are entitled to vote on all matters on which the common stock are each entitled to vote. The holders of Series B and C redeemable convertible preferred stock voting as separate classes are entitled to elect one director for so long as at least 25% of their respective series originally issued remain outstanding. The holders of common stock voting as a separate class are entitled to elect two directors. The holders of common stock and convertible preferred stock are entitled to elect any remaining directors, voting together on an as-converted basis.

Redemption

At any time after November 16, 2008 and within 90 days after the receipt by us of a written request from the holders of not less than a majority of the outstanding Series B and C redeemable convertible preferred stock voting as a single class on an as-converted basis, we are obligated to redeem the Series B and C redeemable convertible preferred stock for their respective original issuance prices plus all declared but unpaid dividends through four equal annual cash installments.

In accordance with SFAS No. 150, each of our Series B and C convertible preferred stock is classified outside of equity on the accompanying consolidated balance sheets because this stock is redeemable at the option of the holders at any time after November 16, 2008.

Each period, we accrete the amount that is necessary to adjust the recorded balance of this preferred stock to an amount equal to its estimated redemption value at its redemption date using the straight-line method, which approximates the effective interest method. Upon completion of an initial public offering, each share of the outstanding preferred stock will automatically convert to common stock and we will cease accreting these shares to their estimated redemption value.

Preferred Stock Warrants

In October 2001, we granted to a financial institution a warrant to purchase a maximum of 60,976 shares of our Series B redeemable convertible preferred stock, at an exercise price of $1.64 per share, in connection with a loan for equipment financing. The warrant was nonforfeitable, fully vested and exercisable upon grant, and will expire in October 2008.

In March 2002, we granted to the financial institution an additional warrant to purchase a maximum of 77,519 shares of our Series C redeemable convertible preferred stock, at an exercise price of $2.58 per share, in connection with a loan for equipment financing. The warrant was nonforfeitable, fully vested and exercisable upon grant, and will expire in March 2012.

In May 2006, we issued to the financial institution a warrant to purchase up to 75,000 shares of our Series C redeemable convertible preferred stock at an exercise price of $2.58 per share in connection with a line of credit agreement. The warrant was nonforfeitable, fully vested and exercisable upon grant, and will expire in May 2016.

As discussed in Note 2, we reclassified the convertible preferred stock warrants as a liability in fiscal 2006 and adjusted the warrants to fair value at the end of each subsequent reporting period.

9.   Stockholders’ Deficit

Common Stock

The Certificate of Incorporation, as amended, authorizes us to issue 100,000,000 shares of $0.001 par value common stock. Common stockholders are entitled to dividends as and when declared by our Board of Directors,

F-22

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.

We have issued shares of common stock under restricted stock purchase agreements in connection with early exercises of common stock option grants. These agreements contain provisions for the repurchase of unvested shares by us at the original issuance price for employees who terminate their employment. The repurchase rights generally lapse over approximately four years. As of February 28, 2006 and 2007, we had 10,242,729 and 13,309,212 shares of common stock outstanding, respectively. Of these shares, 698,932 and 399,861, respectively, were subject to our lapsing right to repurchase, in the event the holder’s employment with us terminates, and are not considered outstanding shares as discussed below.

Warrants to Purchase Common Stock

In July 2006, in connection with a debt agreement, we issued warrants to purchase 150,000 shares of common stock at an exercise price of $1.35 per share. The warrants are nonforfeitable, fully vested and exercisable upon grant, and will expire in July 2016 (see Note 7).

Stock Option Plan

During 1999, our Board of Directors adopted the 1999 Equity Incentive Plan. The 1999 Equity Incentive Plan provides for stock options and stock purchase rights to be granted to employees, directors, and consultants. As of February 28, 2007, a total of 20,435,000 shares were authorized for issuance over the term of the 1999 Equity Incentive Plan. Options granted may be either incentive stock options or nonstatutory stock options and are exercisable as determined by our Board of Directors and as specified in each option agreement. Options vest over a period of time as determined by our Board of Directors, generally four years, and expire no more than ten years from the date of grant.

F-23

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

The exercise price of incentive stock options may not be less than the fair value of our common stock on the date of grant. Nonstatutory options may not be granted at less than 85% of the fair value of our common stock. The term of the 1999 Equity Incentive Plan is ten years. A summary of our stock option activity is as follows:

							Weighted
	Shares			Shares Subject			Average
	Available			to Options			Exercise Price
	for Grant			Outstanding			per Share
	(shares in thousands)
Balance at February 29, 2004		1,063			6,343		$	0.43
Additional shares authorized		5,000			—
Granted		(4,759	)		4,759			0.59
Exercised		—			(371	)		0.40
Canceled/forfeited		820			(820	)		0.48
Repurchased		194			—			0.24
Balance at February 28, 2005		2,318			9,911			0.50
Additional shares authorized		500			—
Granted		(2,340	)		2,340			0.99
Exercised		—			(2,008	)		0.55
Canceled/forfeited		461			(461	)		0.59
Repurchased		13			—			0.73
Balance at February 28, 2006		952			9,782			0.61
Additional shares authorized		3,000			—
Granted		(3,851	)		3,851			1.84
Exercised		—			(771	)		0.54
Canceled/forfeited		510			(510	)		0.77
Repurchased		24			—			0.66
Balance at February 28, 2007		635			12,352			0.99

The following table summarizes information concerning options outstanding at February 28, 2007:

	Options Outstanding						Options Exercisable
					Weighted				Weighted
	Number of		Weighted		Average		Number		Average
	Shares		Average		Exercise		of Shares		Exercise
	Subject to		Remaining		Price per		Subject to		Price per
Range of Exercise Prices:	Options		Contractual Life		Share		Options		Share
	(in thousands)		(in years)				(in thousands)
$0.05 - $0.50		4,477		5.75	$	0.43		4,009	$	0.42
0.51 - 0.85		3,131		7.84		0.68		1,585		0.67
0.86 - 1.35		1,895		8.96		1.28		467		1.27
1.36 - 1.90		2,352		9.38		1.86		15		1.78
1.91 - 2.70		497		9.68		2.70		1		2.70
		12,352		7.61		0.99		6,077		0.56

At February 28, 2007, the aggregate intrinsic value of currently exercisable options was $13,006,000 and the weighted average remaining contractual term of those options was 7.7 years. The aggregate intrinsic value was

F-24

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

calculated as the difference between the exercise price of the underlying stock option awards and the fair value of our common stock at February 28, 2007 of $2.70.

During fiscal 2005, 2006 and 2007, the aggregate intrinsic values of stock option awards exercised were $213,000, $1.8 million and $1.1 million, respectively, determined at the date of option exercise. There were exercisable and vested options to purchase 4,929,210 and 6,077,416 shares of common stock as of February 28, 2006 and 2007, respectively. The total fair value of options vested during fiscal 2007 was $470,000.

The following table summarizes information concerning vested and expected to vest options outstanding (dollars in thousands, except per share amounts):

	As of
	February 28, 2007
Number of vested and expected to vest options outstanding		11,745
Weighted average exercise price per share		$0.97
Aggregate intrinsic value		$20,319
Weighted average remaining contractual term (in years)		7.55

On March 29, 2007, our Board of Directors authorized an additional 500,000 shares of common stock to be issued under the 1999 Equity Incentive Plan. On May 15, 2007, our Board of Directors authorized an additional 850,000 shares of common stock to be issued under the 1999 Equity Incentive Plan.

Early Exercise of Employee Options

In accordance with EITF No. 00-23, Issues Related to the Accounting for Stock Compensation under APB No. 25, and FIN No. 44, shares purchased by employees pursuant to the early exercise of stock options are not deemed to be issued until those shares vest. The EITF reached a consensus that these guidelines should be applied to stock option awards granted or modified after March 21, 2002. Therefore, cash received in exchange for exercised and unvested shares related to stock options granted after that date is recorded as a liability for early exercise of stock options on the accompanying consolidated balance sheets, and will be transferred into common stock and additional paid-in capital as the shares vest. As of February 28, 2006, there were 698,932 shares outstanding as a result of the early exercise of options that were reclassified as approximately $191,000 and $303,000 in current and long-term liabilities, respectively. As of February 28, 2007, there were 399,861 shares outstanding as a result of the early exercise of options, reclassified as approximately $168,000 and $130,000 in current and long-term liabilities, respectively.

Stock-Based Compensation for Non-employees

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options are earned. We believe that the fair value of the stock options is more reliably measurable than the fair value of the services received. The fair value of the stock options granted is calculated at each reporting date using the Black-Scholes option pricing model as prescribed by SFAS No. 123.

F-25

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

The fair value of options granted to non-employees for fiscal 2005, 2006 and 2007 was calculated using the following assumptions:

	Year Ended February 28,
	2005			2006			2007
Weighted average expected term (in years)		10			10			10
Expected stock price volatility		45	%		60	%		62	%
Risk-free interest rate		4.6	%		3.0	%		4.5-5.1	%
Expected dividend yield		0	%		0	%		0	%

Stock-based compensation expense charged for options granted to non-employees for fiscal 2005, 2006 and 2007 was $31,000, $71,000 and $131,000, respectively.

Stock-Based Compensation Associated with Awards to Employees

Employee Stock-Based Awards Granted Prior to March 1, 2006

Compensation costs for employee stock options granted prior to March 1, 2006, the date we adopted SFAS No. 123R, were accounted for using the intrinsic-value method of accounting as prescribed by APB No. 25, as permitted by SFAS No. 123. Under APB No. 25, compensation expense for employee stock options is based on the excess, if any, of the fair value of our common stock over the option exercise price on the measurement date, which is typically the date of grant. All options granted were intended to be exercisable at a price per share not less than fair market value of the shares of our common stock underlying those options on their respective dates of grant. Our Board of Directors determined these fair market values in good faith based on the best information available to our Board of Directors and our management at the time of the grant. These fair value determinations included the use of inputs from a third-party valuation consultant. The fair value of all options granted through February 28, 2006, for financial reporting purposes, was equal to or less than the option exercise price.

Employee Stock-Based Awards Granted On or Subsequent to March 1, 2006

On March 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123R. We adopted SFAS No. 123R using the prospective transition method. Under this transition method, beginning March 1, 2006, compensation cost recognized includes: (a) compensation cost for all stock-based awards granted prior to, but not yet vested as of, February 28, 2006, based on the intrinsic-value method in accordance with the provisions of APB No. 25, and (b) compensation cost for all stock-based payments granted or modified subsequent to February 28, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R.

Compensation cost for employee stock-based awards granted on or after March 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R and will be recognized over the vesting period of the applicable award on a straight-line basis. During fiscal 2007, we issued employee stock-based awards in the form of stock options. The weighted average estimated fair value of the employee stock options granted was $0.63 per share for fiscal 2007.

We use the Black-Scholes pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using a pricing model is affected by our stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise

F-26

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

behaviors, risk-free interest rates and expected dividends. The estimated grant date fair values of the employee stock options were calculated using the Black-Scholes valuation model, based on the following assumptions:

	Year Ended
	February 28, 2007
Weighted average expected term (in years)	3 - 4
Expected stock price volatility	35% - 42%
Risk-free interest rate	4.7% - 5.0%
Expected dividend yield	0%

Weighted Average Expected Term.  Under our 1999 Equity Incentive Plan, the expected term of options granted is based on the options vesting term, contractual terms and historical exercise and vesting information as well as data from similar entities. In evaluating similarity, we considered factors such as industry, stage of life cycle, size, employee demographics and the nature of stock option plans. We believe that with this information taken together we have been able to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

Volatility.  Since we are a private entity with no historical data regarding the volatility of our common stock price, the expected volatility used for fiscal 2007 is based on the volatility of stock prices for similar entities.

Risk-Free Interest Rate.  The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Dividend Yield.  We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model.

Forfeitures.  SFAS No. 123R also requires us to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data, as well as data for similar entities, to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. In evaluating similarity, we considered factors such as industry, stage of life cycle, size, employee demographics, and the nature of stock option plans. We believe that, with this information taken together, we have been able to develop reasonable expectations about future forfeiture patterns. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.

As of February 28, 2007, we had $2.1 million of unrecognized compensation costs, excluding estimated forfeitures, related to non-vested stock option awards granted after March 1, 2006, which are expected to be recognized over a weighted average period of 2.8 years.

F-27

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

Shares of Common Stock Outstanding and Reserved for Future Issuance

We are required to reserve and keep available out of our authorized but unissued shares of common stock a number of shares sufficient to permit the conversion of all outstanding shares of convertible preferred stock, including unexercised preferred stock warrants, and the exercise of all options granted and available for grant under our 1999 Equity Incentive Plan. At February 28, 2007, common stock was reserved for issuance as follows:

	As of February 28,
	2007
	(in thousands)
Common stock warrants		150
Stock option plans:
Unvested shares subject to repurchase		400
Outstanding stock options		12,352
Reserved for future grants		635
Upon conversion of convertible preferred stock outstanding		27,022
Upon conversion of preferred stock warrants		213
Total		40,772

10.   Income Taxes

The provision for income taxes consisted of the following:

	Year Ended February 28,
	2005		2006		2007
	(in thousands)
Current:
Federal	$	—	$	—	$	22
State		—		—		13
Foreign		8		14		17
Total current		8		14		52
Total provision for income taxes	$	8	$	14	$	52

F-28

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

As a result of our history of net operating losses, provision for income taxes relates to federal and state minimum income tax and foreign income tax. Foreign income before provision for income taxes and cumulative effect of change in accounting principle for fiscal 2005, 2006 and 2007 was $35,000, $88,000 and $44,000, respectively. Our effective tax rate differs from the amount computed by applying the statutory federal income tax rate to net loss before income tax and cumulative effect of change in accounting principle as follows:

	Year Ended February 28,
	2005			2006			2007
Federal income tax benefit at statutory rate		(34.0	)%		(34.0	)%		(34.0	)%
Net operating losses not used		33.6			33.6			16.5
Non-deductible warrant expenses		—			—			7.1
Non-deductible stock compensation expense		—			—			4.5
Non-deductible meals and entertainment expense		0.4			1.2			6.1
Other		—			—			3.3
		—	%		0.8	%		3.5	%

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

	As of February 28,
	2006			2007
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	23,964		$	23,090
Research and development credits		—			4,315
Differences in timing of revenue recognition		1,218			1,884
Accruals and allowances		581			714
Gross deferred tax assets		25,763			30,003
Valuation allowance		(25,763	)		(28,262	)
Net deferred tax assets		—			1,741
Deferred tax liabilities:
Acquired intangible assets		—			(1,741	)
Net deferred tax assets (liabilities)	$	—		$	—
Recorded as:
Current deferred tax assets				$	325
Non-current deferred tax liabilities				$	(325	)

Realization of the deferred tax assets is dependent upon future earnings, if any, the amount and timing of which are uncertain. Accordingly, substantially all of our net deferred tax assets have been offset by a valuation allowance. The valuation allowance increased by approximately $4.2 million, $2.0 million and $2.5 million during fiscal 2005, 2006 and 2007, respectively. Approximately $2.5 million of the valuation allowance relates to acquisition-related

F-29

DemandTec, Inc.

Notes To Consolidated Financial Statements — (Continued)

items that when realized will be credited to goodwill. Also, approximately $176,000 of the valuation allowance relates to stock option benefits that when realized will be recorded as an adjustment to additional paid-in capital.

As of February 28, 2007, we had cumulative federal net operating loss carryforwards of approximately $64.0 million. We also had federal research and development tax credit carryforwards of approximately $2.8 million. The net operating loss and credit carryforwards will expire at various dates beginning in 2019, if not utilized.

As of February 28, 2007, we had cumulative state net operating loss carryforwards of approximately $42.0 million. The net operating loss carryforwards will expire at various dates beginning in 2009, if not utilized. We also had state research and development tax credit carryforwards of approximately $2.3 million that will carry forward indefinitely if not utilized.

Utilization of the net operating loss carryforwards and credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

11.   Employee Savings and Retirement Plan

We have a 401(k) plan that allows eligible employees to contribute up to 15% of their total compensation, subject to annual limits. Under the plan, eligible employees may defer a portion of their pretax salaries, but not more than statutory limits. Contributions by us are at the discretion of our Board of Directors. No discretionary contributions have been made by us to date.

12.   Subsequent Events (unaudited)

On May 22, 2007, our Board of Directors approved the filing of a registration statement with the Securities and Exchange Commission for an initial public offering of our common stock.

On May 22, 2007, our Board of Directors adopted the 2007 Incentive Award Plan, or the 2007 Plan, subject to stockholder approval. A total of 6,000,000 shares of common stock have been authorized for issuance pursuant to the 2007 Plan, which will become effective on the effective date of our initial public offering.

On May 22, 2007, our Board of Directors adopted the 2007 Employee Stock Purchase Plan, or the 2007 ESPP, subject to stockholder approval. A total of 1,000,000 shares of common stock were reserved for issuance under the 2007 ESPP, which will become effective on the effective date of our initial public offering.

F-30

Report of Ernst & Young LLP,
Independent Auditors

The Board of Directors and Stockholders

TradePoint Solutions, Inc.

We have audited the accompanying balance sheets of TradePoint Solutions, Inc. (the Company) as of December 31, 2004 and 2005, and the related statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004 and 2005, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

San Francisco, California

May 15, 2007

F-31

TradePoint Solutions, Inc.

Balance Sheets

(in thousands, except per share data)

							As of
	As of December 31,						September 30,
	2004			2005			2006
							(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,150		$	159		$	277
Accounts receivable		36			280			284
Due from related party		191			59			25
Prepaid expenses		8			25			—
Other current assets		77			—			—
Total current assets		1,462			523			586
Property and equipment, net		122			144			125
Other assets		10			10			36
Total assets	$	1,594		$	677		$	747
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	176		$	175		$	152
Deferred revenue		210			982			1,505
Line of credit		—			—			188
Redeemable convertible preferred stock warrant liability		15			29			30
Total current liabilities		401			1,186			1,875
Deferred revenue, non-current		—			30			—
Commitments
Redeemable convertible preferred stock:
Series A, $0.001 par value — 17,500 shares authorized as of December 31, 2004 and 2005, 17,335 shares issued and outstanding as of December 31, 2004 and 2005 and September 30, 2006 (unaudited), aggregate liquidation preference of $3,664 as of December 31, 2005		3,396			3,410			3,421
Series A1, $0.001 par value — 11,111 shares authorized as of December 31, 2004 and 2005, 10,947, 11,036 and 11,036 shares issued and outstanding as of December 31, 2004 and 2005, and September 30, 2006 (unaudited), respectively, aggregate liquidation preference of $2,483 as of December 31, 2005		2,373			2,608			2,769
Total redeemable convertible preferred stock		5,769			6,018			6,190
Stockholders’ deficit:
Common stock, $0.001 par value — 50,000 shares authorized, 8,492 shares issued and outstanding as of December 31, 2004 and 2005, 9,013 shares issued and outstanding September 30, 2006 (unaudited)		8			8			9
Additional paid-in capital		162			—			—
Accumulated deficit		(4,746	)		(6,565	)		(7,327	)
Total stockholders’ deficit		(4,576	)		(6,557	)		(7,318	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	1,594		$	677		$	747

See accompanying notes.

F-32

TradePoint Solutions, Inc.

Statements of Operations

(in thousands)

							Nine Months Ended
	Year Ended December 31,						September 30,
	2004			2005			2005			2006
							(unaudited)
Revenue (see Note 11)	$	145		$	1,336		$	831		$	1,778
Cost of revenue		603			638			504			496
Gross profit (loss)		(458	)		698			327			1,282
Operating expenses:
Research and development		790			1,110			831			826
Sales and marketing		277			507			354			421
General and administrative		1,056			832			673			637
Total operating expenses		2,123			2,449			1,858			1,884
Loss from operations		(2,581	)		(1,751	)		(1,531	)		(602	)
Other income (expense), net		(146	)		(16	)		6			(26	)
Net loss		(2,727	)		(1,767	)		(1,525	)		(628	)
Accrued dividend on Series A1 preferred stock		—			197			147			147
Accretion to redemption value of redeemable convertible preferred stock		14			32			24			25
Net loss attributable to common stockholders	$	(2,741	)	$	(1,996	)	$	(1,696	)	$	(800	)

See accompanying notes.

F-33

TradePoint Solutions, Inc.

Statement of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(in thousands)

	Redeemable Convertible Preferred Stock												Additional						Total
	Series A				Series A1				Common Stock				Paid-In			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at December 31, 2003		9,341	$	1,800		—	$	—		8,492	$	8	$	34		$	(2,005	)	$	(1,963	)
Issuance of Series A preferred stock, net of $17 in offering costs		7,994		1,582		—		—		—		—		—			—			—
Issuance of Series A1 preferred stock upon conversion of notes payable		—		—		5,009		1,127		—		—		—			—			—
Issuance of Series A1 preferred stock, net of $91 in offering costs		—		—		5,938		1,246		—		—		—			—			—
Issuance of common stock warrants		—		—		—		—		—		—		93			—			93
Accretion to redemption value of redeemable convertible preferred stock		—		14		—		—		—		—		—			(14	)		(14	)
Modification of employee stock option		—		—		—		—		—		—		9			—			9
Non-employee stock-based compensation		—		—		—		—		—		—		26			—			26
Net loss		—		—		—		—		—		—		—			(2,727	)		(2,727	)
Balance at December 31, 2004		17,335		3,396		10,947		2,373		8,492		8		162			(4,746	)		(4,576	)
Issuance of Series A1 preferred stock		—		—		89		20		—		—		—			—			—
Issuance of common stock warrants		—		—		—		—		—		—		5			—			5
Accrued dividend on Series A1 preferred stock		—		—		—		197		—		—		(177	)		(20	)		(197	)
Accretion to redemption value of redeemable convertible preferred stock		—		14		—		18		—		—		—			(32	)		(32	)
Non-employee stock-based compensation		—		—		—		—		—		—		10			—			10
Net loss		—		—		—		—		—		—		—			(1,767	)		(1,767	)
Balance at December 31, 2005		17,335		3,410		11,036		2,608		8,492		8		—			(6,565	)		(6,557	)
Issuance of common stock on exercise of stock options (unaudited)		—		—		—		—		521		1		25			—			26
Issuance of common stock warrants (unaudited)		—		—		—		—		—		—		12			—			12
Accrued dividend on Series A1 preferred stock (unaudited)		—		—		—		147		—		—		(39	)		(108	)		(147	)
Accretion to redemption value of redeemable convertible preferred stock (unaudited)		—		11		—		14		—		—		—			(25	)		(25	)
Employee stock-based compensation (unaudited)		—		—		—		—		—		—		2			—			2
Net loss (unaudited)		—		—		—		—		—		—		—			(629	)		(629	)
Balance at September 30, 2006 (unaudited)		17,335	$	3,421		11,036	$	2,769		9,013	$	9	$	—		$	(7,327	)	$	(7,318	)

See accompanying notes.

F-34

TradePoint Solutions, Inc.

Statements of Cash Flows

(in thousands)

							Nine Months Ended
	Year Ended December 31,						September 30,
	2004			2005			2005			2006
							(unaudited)
Operating activities:
Net loss attributable to common stockholders	$	(2,741	)	$	(1,996	)	$	(1,696	)	$	(800	)
Adjustment to reconcile net loss attributable to common stockholders to net cash used in operating activities:
Accrued dividend on redeemable convertible preferred stock		—			197			147			147
Accretion to redemption value of redeemable convertible preferred stock		14			32			24			24
Depreciation		30			44			34			50
Loss on disposal of equipment		12			—			—			—
Issuance of common stock warrants		93			5			—			15
Issuance of preferred stock warrants		—			14			—			—
Accrued interest on notes payable		27			—			—			—
Modification of common stock option		9			—			—			—
Non-employee stock-based compensation		26			10			—			—
Stock-based compensation		—			—			—			2
Changes in operating assets and liabilities:
Accounts receivable		(9	)		(244	)		(33	)		(4	)
Due from related party		(191	)		132			—			34
Prepaid expenses and other assets		67			60			57			(1	)
Accounts payable and accrued expenses		(315	)		(1	)		1			(23	)
Deferred revenue		208			802			726			493
Net cash used in operating activities		(2,770	)		(945	)		(740	)		(63	)
Investing activities:
Purchases of property and equipment		(86	)		(66	)		(64	)		(33	)
Net cash used in investing activities		(86	)		(66	)		(64	)		(33	)
Financing activities:
Issuance of debt		—			—			—			188
Repayment of debt		(1	)		—			—			—
Proceeds from issuance of common stock		—			—			—			26
Proceeds from issuance of convertible notes		1,100			—			—			—
Proceeds from issuance of convertible preferred stock, net		2,828			20			20			—
Net cash provided by financing activities		3,927			20			20			214
Net increase (decrease) in cash and cash equivalents		1,071			(991	)		(784	)		118
Cash and cash equivalents at beginning of period		79			1,150			1,150			159
Cash and cash equivalents at end of period	$	1,150		$	159		$	366		$	277
Supplemental information:
Conversion of note for preferred stock	$	1,127		$	—		$	—		$	—

See accompanying notes.

F-35

TradePoint Solutions, Inc.

Notes to Financial Statements

1.   Organization and Business

TradePoint Solutions, Inc., the Company, was incorporated in California in August 2000. The Company provides consumer products (CP) companies, sales agencies and retailers a platform to automate the presentation, negotiation and reconciliation of trade promotions in a secure, web-based environment.

2.   Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying balance sheet as of September 30, 2006, the statements of operations and cash flows for the nine months ended September 30, 2005 and 2006, the statement of redeemable convertible preferred stock and stockholders’ deficit for the nine months ended September 30, 2006, and the accompanying notes for these periods are unaudited. These unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations and cash flows as of September 30, 2006 and for the nine months ended September 30, 2005 and 2006. The results of operations for the nine months ended September 30, 2006 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

These financial statements are prepared in accordance with generally accepted accounting principles in the United States. These accounting principles require management to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Significant estimates and assumptions made by management include the determination of the fair value of share-based payments. Management believes that the estimates and judgments were reasonable based upon information available at the time that these estimates and judgments were made. To the extent there are material differences between these estimates and actual results, the financial statements will be affected.

Revenue Recognition

Revenues are generated from fees under term-based agreements, generally one year in length. These agreements contain multiple elements, which include the provision of on-demand software, hosting services, customer support and professional services. Professional services consist of fees generated for implementation and training related to the customers’ use of the software.

The Company provides its application as an on-demand hosted service. As a result, the Company follows the provisions of Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, Revenue Recognition, or SAB No. 104, and Emerging Issues Task Force, or EITF, Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, or EITF 00-21. Revenue is recognized when all of the following conditions are met:

•  there is persuasive evidence of an arrangement;

•  the software as a service has been provided to the customer;

•  the collection of the fees is probable; and

•  the amount of fees to be paid by the customer is fixed or determinable.

In applying the provisions of EITF 00-21, the Company has determined there is no objective and reliable evidence of fair value for each of the elements of the Company’s offering. As a result, the elements within these agreements do not qualify for treatment as separate units of accounting. Therefore, fees received under these

F-36

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

agreements are accounted for as a single unit of accounting and recognized ratably over the term of the agreement, commencing upon the later of the agreement start date or the date access to the software is provided to the customer.

Concentrations of Credit Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and the line of credit. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable.

One customer accounted for 52% and 41% of total revenue in the years ended December 31, 2004 and 2005, respectively. Two customers accounted for 94% and 40% of total accounts receivable, included as accounts receivable and due from related party in the accompanying balance sheets, as of December 31, 2004 and 2005, respectively.

Fair Value of Financial Instruments

The carrying amounts of the Company’s cash equivalents approximate their fair values due to their short maturities. The fair value of long-term obligations is estimated based on current interest rates available to the Company for debt instruments with similar terms, degrees of risk and remaining maturities. The carrying values of these obligations approximate their respective fair values.

Redeemable Convertible Preferred Stock Warrants

Freestanding warrants and other similar instruments related to shares that are redeemable are accounted for in accordance with SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, or SFAS No. 150. Under SFAS No. 150, the freestanding warrants that are related to the Company’s redeemable convertible preferred stock are classified as liabilities on the balance sheets. The warrants are subject to re-measurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net. The Company will continue to adjust the liability for changes in fair value until the earlier of (1) the exercise or expiration of the warrants or (2) the completion of a liquidation event, at which time all preferred stock warrants will be converted into warrants to purchase common stock and, accordingly, the liability will be reclassified to additional paid-in capital.

Cash and Cash Equivalents

The Company considers short-term highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of December 31, 2005, cash equivalents consisted of money market funds and short-term time deposits. Cash equivalents are stated at their fair market values, which are determined based upon quoted market prices.

Accounts Receivable, Due from Related Party and Allowance for Doubtful Accounts

Accounts receivable and due from related party (see Note 11) are recorded at the invoiced amount and do not bear interest. The Company evaluates the collectibility of its accounts receivable based on known collection risks and historical experience. Management believes that all accounts receivable are collectible and, therefore, no allowance is deemed necessary.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, generally three to five years.

F-37

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

Research and Development and Software Development Costs

The Company accounts for internal use software costs, including web site development costs, in accordance with the American Institute of Certified Public Accountants’ Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, or SOP No. 98-1. In accordance with SOP No. 98-1, the Company capitalizes the costs to develop software for its web site and other internal uses when preliminary development efforts are successfully completed, management has authorized and committed funding, and it is probable that the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Any capitalized costs would be amortized to expense on a straight-line method over their expected lives. To date, internal software development costs eligible for capitalization have been insignificant and, accordingly, the Company has charged all software development costs to research and development expense as incurred.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes.  Under this method, deferred tax assets and liabilities are determined based on the temporary differences between their financial reporting and tax bases and are measured using the enacted tax rates that are anticipated to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized. The Company currently has a full valuation allowance on its deferred tax assets as it believes it is more likely than not that the deferred tax assets will not be realized.

Stock-Based Compensation

Prior to January 1, 2006, the Company accounted for stock-based employee and director compensation under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB No. 25, and elected to follow the disclosure-only alternative prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under APB No. 25, stock-based employee and director compensation arrangements were accounted for using the intrinsic-value method based on the difference, if any, between the estimated fair value of the Company’s common stock and the exercise price on the date of grant. Options granted were based on the board of directors’ assumptions regarding the value of the common stock at the time of grant. The fair value of all options granted through December 31, 2005, for financial reporting purposes, were equal to or less than the option exercise price.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R, Share-Based Payment, using the prospective transition method, which requires the Company to apply the provisions of SFAS No. 123R only to new awards granted, and to awards modified, repurchased or cancelled, after the adoption date. Under this transition method, stock-based compensation expense recognized beginning January 1, 2006 is based on the grant date fair value of stock option awards granted or modified after January 1, 2006.

Options and warrants granted to consultants and other non-employees are accounted for in accordance with EITF Issue No. 96-18, Accounting for Equity Investments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, or EITF No. 96-18, and are valued using the Black-Scholes method prescribed by SFAS No. 123. These options are subject to periodic revaluation over their vesting terms.

Recent Accounting Pronouncements

In November 2005, the FASB issued FASB Staff Position, or FSP, Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, which provides

F-38

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

guidance on determining when investments in certain debt and equity securities are considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The FSP is required to be applied to reporting periods beginning after December 15, 2005. The adoption of this FSP in 2006 had no impact on the financial statements.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections: a Replacement of Accounting Principles Board Opinion No. 20 and FASB Statement No. 3, or SFAS No. 154. SFAS No. 154 requires retrospective application for voluntary changes in accounting principle unless it is impracticable to do so. Retrospective application refers to the application of a different accounting principle to previously issued financial statements as if that principle had always been used. The SFAS No. 154 retrospective application requirement replaces the APB No. 20, Accounting Changes, requirement to recognize most voluntary changes in accounting principle by including in net income (loss) of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 defines retrospective application as the application of a different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entity. SFAS No. 154 also redefines “restatement” as the revising of previously issued financial statements to reflect the correction of an error. The requirements of SFAS No. 154 are effective for accounting changes made in fiscal years beginning after December 15, 2005 and will only impact the financial statements in periods in which a change in accounting principle is made.

3.   Balance Sheet Components

Property and equipment consisted of the following (in thousands):

	As of						As of
	December 31,						September 30,
	2004			2005			2006
							(unaudited)
Computer hardware	$	62		$	111		$	136
Computer software		67			69			72
Furniture and fixtures		40			55			55
Other capital equipment		6			6			9
Total property and equipment		175			241			272
Less: accumulated depreciation		(53	)		(97	)		(147	)
Property and equipment, net	$	122		$	144		$	125

Depreciation expense was approximately $30,000 and $44,000 for the years ended December 31, 2004 and 2005, respectively.

F-39

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

Accounts payable and accrued liabilities consisted of the following (in thousands):

	As of				As of
	December 31,				September 30,
	2004		2005		2006
					(unaudited)
Accounts payable	$	41	$	7	$	8
Accrued compensation expenses		114		161		133
Other accrued expenses		21		7		11
Accounts payable and accrued expenses	$	176	$	175	$	152

4.   Commitments

The Company leases facilities under non-cancelable operating leases that expire on August 31, 2007. Total rent expense under operating leases was approximately $51,000 and $92,000 for the years ended December 31, 2004 and 2005, respectively. At December 31, 2005, future minimum lease payments under the leases were as follows (in thousands):

Year Ending December 31,
2006	$	46
2007		32
	$	78

5.   Line of Credit

In April 2005, the Company entered into a revolving line of credit with a financial institution with a maturity date of April 2007. Amounts available for borrowings are limited to the lesser of (i) $500,000 or (ii) 75% of eligible accounts receivable. Borrowings under the line of credit accrue interest at the prime rate plus 1.5%, there is no prepayment penalty, and no minimum interest is due if the line of credit is repaid in full and the facility is closed. The line of credit is collateralized by all of the Company’s assets and requires the Company to comply with certain non-financial and financial covenants, including minimum quick ratio and three-month rolling cash flows. The Company is also required to maintain a minimum $250,000 deposit with the financial institution. At December 31, 2005, the Company had $159,000 on deposit with the financial institution and was in default with its minimum cash balance requirement. The minimum cash balance requirement at December 31, 2005 was waived by the lender in connection with the execution of a first amendment and waiver to the line of credit agreement in April 2006. At December 31, 2005 and September 30, 2006, the Company had $0 and $188,000 (unaudited), respectively, outstanding under the line of credit. In conjunction with the line of credit, the Company issued to the financial institution warrants to purchase 81,198 shares of common stock at an exercise price of $0.10 per share (see Note 7) and 75,023 shares of Series A1 redeemable convertible preferred stock at an exercise price of $0.225 per share (see Note 6).

F-40

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

6.   Redeemable Convertible Preferred Stock

The authorized, issued and outstanding shares of the Company’s redeemable convertible preferred stock and aggregate liquidation preferences thereof as of December 31, 2005 consisted of the following (in thousands):

			Issued and		Liquidation
	Authorized		Outstanding		Preference
Series A		17,500		17,335	$	3,467
Series A1		11,111		11,036		2,483
		28,611		28,371	$	5,950

The rights, privileges and preferences of Series A and A1 redeemable convertible preferred stock are as follows:

Dividends

The holders of shares of Series A redeemable convertible preferred stock, the Series A Preferred Stock, are entitled to receive dividends out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend on the common stock of the Company. These dividends will accrue annually at the rate of $0.016 per annum for each share of Series A Preferred Stock, payable when, as and if declared by the Board of Directors. These dividends are not cumulative.

The holders of Series A1 redeemable convertible preferred stock, Series A1 Preferred Stock are entitled to receive dividends out of any assets legally available therefor, prior and in preference to any declaration or payment on the Series A Preferred Stock or common stock of the Company. Such dividends will accrue annually at the rate of $0.018 per annum for each share of Series A1 Preferred Stock but will be payable only when, as and if declared by the Board of Directors. These dividends shall be cumulative.

After payment of these dividends, any additional dividends or distributions would be distributed among all holders of common and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock at the then effective conversion rate.

Liquidation

In the event of any liquidation event including certain types of asset sales, mergers, securities transfers or other liquidation of the Company, the holders of Series A1 Preferred Stock would be entitled to receive, prior and in preference to any distribution of the proceeds of that liquidation event to the holders of Series A Preferred Stock and common stock, an amount per share equal to the sum of the applicable Series A1 Preferred Stock original issue price of $0.225 per share plus accrued but unpaid dividends, whether or not declared, on such share.

If, upon the occurrence of such a liquidation event, the proceeds distributed among the holders of the preferred stock were insufficient to permit the payment to these holders of the full preferential amounts, then the entire amount legally available for distribution would be distributed among the holders of the preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive had such proceeds been available.

Upon completion of the distributions to the holders of Series A1 and A Preferred Stock, all remaining proceeds would be distributed among the holders of Series A1 and Series A Preferred Stock and common stock pro rata based upon the number of shares of common stock held by each assuming full conversion of all such preferred stock.

F-41

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

Redemption

Any holder of Series A1 Preferred Stock may require that the Company redeem all, but not less than all, of such holder’s shares prior to December 31, 2009. If the Company receives one or more redemption demands by the holders of Series A1 Preferred Stock, it must, to the extent it may lawfully do so, redeem in one installment on a date not more than thirty days after determination of the Series A1 Preferred Stock redemption price, all of such holder’s outstanding shares of Series A1 Preferred Stock by paying in cash a sum equal to the greater of the fair value of the Series A1 Preferred Stock as determined by the Board of Directors or the number of Series A1 Preferred Stock times an amount per share equal to the sum of the applicable Series A1 Preferred Stock original issue price plus accrued and unpaid dividends, whether or not declared, on such share.

At any time after December 31, 2009, upon a written request from the holders of not less than a majority of the then outstanding shares of Series A Preferred Stock that all or a designated percentage of the then outstanding shares of Series A Preferred Stock be redeemed, the Company must, to the extent it may lawfully do so, redeem in one installment not more than sixty days after receipt of the Series A Preferred Stock demand the designated amount of then outstanding shares of Series A Preferred Stock by paying in cash therefor a sum per share equal to the Series A Preferred Stock original issue price, plus all declared but unpaid dividends on such shares if any.

In accordance with SFAS No. 150, the Company’s Series A and A1 Preferred Stock, because they are redeemable at the option of the holders at any time after December 31, 2009, are classified outside of equity in the accompanying balance sheets.

Each period, the Company accretes the amount that is necessary to adjust the recorded balance of the preferred stock to an amount equal to its estimated redemption value at its redemption date using the straight line method, which approximates the effective interest method. The redemption value of Series A1 Preferred Stock has been determined to be the original issue price of the preferred stock plus any dividends accrued and unpaid, whether or not declared, on each share outstanding. The redemption value of Series A Preferred Stock is equal to the original issue price.

Conversion

Each share of preferred stock is convertible, at the option of the holder thereof, at any time after the date of issuance of that share and on or prior to the fifth day prior to the redemption date. Each share of preferred stock is convertible into such number of fully paid and non-assessable shares of common stock as is determined by dividing the applicable original issue price for such series by the applicable conversion price for such series, determined as the original issue price applicable to such series subject to adjustment for anti-dilution and other factors.

Each share of a preferred stock series will automatically be converted into shares of common stock at the conversion price at the time in effect for the series of preferred stock immediately upon the earlier of (i) the effectiveness the Company’s registration statement on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended, provided that the public offering raised proceeds of not less than $20,000,000 in the aggregate with a minimum market capitalization of $80,000,000 or (ii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of that preferred stock series voting together on an as-converted basis as separate series.

Voting

Holders of preferred stock are entitled to one vote for each share of common stock into which their shares can be converted.

As long as 3,125,000 shares of Series A Preferred Stock are outstanding, the holders of Series A Preferred Stock and Series A1 Preferred Stock, voting together as a single class and not as a separate series and on an as-converted basis, will be entitled to elect two directors of the Company at any election of directors. The holders of

F-42

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

preferred stock and common stock, voting together as a single class and not as a separate series, and on an as-converted basis, will be entitled to elect any remaining directors of the Company.

Issuance of Preferred Stock Upon Conversion of Notes

In August and October 2004, the Company issued convertible promissory notes, or the Notes, to several investors for a total of $1,100,000 with an interest rate of 8% per annum. The note purchase agreements provided for the conversion of the face value of the Notes and any interest accrued thereon into Series A1 Preferred Stock at the option of the holder, at any time after the date of issuance and on or prior to the maturity date. The Notes also provided for the issuance of warrants to purchase the Company’s common stock (see Note 7).

At the closing of the Company’s Series A1 Preferred Stock financing on December 28, 2004, the Notes and related accrued interest of $27,000 converted into Series A1 Preferred Stock at a price of $0.225 per share.

Warrants Issued to Purchase Preferred Stock

In November 2003, in connection with a loan, the Company issued to two investors warrants to purchase 165,000 shares of the Company’s Series A Preferred Stock at an exercise price of $0.20 per share. The warrants are nonforfeitable, fully vested and exercisable upon grant. The fair value of the warrants upon grant was estimated at an aggregate value of $15,000 using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk free interest rate of 3.3%, contractual life of 5 years and no dividends. The fair value of the warrants was recorded as debt issuance costs and was amortized to interest expense until the loans were converted to Series A Preferred Stock, at which point the remaining balance was written off as interest expense. The preferred stock warrant is classified in liabilities and is revalued each reporting period that it remains outstanding, with the changes in fair value recorded within other income (expense), net, in the accompanying statements of operations. Revaluations at December 31, 2004, 2005 and September 30, 2006 (unaudited) resulted in nominal changes to the fair value.

In April 2005, in connection with the line of credit, the Company issued to a bank warrant to purchase 75,023 shares of the Company’s Series A1 Preferred Stock at an exercise price of $0.225 per share. The warrant is nonforfeitable, fully vested, and exercisable upon grant. The fair value of the warrant was estimated at an aggregate value of $9,000 using the Black-Scholes valuation model with the following assumptions: expected volatility of 59%, risk free interest rate of 4.6%, contractual life of 7 years, and no dividends. The fair value of the warrant was recorded as debt issuance costs and is being amortized to interest expense over the term of the line of credit. The preferred stock warrant is classified in liabilities and is revalued each reporting period that it remains outstanding, with the changes in fair value recorded within other income (expense), net, in the accompanying statements of operations. For the year ended December 31, 2005 and nine months ended September 30, 2006, the Company recorded revaluation charges of $4,500 and $3,000 (unaudited), respectively, to other income (expense), net.

At December 31, 2005, the range of warrant prices for shares under warrants to purchase preferred shares and the weighted-average remaining contractual life were as follows:

	Shares Subject to Warrants Outstanding
					Weighted-		Weighted-
	Warrant		Number of		Average		Remaining
Stock	Exercise Price		Warrants		Exercise Price		Contractual Life
	(in thousands, except per share amounts)						(in years)
Series A	$	0.20		165	$	0.200		2.8
Series A1		0.225		75		0.225		6.3
Total				240		0.208		3.9

F-43

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

All warrants outstanding as of December 31, 2005 were fully exercisable.

7.   Stockholders’ Deficit

Common Stock

The Company’s certificate of incorporation, as amended, authorizes the Company to issue 50,000,000 shares of $0.001 par value common stock. Common stockholders are entitled to dividends as and when declared by the Board of Directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding shares of redeemable convertible preferred stock, including unexercised preferred stock warrants, and options granted and available for grant under the Company’s stock option plans. At December 31, 2005, common stock was reserved for issuance as follows (in thousands):

Conversion of outstanding Series A preferred stock	17,335
Conversion of outstanding Series A1 preferred stock	11,036
Series A preferred stock warrant	165
Series A1 preferred stock warrant	75
Common stock warrants	3,282
Outstanding common stock options	4,568
Reserve for equity incentive plan options	312
Total	36,773

Warrants Issued to Purchase Common Stock

In August and October 2004, the Company borrowed a total of $1,100,000 through the issuance of convertible promissory notes with an interest rate of 8% per annum (see Note 6).

In connection with these convertible notes, the Company issued warrants to purchase 2,200,000 shares of common stock at an exercise price of $0.10 per share. The fair value of the warrants totaled $93,000 using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk free interest rate of 3.4%, contractual life of 5 years and no dividends. The fair value of the warrants was recorded as debt issuance costs and written-off to interest expense in the accompanying statements of operations as the loans were converted to Series A1 Preferred Stock in December 2004.

In April 2005, in connection with a line of credit, the Company issued to a bank warrants to purchase 81,198 shares of common stock at an exercise price of $0.10 per share. The fair value of the warrants was estimated at $0.06 per share with an aggregate value of $5,000 for all shares using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk free interest rate of 5.1%, contractual life of 7 years and no dividends. The fair value of the warrants was recorded as debt issuance costs, which are being amortized to interest expense over the term of the loan.

F-44

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

At December 31, 2005, the range of prices of warrants to purchase common stock and the weighted average remaining contractual life were as follows:

Warrants Outstanding — December 31, 2005
						Weighted
				Weighted		Average
Range of Warrant		Number of		Average		Remaining
Exercise Price		Warrants		Exercise Price		Contractual Life
(in thousands, except per share amounts)						(in years)
$	0.05		1,001	$	0.050		2.12
	0.10		2,281		0.100		4.07
			3,282		0.085		3.5

All outstanding warrants as of December 31, 2005 are fully exercisable.

Between June and September 2006, in connection with $200,000 of bridge loans received from investors, the Company issued warrants to purchase 400,000 shares of common stock at an exercise price of $0.10 per share. The fair value of the warrants was $11,650 (unaudited) using the Black-Scholes valuation model with the following assumptions: expected volatility of 61%, risk free interest rate of 5.1%, contractual life of 5 years and no dividends. The fair value of the warrants was recorded as interest expense in the accompanying statements of operations. The loans were converted to common stock in 2006.

Common Stock Option Plans

In April 2003, the Board of Directors approved the 2003 Stock Plan, or the 2003 Plan. In October 2004, the Board of Directors approved the 2004 Stock Plan, or the 2004 Plan, as amended on October 6, 2004. As of December 31, 2005, a total of 4,880,000 shares were authorized for issuance over the term of the 2003 and 2004 Plans. Stock options granted under the 2003 and 2004 Plans may be either incentive stock options, or ISOs, or nonstatutory stock options, or NSOs. ISOs may be granted to employees with exercise prices not less than the fair value of the common stock on the grant date as determined by the Board, and NSOs may be granted to employees, directors or consultants at exercise prices not less than 90% of the fair value of the common stock on the grant date as determined by the Board of Directors. Options may be granted with vesting terms as determined by the Board of Directors. Options are typically granted with vesting of 25% of the underlying shares on the one-year anniversary, with the remaining options vesting equally over 36 months thereafter. Options expire no more than 10 years after the date of grant or earlier if employment is terminated.

F-45

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

A summary of activity under the 2003 and 2004 Plans and related information is as follows:

				Shares			Weighted
	Shares			Subject to			Average
	Available			Options			Exercise Price
	for Grant			Outstanding			per Share
	(in thousands, except per share data)
Balance as of December 31, 2003		795			1,585		$	0.05
Authorized		2,500			—
Options granted		(2,543	)		2,543			0.08
Balance as of December 31, 2004		752			4,128			0.07
Options granted		(513	)		513			0.10
Options cancelled		73			(73	)		0.07
Balance as of December 31, 2005		312			4,568			0.07
Options granted (unaudited)		(445	)		445			0.15
Options cancelled (unaudited)		257			(257	)		0.05
Options exercised (unaudited)		—			(521	)		0.05
Balance as of September 30, 2006 (unaudited)		124			4,235			0.08

As of December 31, 2005, there were exercisable options to purchase 1,931,152 shares of common stock with a weighted average exercise price of $0.06 per share and a weighted average remaining contractual life of 7.6 years. The total fair value of options that vested during the nine months ended September 30, 2006 was $18,585 (unaudited).

Common Stock Option Modification

On September 20, 2004, the Company modified stock options granted to its former Chief Executive Officer to accelerate the vesting of 183,334 unvested shares and to extend the period of exercisability. In accordance with FIN 44, Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25, the Company recorded a stock compensation charge of approximately $9,000.

Employee Stock-Based Awards Granted Prior to December 31, 2005

Compensation costs for employee stock options granted prior to December 31, 2005, the date the Company adopted SFAS No. 123R, were accounted for using the intrinsic-value method of accounting as prescribed by APB No. 25, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation, and as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under APB No. 25, compensation expense for employee stock options is based on the excess, if any, of the fair value of the Company’s common stock over the option exercise price on the measurement date, which is typically the date of grant. All options granted were intended to be exercisable at a price per share not less than fair market value of the shares of the Company’s stock underlying those options on their respective dates of grant. The Company’s Board of Directors determined these fair market values in good faith based on the best information available to the Board of Directors and Company’s management at the time of the grant.

The fair value of all options granted through December 31, 2005, for financial reporting purposes, was equal to or less than the option exercise price.

F-46

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

Employee Stock-Based Awards Granted On or Subsequent to December 31, 2005

On January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R using the prospective transition method. Under this transition method, beginning January 1, 2006, compensation cost recognized includes compensation cost for all stock-based payments granted or modified subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R.

Compensation cost for employee stock-based awards granted on or after January 1, 2006, the date the Company adopted SFAS No. 123R, is based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R and will be recognized over the vesting period of the applicable award on a straight-line basis. During the nine months ended September 30, 2006 the Company issued employee stock-based awards in the form of stock options. The weighted average estimated fair value of the employee stock options granted was $0.04 per share (unaudited) for the nine months ended September 30, 2006.

The Company uses the Black-Scholes pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using the pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The estimated grant date fair values of the employee stock options were calculated using the Black-Scholes valuation model, based on the following assumptions:

	Nine Months Ended
	September 30,
	2006
	(unaudited)
Weighted-average expected term		7 years
Expected volatility		42	%
Risk-free interest rate		4.9	%
Dividend yield		0	%

As a result of adopting SFAS No. 123R on January 1, 2006, the Company’s net loss for the nine months ended September 30, 2006 was $1,700 (unaudited) higher than if it had continued to account for employee stock-based compensation under APB No. 25.

Stock-Based Compensation Associated with Awards to Employees

Weighted-Average Expected Term.  Under the Company’s 2003 Plan and 2004 Plan, the expected term of options granted is determined using the average period the stock options are expected to remain outstanding and is based on the options’ vesting term, contractual terms and historical exercise and vesting information used to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

Volatility.  Since the Company is a private entity with no historical data regarding the volatility of its common stock, the expected volatility used for 2006 is based on volatility of similar entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle, size, employee demographics and nature of stock plans.

Risk-Free Interest Rate.  The risk-free rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Dividend Yield.  The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future and, therefore, used an expected dividend yield of zero in the valuation model.

F-47

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

Forfeitures.  SFAS No. 123R also requires the Company to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. If the Company’s actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

Stock-Based Compensation for Non-Employees

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options are earned. The Company believes that the fair value of the stock options is more reliably measurable than the fair value of the services received. The fair value of the stock options granted is calculated at each reporting period date using the Black-Scholes option pricing model as prescribed by SFAS No. 123.

The fair value for options granted to non-employees for fiscal 2004 and 2005 was calculated using the following assumptions: risk-free rates of 2.75%-4.24%, expected life of 10 years, no expected dividends, and expected volatility of 60%.

Stock-based compensation expense charged for options granted to non-employees for the years ended December 31, 2004 and 2005 was approximately $26,000 and $10,000, respectively.

8.   Income Taxes

Due to the Company’s net operating losses since inception and present inability to recognize the potential benefits of its net operating loss carryforwards, as described below, no provision or benefit for income taxes has been recorded during any of the periods presented in the accompanying financial statements.

At December 31, 2004 and 2005, the Company had deferred tax assets of approximately $1,870,000 and $2,744,000, respectively. Realization of the deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased for the years ended December 31, 2004 and 2005 by $1,088,000 and $874,000, respectively. Deferred tax assets primarily relate to net operating loss and tax credit carryforwards.

As of December 31, 2004 and 2005, the Company had federal net operating loss carryforwards of approximately $4,309,000 and $5,555,000, respectively. The net operating losses will expire at various dates beginning in 2022, if not utilized. As of December 31, 2004 and 2005, the Company had state net operating loss carryforwards of $4,312,000 and $5,576,000, respectively, that will begin to expire at various dates beginning in 2014, if not utilized. As of December 31, 2004, the Company had federal and state research and development tax credits of $38,000 and $28,000, respectively. As of December 31, 2005, the Company had federal and state research and development tax credits of $148,000 and $111,000, respectively.

Utilization of the Company’s net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations included in the Internal Revenue Code of 1986, as amended and similar state provisions. This annual limitation may result in the expiration of net operating loss carryforwards before utilization.

9.   Retirement Savings Plan

The Company maintains a 401(k) retirement savings plan, or the Savings Plan, for its permanent employees. Each participant in the Savings Plan may elect to contribute a percentage of his or her annual compensation to the Savings Plan, up to a specified maximum amount per year. The Company, at its discretion, may make contributions

F-48

TradePoint Solutions, Inc.

Notes to Financial Statements — (Continued)

to the Savings Plan. The Company made no contributions to the Savings Plan during any of the periods presented in the accompanying statements of operations. Benefits payable under the Savings Plan are limited to Company and employee contributions and earnings thereon.

10.   Related Party Transactions

One of the Company’s officers holds approximately 13% of the Company’s combined common and preferred shares outstanding and has a family member who served on the board of directors of one of the Company’s major customers until March 2005. During the years ended December 31, 2004 and 2005 and the nine months ended September 30, 2006, the Company recognized revenues of approximately $76,000, $549,000 and $475,000 (unaudited), respectively, from this customer. Accounts receivable due from this customer totaled approximately $191,000, $59,000 and $25,000 (unaudited) at December 31, 2004, 2005 and September 30, 2006 respectively.

Sales transactions with this customer were conducted in the ordinary course of business under terms consistent to those with third party customers. The outstanding receivables are considered collectible.

11.   Subsequent Events

In November 2006, the Company was acquired by DemandTec, Inc.

F-49

Unaudited Pro Forma Combined Condensed Financial Information

Introductory Note

On November 9, 2006, Demandtec, Inc. acquired all of the issued and outstanding capital stock of TradePoint Solutions, Inc. (“TradePoint”), a provider of an application that provides CP companies, sales agencies and retailers a platform to automate the presentation, negotiation and reconciliation of trade promotions in a secure, web-based environment. The aggregate purchase price of approximately $9.8 million consisted of approximately 2.1 million shares of our common stock, valued at approximately $4.1 million, approximately $3.7 million in cash, a $1.8 million promissory note issued to TradePoint shareholders and transaction costs of $0.2 million. The financial position and operating results of TradePoint have been included in our financial position and operating results from the date of the acquisition.

The following unaudited pro forma combined condensed financial information gives effect to the acquisition by us of all of the issued and outstanding capital stock of TradePoint. The unaudited pro forma combined condensed statement of operations combine the results of operations of us and TradePoint for the year ended February 28, 2007, as if the acquisition had occurred on March 1, 2006. An unaudited pro forma combined condensed balance sheet for us and TradePoint at February 28, 2007 was not presented as TradePoint’s balance sheet including related acquisition adjustments had already been included in our consolidated balance sheet as of this date.

The unaudited pro forma combined condensed financial information has been prepared from, and should be read in conjunction with our historical consolidated financial statements and the historical financial statements of TradePoint. Our historical consolidated financial statements for the year ended February 28, 2007 are included in this prospectus. TradePoint’s historical financial statements for the nine months ended September 30, 2006 are also included in this prospectus. The unaudited pro forma results for the year ended February 28, 2007 include the results of operations for TradePoint for the nine-months ended September 30, 2006.

The pro forma acquisition adjustments described in Note 2 were based on available information and certain assumptions made by us and may be revised as additional information becomes available. The unaudited pro forma combined condensed financial information was presented for illustrative purposes only and is not necessarily intended to represent what our financial position is or results of operations would have been if the acquisition had occurred on March 1, 2006 or to project our results of operations for any future period. Since we and TradePoint were not under common control or management for any period presented, the unaudited pro forma combined condensed financial results may not be comparable to, or indicative of, future performance.

The unaudited pro forma combined condensed statement of operations included herein has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.

F-50

Unaudited Pro Forma Combined Condensed Statement of Operations
(in thousands, except per share data)

				TradePoint
				Solutions, Inc
	DemandTec, Inc			Nine Months
	Year Ended			Ended
	February 28,			September 30,			Pro Forma			Year Ended
	2007			2006			Adjustments			February 28, 2007
Revenue	$	43,485		$	1,778		$	—		$	45,263
Cost of revenue		14,230			496			407	(a)		15,133
Gross profit		29,255			1,282			(407	)		30,130
Operating expenses:
Research and development		15,340			826			—			16,166
Sales and marketing		12,108			421			—			12,529
General and administrative		2,673			637			—			3,310
Amortization of acquired intangible assets		118			—			239	(a)		357
Total operating expenses		30,239			1,884			239			32,362
Loss from operations		(984	)		(602	)		(646	)		(2,232	)
Other income (expense), net		(480	)		(26	)		(129	)(b)		(635	)
Loss before provision for income taxes		(1,464	)		(628	)		(775	)		(2,867	)
Provision for income taxes		52			—			—			52
Net loss		(1,516	)		(628	)		(775	)		(2,919	)
Accrued dividend on Series A1		—			147			—			147
Accretion to redemption value of preferred stock		32			25			—			57
Net loss attributable to common stockholders	$	(1,548	)	$	(800	)	$	(775	)	$	(3,123	)
Net loss per common share, basic and diluted										$	(0.25	)
Shares used in computing basic and diluted net loss per common share											11,061
Adjustments:
Weighted-average of TradePoint shares included in original weighted-average common outstanding											(717	)(c)
Adjustment to reflect shares issued to TradePoint shareholders as if they were outstanding as of March 1, 2006											2,150	(c)
As adjusted shares used to compute basic and diluted net loss per common share											12,494

The accompanying notes are an integral part of this unaudited pro forma combined condensed statement of operations.

F-51

Notes to Unaudited Pro Forma Combined Condensed Financial Information

1.  Purchase Price — TradePoint Solutions, Inc.

The unaudited pro forma combined condensed consolidated financial information reflects an estimated purchase price of approximately $9.8 million, which consisted of the following (in thousands):

Cash	$	3,733
Promissory note		1,800
Common stock		4,085
Acquisition costs		219
Total purchase price	$	9,837

The fair value of the common stock was determined with the assistance of a third-party valuation consultant using an average of the income and market comparable approaches.

The acquisition of TradePoint was accounted for as an acquisition of a business in accordance with SFAS No. 141, Business Combinations, and under SFAS No. 142, Goodwill and Other Intangible Assets. As a result of the acquisition, all of TradePoint’s issued and outstanding capital stock immediately prior to the acquisition was automatically converted into the right to receive an aggregate of 2,149,960 shares of our common stock. Consideration also included approximately $3.7 million in cash and a $1.8 million promissory note. The promissory note is subject to downward adjustment, with an offset to goodwill, for any claims for indemnification that we may make for certain breaches of representations, warranties and covenants set forth in the acquisition agreement. Any amounts remaining and available will be distributed to the former TradePoint stockholders in November 2007. The remainder of the consideration consisted of acquisition costs.

We allocated the purchase price to the fair value of the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets acquired is recorded as goodwill. The purchase price has been allocated as follows (in thousands):

Current assets	$	808
Deferred tax asset		1,741
Property and equipment		76
Intangible assets:
Developed technology		3,050
Customer relationships		940
Non-compete covenants		500
Tradename		560
Goodwill		5,290
Current liabilities assumed		(1,387	)
Deferred tax liability		(1,741	)
Total purchase price	$	9,837

Goodwill will not be amortized and is not tax deductible. Intangible assets are being amortized on a straight-line basis over a weighted average period of 5.7 years. The intangible assets acquired are reported, net of accumulated amortization, as acquired intangible assets.

2.   Pro Forma Adjustments

The accompanying unaudited pro forma combined condensed statement of operations has been prepared as if the acquisition was completed on March 1, 2006. The statement of operations for TradePoint reflects the results of

F-52

operations for the nine-months ended September 30, 2006. The results of operations for TradePoint since the actual date of acquisition, November 9, 2006, have been included in our consolidated statement of operations for the year ended February 28, 2007.

The unaudited pro forma combined condensed statement of operations reflects the following pro forma adjustments:

(a) Adjustment to record additional amortization of intangible assets from the assumed acquisition date of March 1, 2006 to the actual date of acquisition, of which $407,000 was included in cost in revenue and $239,000 was included as a separate component of operating expenses. Amortization expense related to the acquired intangible assets recorded in our consolidated statements of operations was $321,000 for the period from November 9, 2006, the actual date of acquisition, to February 28, 2007, of which $118,000 was included as a separate component of operating expenses and $203,000 was included in cost of revenue.

(b) Adjustment to reduce interest income from March 1, 2006, the assumed date of acquisition, to November 9, 2006, the actual date of acquisition, for the cash consideration paid from the assumed acquisition date of March 1, 2006 using the average interest rate over the respective period.

(c) Adjustment to record our common shares outstanding for the stock consideration paid as though they were outstanding from the assumed acquisition date of March 1, 2006.

F-53

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.   Other Expenses of Issuance and Distribution

The following table presents the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and The NASDAQ Global Market listing fee.

SEC registration fee	$	2,648
NASD filing fee		9,125
NASDAQ Global Market listing fee.		100,000
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue sky fees and expenses		*
Custodian and transfer agent fees		*
Miscellaneous fees and expenses		*
Total	$	*

*  To be completed by amendment.

Item 14.   Indemnification of Directors and Officers

Our restated certificate of incorporation and amended and restated bylaws contain provisions relating to the limitation of liability and indemnification of directors and officers. The restated certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:

•  for any breach of the director’s duty of loyalty to us or our stockholders;

•  for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

•  in respect of unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•  for any transaction from which the director derives any improper personal benefit.

Our restated certificate of incorporation also provides that, if Delaware law is amended after the approval by our stockholders of the restated certificate of incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law.

Our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred in connection with their service for or on our behalf. Our amended and restated bylaws provide that we must advance the expenses incurred by a director or officer in advance of the final disposition of an action or proceeding. Our amended and restated bylaws also authorize us to indemnify any of our employees or agents and permit us to secure insurance on behalf of any officer, director, employee or agent for any liability arising out of his or her action in that capacity, whether or not Delaware law would otherwise permit indemnification.

Prior to the closing of this offering, we will have entered into an indemnification agreement with each of our directors and executive officers and certain other key employees, a form of which is attached as Exhibit 10.1. The agreement will provide that we will indemnify him or her against any and all expenses that he or she incurs because

II-1

of his or her status as one of our directors, executive officers or other key employees, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and our amended and restated bylaws, except in a proceeding initiated by that person without the approval of our board of directors. In addition, the agreement will provide that, to the fullest extent permitted by Delaware law, we will advance all expenses incurred by him or her in connection with a legal proceeding.

Reference is made to Section 9 of the underwriting agreement contained in Exhibit 1.1 to this registration statement, indemnifying our directors and officers against limited liabilities. In addition, Section 1.9 of our amended and restated investors’ rights agreement contained in Exhibit 4.3 to this registration statement provides for indemnification of certain of our stockholders against liabilities described in our amended and restated investors’ rights agreement.

Item 15.   Recent Sales of Unregistered Securities

Since March 1, 2004, we have issued the following securities that were not registered under the Securities Act:

1. We granted stock options to purchase 12,053,910 shares of our common stock at exercise prices ranging from $0.50 to $4.30 per share to employees, consultants, directors and other service providers under our 1999 Equity Incentive Plan.

2. We issued and sold an aggregate of 3,211,614 shares of our common stock to employees, consultants and other service providers for aggregate consideration of approximately $1,908,582.35 pursuant to exercises of options granted under our 1999 Equity Incentive Plan.

3. On November 9, 2006, we issued an aggregate of 2,149,960 shares of our common stock in connection with our acquisition of TradePoint.

4. On July 25, 2006, we issued warrants to purchase an aggregate of 150,000 shares of common stock to two institutional investors with an exercise price of $1.35 per share.

5. On May 23, 2006, we issued a warrant to purchase an aggregate of 75,000 shares of Series C convertible preferred stock to an institutional investor with an exercise price of $2.58 per share.

6. On August 1, 2006, we issued 25,000 shares of our Series C convertible preferred stock to an institutional investor for aggregate consideration of approximately $64,500.

7. On August 1, 2006, we issued 170,000 shares of our common stock to an institutional investor for aggregate consideration of approximately $229,500.

The sales of securities described in Items (1) and (2) were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Rule 701 promulgated under the Securities Act. The sale of securities described in Items (3) through (7) were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering. The recipients of securities in each transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution, and appropriate legends were affixed to the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us.

Item 16.   Exhibits and Financial Statement Schedules

(a)   Exhibits

Exhibit No.			Description
	1	.1*	Form of Underwriting Agreement.
	2	.1	Agreement and Plan of Merger and Reorganization, dated as of October 6, 2006, by and among the Registrant, TP Acquisition Corp., TradePoint Solutions, Inc. and Charles Magowan, as Shareholders’ Representative.
	3	.1	Amended and Restated Certificate of Incorporation, as amended.

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Exhibit No.			Description
	3	.2*	Form of Restated Certificate of Incorporation to be effective immediately prior to the closing of this offering.
	3	.3	Bylaws.
	3	.4	Form of Amended and Restated Bylaws to be effective immediately prior to the closing of this offering.
	4	.1	Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
	4	.2*	Form of Common Stock certificate.
	4	.3	Amended and Restated Investors’ Rights Agreement, dated September 20, 2002, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, as amended.
	5	.1*	Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
	10	.1*	Form of Indemnification Agreement between the Registrant and each of its directors and executive officers and certain key employees.
	10	.2	DemandTec, Inc. 1999 Equity Incentive Plan, as amended, and forms of agreements thereunder.
	10	.3*	DemandTec, Inc. 2007 Equity Incentive Plan and forms of agreements thereunder.
	10	.4*	DemandTec, Inc. 2007 Employee Stock Purchase Plan.
	10	.5	Sublease by and between the Registrant and Liberate Technologies, dated December 7, 2001, as amended.
	10	.6	Offer Letter with Daniel R. Fishback, dated June 1, 2001, as amended.
	10	.7	Offer Letter with Mark A. Culhane, dated July 20, 2001, as amended.
	10	.8	Offer Letter with John C. Crouch, dated November 17, 2003.
	10	.9	Offer Letter with James H. Dai, dated February 5, 2004.
	10	.10	Offer Letter with Michael L. Frandsen, dated November 1, 2006, as amended.
	10	.11	Offer Letter with Ronald E. F. Codd, dated March 1, 2007.
	10	.12	Offer Letter with Linda Fayne Levinson, dated April 27, 2005, as amended.
	10	.13	Offer Letter with Victor L. Lund, dated March 22, 2005, as amended.
	10	.14	Offer Letter with Joshua W. R. Pickus, dated March 1, 2007.
	10	.15	Offer Letter with Charles J. Robel, dated September 12, 2006.
	10	.16	Master Service Agreement dated August 19, 2005, by and between the Registrant, Equinix Operating Co., Equinix Inc. and Equinix Pacific, Inc.
	10	.17	Amended and Restated Outsourcing Services Agreement, dated May 1, 2006, by and between the Registrant and Sonata Services Limited.
	10	.18	Loan and Security Agreement, dated July 25, 2006, among the Registrant, Silicon Valley Bank and Gold Hill Venture Lending 03, LP.
	10	.19	Amended and Restated Voting Agreement, dated September 20, 2002, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, as amended.
	10	.20*	Summary of 2007 Bonus Plan of Registrant.
	10	.21*	Summary of 2008 Bonus Plan of Registrant.
	10	.22	Third Amended and Restated Loan and Security Agreement, dated May 23, 2006, among the Registrant and Silicon Valley Bank.
	21	.1*	List of subsidiaries.
	23	.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

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Exhibit No.			Description
	23	.2	Consent of Ernst & Young LLP, Independent Auditors.
	23	.3*	Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (contained in Exhibit 5.1).
	23	.4*	Consent of Frost & Sullivan.
	24	.1	Power of Attorney (contained in the signature page to this registration statement).

* To be filed by amendment.

(b)   Financial Statement Schedules

All schedules have been omitted because the information required to be presented in them is not applicable or is shown in our consolidated financial statements or related notes.

Item 17.   Undertakings

The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Carlos, State of California, on this 24^th day of May, 2007.

DEMANDTEC, INC.

By:  /s/  Daniel Fishback

Daniel Fishback,

President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Daniel Fishback and Mark Culhane, and each of them, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by this registration statement that is to be effective on filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/  Daniel Fishback Daniel Fishback	President, Chief Executive Officer and Director (Principal Executive Officer)	May 24, 2007
/s/  Mark Culhane Mark Culhane	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	May 24, 2007
/s/  Ronald E.F. Codd Ronald E.F. Codd	Director	May 24, 2007
/s/  Linda Fayne Levinson Linda Fayne Levinson	Director	May 24, 2007
/s/  Victor Lund Victor Lund	Chairman of the Board of Directors	May 24, 2007
/s/  Joshua Pickus Joshua Pickus	Director	May 24, 2007
/s/  Charles Robel Charles Robel	Director	May 24, 2007
/s/  James Sayre James Sayre	Director	May 24, 2007

II-5

INDEX TO EXHIBITS

Exhibit No.			Description
	1	.1*	Form of Underwriting Agreement.
	2	.1	Agreement and Plan of Merger and Reorganization, dated as of October 6, 2006, by and among the Registrant, TP Acquisition Corp., TradePoint Solutions, Inc. and Charles Magowan, as Shareholders’ Representative.
	3	.1	Amended and Restated Restated Certificate of Incorporation, as amended.
	3	.2*	Form of Restated Certificate of Incorporation to be effective immediately prior to the closing of this offering.
	3	.3	Bylaws.
	3	.4	Form of Amended and Restated Bylaws to be effective immediately prior to the closing of this offering.
	4	.1	Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
	4	.2*	Form of Common Stock certificate.
	4	.3	Amended and Restated Investors’ Rights Agreement, dated September 20, 2002, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, as amended.
	5	.1*	Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
	10	.1*	Form of Indemnification Agreement between the Registrant and each of its directors and executive officers and certain key employees.
	10	.2	DemandTec, Inc. 1999 Equity Incentive Plan, as amended, and forms of agreements thereunder.
	10	.3*	DemandTec, Inc. 2007 Equity Incentive Plan and forms of agreements thereunder.
	10	.4*	DemandTec, Inc. 2007 Employee Stock Purchase Plan.
	10	.5	Sublease by and between the Registrant and Liberate Technologies, dated December 7, 2001, as amended.
	10	.6	Offer Letter with Daniel R. Fishback, dated June 1, 2001, as amended.
	10	.7	Offer Letter with Mark A. Culhane, dated July 20, 2001, as amended.
	10	.8	Offer Letter with John C. Crouch, dated November 17, 2003.
	10	.9	Offer Letter with James H. Dai, dated February 5, 2004.
	10	.10	Offer Letter with Michael L. Frandsen, dated November 1, 2006, as amended.
	10	.11	Offer Letter with Ronald E. F. Codd, dated March 1, 2007.
	10	.12	Offer Letter with Linda Fayne Levinson, dated April 27, 2005, as amended.
	10	.13	Offer Letter with Victor L. Lund, dated March 22, 2005, as amended.
	10	.14	Offer Letter with Joshua W. R. Pickus, dated March 1, 2007.
	10	.15	Offer Letter with Charles J. Robel, dated September 12, 2006.
	10	.16	Master Service Agreement dated August 19, 2005, by and between the Registrant, Equinix Operating Co., Equinix Inc. and Equinix Pacific, Inc.
	10	.17	Amended and Restated Outsourcing Services Agreement, dated May 1, 2006, by and between the Registrant and Sonata Services Limited.
	10	.18	Loan and Security Agreement, dated July 25, 2006, among the Registrant, Silicon Valley Bank and Gold Hill Venture Lending 03, LP.
	10	.19	Amended and Restated Voting Agreement, dated September 20, 2002, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, as amended.
	10	.20*	Summary of 2007 Bonus Plan of Registrant.

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Exhibit No.			Description
	10	.21*	Summary of 2008 Bonus Plan of Registrant.
	10	.22	Third Amended and Restated Loan and Security Agreement, dated May 23, 2006, among the Registrant and Silicon Valley Bank.
	21	.1*	List of subsidiaries.
	23	.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
	23	.2	Consent of Ernst & Young LLP, Independent Auditors.
	23	.3*	Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (contained in Exhibit 5.1).
	23	.4*	Consent of Frost & Sullivan.
	24	.1	Power of Attorney (contained in the signature page to this registration statement).

* To be filed by amendment.

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EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

by and among

DEMANDTEC, INC.,

TP ACQUISITION CORP.,

TRADEPOINT SOLUTIONS, INC.

and

CHARLES MAGOWAN, as

SHAREHOLDERS’ REPRESENTATIVE

Dated as of October 6, 2006

TABLE OF CONTENTS

	Page
ARTICLE I THE MERGER		2
1.1 The Merger		2
1.2 Effective Time; Closing		2
1.3 Effect of the Merger		2
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation		2
1.5 Directors and Officers		3
1.6 Tax-free Reorganization		3
ARTICLE II MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES		3
2.1 Merger Consideration		3
2.2 Exchange of Cash and Certificates		7
2.3 Stock Transfer Books		8
2.4 Company Stock Options; Company Warrants		9
2.5 Securities Laws Issues		9
2.6 Dissenting Shares		9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		10
3.1 Organization and Qualification		10
3.2 Articles of Incorporation and Bylaws		10
3.3 No Subsidiaries		11
3.4 Capitalization		11
3.5 Authority Relative to This Agreement		13
3.6 No Conflict; Required Filings and Consents		13
3.7 Permits; Compliance		14
3.8 Financial Statements		14
3.9 Absence of Certain Changes or Events		15
3.10 Absence of Litigation		16
3.11 Employee Benefit Plans; Labor Matters		16
3.12 Contracts		19
3.13 Environmental Matters		21
3.14 Intellectual Property		22
3.15 Taxes		24
3.16 Vote Required		26
3.17 Assets; Absence of Liens and Encumbrances		26
3.18 Owned Real Property		27
3.19 Certain Interests		27
3.20 Insurance Policies		27
3.21 Restrictions on Business Activities		28
3.22 Brokers		28
3.23 Customers and Suppliers		28
3.24 Accounts Receivable; Bank Accounts		28
3.25 Powers of Attorney		28
3.26 Warranties		28
3.27 Books and Records		28
3.28 No Misstatements		29
3.29 409A Compliance		29

i

	Page
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB		29
4.1 Organization and Qualification		29
4.2 Certificate of Incorporation and Bylaws		30
4.3 Capitalization		30
4.4 Authority Relative to This Agreement		30
4.5 No Conflict; Required Filings and Consents		31
4.6 Permits; Compliance		31
4.7 Financial Statements		32
4.8 Absence of Certain Changes or Events		32
4.9 Absence of Litigation		33
4.10 Brokers		33
4.11 Valid Issuance of Parent Shares		33
4.12 Taxes		34
4.13 Compliance		35
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER		35
5.1 Conduct of Business by the Company Pending the Merger		35
5.2 Litigation		38
5.3 Notification of Certain Matters		38
ARTICLE VI ADDITIONAL AGREEMENTS		38
6.1 Employee Matters		38
6.2 Further Action; Consents; Filings		39
6.3 No Public Announcement		39
6.4 Expenses		40
6.5 Conversion Schedule		40
6.6 Tax Filings		40
6.7 Shareholder Solicitation		40
6.8 Access to Information; Confidentiality		40
6.9 No Solicitation by the Company		41
ARTICLE VII CONDITIONS TO THE MERGER		41
7.1 Conditions to the Obligations of Parent and Merger Sub		41
7.2 Conditions to the Obligations of the Company		44
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER		44
8.1 Termination		44
8.2 Effect of Termination		45
8.3 Amendment		45
8.4 Waiver		45
ARTICLE IX INDEMNIFICATION		46
9.1 Survival of Representations and Warranties		46
9.2 Indemnification by the Company Series A Preferred Holders and Parent		46
9.3 Recoveries		48
9.4 Indemnification Procedures – Third Party Claims		48
9.5 Indemnification Procedures – Generally		50
9.6 Shareholders’ Representative		53
ARTICLE X GENERAL PROVISIONS		54
10.1 Notices		54

ii

	Page
10.2 Certain Definitions		54
10.3 Severability		55
10.4 Assignment; Binding Effect; Benefit		56
10.5 Incorporation of Exhibits		56
10.6 Specific Performance		56
10.7 Governing Law; Forum		56
10.8 Time of the Essence		56
10.9 Waiver of Jury Trial		56
10.10 Construction and Interpretation		56
10.11 Further Assurances		57
10.12 Headings		57
10.13 Counterparts		57
10.14 Entire Agreement		57

Exhibit A	Form of Shareholder Certificate
Exhibit B	Form of Non-Competition and Non-Solicitation Agreement
Exhibit C	Form of Promissory Note
Schedule I	Schedule of Individuals Entering into Voting Agreements
Schedule II	Schedule of Individuals Entering Into Non-Competition and Non-Solicitation Agreements
Schedule III	Schedule of Individuals Receiving Offer Letters to Be Employed at Closing

iii

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Agreement”) is made and entered into October 6, 2006, by and among DemandTec, Inc., a Delaware corporation (“Parent”), TP Acquisition Corp, a California corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), TradePoint Solutions, Inc., a California corporation (the “Company”), and Charles Magowan, as Shareholders’ Representative (as defined in Section 9.6 hereof).

Recitals

     A. Upon the terms and subject to the conditions of this Agreement and in accordance with the California General Corporation Law (the “CGCL”), Parent and the Company will enter into a business combination transaction pursuant to which Merger Sub will merge with and into the Company (the “Merger”);

     B. The Board of Directors of the Company has (i) determined that the Merger is fair to, and in the best interests of, the Company and its shareholders, (ii) unanimously approved and adopted this Agreement, the Merger, and the other transactions contemplated by this Agreement, and (iii) unanimously recommend that the shareholders of the Company approve and adopt this Agreement and the Merger;

     C. The holders of at least 98% of the outstanding shares of Company Common Stock (as defined below), the holders of at least 98% of the outstanding shares of Company Series A Preferred Stock (as defined below), and the holders of at least 98% of the outstanding shares of Company Series A1 Preferred Stock (as defined below) and the holders of at least 75% of the outstanding shares of the Company voting together as a class have approved this Agreement and the Merger;

     D. The Boards of Directors of each of Parent and Merger Sub have (i) determined that the Merger is consistent with and in furtherance of the long-term business strategy of Parent and fair to, and in the best interests of, Parent, Merger Sub and their respective shareholders and (ii) approved and adopted this Agreement, the Merger, and the other transactions contemplated by this Agreement;

     E. Pursuant to the Merger, each outstanding share of Company Stock (other than Dissenting Shares, as defined below) shall be converted into the right to receive shares of Parent’s authorized common stock, par value $0.001 per share (“Parent Common Stock”), at the rate determined in this Agreement, and, where applicable, such other forms of consideration further described herein;

     F. As a condition and inducement to Parent’s and Merger Sub’s entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, those shareholders of the Company listed on Schedule I are entering into a voting agreement with Parent (a “Voting Agreement”), dated the date hereof and in a form acceptable to Parent;

     G. As a condition to Parent’s consummation of the Merger, each of the shareholders of the Company (the “Company Shareholders”) is executing and delivering to Parent a Shareholder Certificate substantially in the form attached hereto as Exhibit A (a “Shareholder Certificate”);

     H. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, each individual listed on Schedule II is entering into a Non-Competition and Non-Solicitation Agreement substantially in the form attached hereto as Exhibit B (a “Non-Competition and Non-Solicitation Agreement”); and

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Merger Sub, the Company and the Shareholders’ Representative hereby agree as follows:

ARTICLE I

THE MERGER

     1.1 The Merger. Upon the terms of this Agreement and subject to the conditions set forth in this Agreement, and in accordance with the CGCL, at the Effective Time (as defined in Section 1.2), Merger Sub shall be merged with and into the Company (the “Reverse Merger”). As a result of the Reverse Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation of the Reverse Merger (the “Surviving Corporation”). As soon as reasonably practicable following the consummation of the Reverse Merger, but in any event within sixty (60) days thereafter, the Company shall be merged (the “Second-Step Merger”) with and into Parent or a wholly-owned, first-tier subsidiary of Parent that is not, for federal income tax purposes, recognized as an entity separate from Parent. Following the Second-Step Merger, the separate corporate existence of the Company shall cease and Parent or its wholly-owned subsidiary, as the case may be, shall continue as the surviving entity in such merger. The Reverse Merger is referred to herein as the “Merger.”

     1.2 Effective Time; Closing. The consummation of the transactions contemplated by this Agreement (other than the Second-Step Merger) shall take place at a closing (the “Closing”) to be held on the second business day following satisfaction or waiver of the conditions set forth in Article VII hereof (the “Closing Date”) at such place and time as the parties may agree. The parties hereto shall cause the Merger to be consummated by (i) filing an Agreement of Merger (the “Agreement of Merger”) with the Secretary of State of the State of California in such form as is required by, and executed in accordance with, the relevant provisions of the CGCL and (ii) making all other filings and recordings required under the CGCL. The term “Effective Time” means the date and time of the filing of the Agreement of Merger (or such later time as may be agreed by each of the parties hereto and specified in the Agreement of Merger).

     1.3 Effect of the Merger. At and after the Effective Time, the Merger shall have the effects as set forth in the applicable provisions of the CGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of each of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

     1.4 Articles of Incorporation and Bylaws of the Surviving Corporation.

          (a) At the Effective Time, the Articles of Incorporation of the Company as the Surviving Corporation shall be amended and restated to read the same as the Articles of Incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that Section 1 of the Articles of Incorporation of the Surviving Corporation, instead of reading the same as Section 1 of the Articles of Incorporation of Merger Sub, shall read as follows: “The name of this corporation is TradePoint Solutions, Inc.”

          (b) At the Effective Time, the Bylaws of the Company as the Surviving Corporation shall be amended and restated to read the same as the Bylaws of Merger Sub as in effect

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immediately prior to the Effective Time, except that all references to Merger Sub in the Bylaws of the Surviving Corporation shall be changed to refer to TradePoint Solutions, Inc.

     1.5 Directors and Officers. The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation, and the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.

     1.6 Tax-free Reorganization. For federal income tax purposes, the parties intend that the Reverse Merger with the Second-Step Merger constitute an integrated transaction that collectively or seriatim qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and will use commercially reasonable efforts to have it so qualify; provided, however, that none of the parties makes any representation or warranty that the Merger will so qualify.

ARTICLE II

MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES

     2.1 Merger Consideration.

          (a) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities:

               (i) each share of common stock of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time (other than any shares of Company Common Stock to be canceled pursuant to Section 2.1(a)(vi) and any Dissenting Shares (as defined in Section 2.6)) shall be converted into the right to receive such number of shares of Parent Common Stock equal to the Common Exchange Ratio (as defined in Section 2.1(b));

               (ii) each share of Series A Preferred Stock of the Company (“Company Series A Preferred Stock”) issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) shall be converted into the right to receive (x) such number of shares of Parent Common Stock equal to the Common Exchange Ratio, plus (y) an amount of cash equal to the Series A Cash Consideration Exchange Amount (as defined below), plus (z) upon maturity of the Promissory Note (as defined below), and subject to the provisions of Article IX below, an amount of cash equal to the Series A Promissory Note Exchange Amount (as defined below);

               (iii) each share of Series A1 Preferred Stock of the Company issued on December 28, 2004 (“December 2004 Company Series A1 Preferred Stock”) and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) shall be converted into the right to receive (x) such number of shares of Parent Common Stock equal to the Common Exchange Ratio, plus (y) an amount of cash equal to the December 2004 Series A1 Cash Consideration Exchange Amount (as defined below);

               (iv) each share of Series A1 Preferred Stock of the Company issued on March 31, 2005 (“March 2005 Company Series A1 Preferred Stock”) and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) shall be converted into the right to receive (x) such number of shares of Parent Common Stock equal to the Common Exchange Ratio, plus (y) an

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amount of cash equal to the March 2005 Series A1 Cash Consideration Exchange Amount (as defined below);

               (v) each share of Series A1 Preferred Stock of the Company issued upon exercise of a Company warrant to purchase shares of Series A1 Preferred Stock of the Company (the “Series A1 Warrant Shares” and, together with the December 2004 Company Series A1 Preferred Stock and March 2005 Company Series A1 Preferred Stock, “Company Series A1 Preferred Stock;” Company Series A Preferred Stock and Company Series A1 Preferred Stock are collectively referred to herein as “Company Preferred Stock;” Company Common Stock and Company Preferred Stock are collectively referred herein to as “Company Stock”) and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) shall be converted into the right to receive (x) such number of shares of Parent Common Stock equal to the Common Exchange Ratio, plus (y) an amount of cash equal to the Series A1 Warrant Shares Cash Consideration Exchange Amount (as defined below);

               (vi) each share of Company Stock held in the treasury of the Company and each share of Company Stock owned by Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto;

               (vii) each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. The stock certificate evidencing shares of common stock of Merger Sub shall then evidence ownership of the outstanding shares of common stock of the Surviving Corporation; and

               (viii) Notwithstanding anything in this Agreement to the contrary, the maximum aggregate amount of merger consideration to which the holders of securities of the Company shall be entitled as a result of the transactions contemplated hereunder shall be the Aggregate Merger Consideration (as defined below).

          (b) As used in this Agreement, the following terms have the following meanings:

               (i) “Aggregate Merger Consideration” means (x) the Cash Consideration, plus (y) the Promissory Note, plus (z) the Parent Shares.

               (ii) “Cash Consideration” means $4,000,000.

               (iii) “Common Exchange Ratio” means the quotient of (x) the Parent Shares divided by (y) the Fully Diluted Common Shares Amount.

               (iv) “Fully Diluted Common Shares Amount” means a number of shares of Company Common Stock equal to the sum of (x) the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time, and (y) the number of shares of Company Common Stock issuable upon conversion of shares of Company Preferred Stock issued and outstanding immediately prior to the Effective Time.

               (v) “Parent Shares” means 2,150,000 shares of Parent Common Stock (subject to splits, combinations, and similar events after the date hereof with respect to Parent Common Stock).

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               (vi) “Promissory Note” means the Promissory Note substantially in the form attached hereto as Exhibit C.

               (vii) “Promissory Note Amount” means the amount of principal payable under the Promissory Note, which amount is subject to adjustment from time to time as set forth in Article IX below.

               (viii) “Remaining Cash Consideration” means (x) the Cash Consideration less (y) the Total Series A1 Liquidation Preference.

               (ix) “Series A Cash Consideration Exchange Amount” means the quotient of (x) the Remaining Cash Consideration divided by (y) the total number of shares of Company Series A Preferred Stock outstanding immediately prior to the Effective Time.

               (x) “Series A Promissory Note Exchange Amount” means the quotient of (x) the Promissory Note Amount divided by (y) the total number of shares of Company Series A Preferred Stock outstanding immediately prior to the Effective Time.

               (xi) “December 2004 Series A1 Cash Consideration Exchange Amount” means the product of (x) the Total Series A1 Liquidation Preference multiplied by (y) the December 2004 Series A1 Liquidation Preference Per Share Percentage.

               (xii) “December 2004 Series A1 Liquidation Preference” means the product of (x) the December 2004 Series A1 Liquidation Preference Per Share multiplied by (y) the total number of shares of December 2004 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

               (xiii) “December 2004 Series A1 Liquidation Preference Per Share” means the sum of (x) $0.225 plus (y) the Series A1 Dividend Amount accrued to the shares of December 2004 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

               (xiv) “December 2004 Series A1 Liquidation Preference Percentage” means the quotient of (x) the December 2004 Series A1 Liquidation Preference divided by (y) the Total Series A1 Liquidation Preference.

               (xv) “December 2004 Series A1 Liquidation Preference Per Share Percentage” means the quotient of (x) the December 2004 Series A1 Liquidation Preference Percentage divided by (y) the total number of shares of December 2004 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

               (xvi) “March 2005 Series A1 Cash Consideration Exchange Amount” means the product of (x) the Total Series A1 Liquidation Preference multiplied by (y) the March 2005 Series A1 Liquidation Preference Per Share Percentage.

               (xvii) “March 2005 Series A1 Liquidation Preference” means the product of (x) the March 2005 Series A1 Liquidation Preference Per Share multiplied by (y) the total number of shares of March 2005 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

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               (xviii) “March 2005 Series A1 Liquidation Preference Per Share” means the sum of (x) $0.225 plus (y) the Series A1 Dividend Amount accrued to the shares of March 2005 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

               (xix) “March 2005 Series A1 Liquidation Preference Percentage” means the quotient of (x) the March 2005 Series A1 Liquidation Preference divided by (y) the Total Series A1 Liquidation Preference.

               (xx) “March 2005 Series A1 Liquidation Preference Per Share Percentage” means the quotient of (x) the March 2005 Series A1 Liquidation Preference Percentage divided by (y) the total number of shares of March 2005 Company Series A1 Preferred Stock outstanding immediately prior to the Effective Time.

               (xxi) “Series A1 Warrant Shares Cash Consideration Exchange Amount” means the product of (x) the Total Series A1 Liquidation Preference multiplied by (y) the Series A1 Warrant Shares Liquidation Preference Per Share Percentage.

               (xxii) “Series A1 Warrant Shares Liquidation Preference” means the product of (x) the Series A1 Warrant Shares Liquidation Preference Per Share multiplied by (y) the total number of Series A1 Warrant Shares outstanding immediately prior to the Effective Time.

               (xxiii) “Series A1 Warrant Shares Liquidation Preference Per Share” means the sum of (x) $0.225 plus (y) the Series A1 Dividend Amount accrued to the Series A1 Warrant Shares outstanding immediately prior to the Effective Time.

               (xxiv) “Series A1 Warrant Shares Liquidation Preference Percentage” means the quotient of (x) the Series A1 Warrant Shares Liquidation Preference divided by (y) the Total Series A1 Liquidation Preference.

               (xxv) “Series A1 Warrant Shares Liquidation Preference Per Share Percentage” means the quotient of (x) the Series A1 Warrant Shares Liquidation Preference Percentage divided by (y) the total number of Series A1 Warrant Shares outstanding immediately prior to the Effective Time.

               (xxvi) “Series A1 Dividend Amount” means that dollar amount of dividends that have accrued but have not been paid in respect of a share of Company Series A1 Preferred Stock, which dollar amount is equal to $0.018 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like with respect to the Company Series A1 Preferred Stock occurring after the date of this Agreement and prior to the Effective Time) per annum (compounded annually on the anniversary of the original issuance date) for each share of Company Series A1 Preferred Stock, calculated from the date of original issuance by the Company of shares of Company Series A1 Preferred Stock through and including the Closing Date. For avoidance of doubt, “Series A1 Dividend Amount” shall not include that dollar amount of dividends that have otherwise been paid by the Company, or will be paid by the Company at or prior to the Effective Time, in respect of a share of Company Series A1 Preferred Stock.

               (xxvii) “Total Series A1 Liquidation Preference” means the sum of (x) the December 2004 Series A1 Liquidation Preference plus (y) the March 2005 Series A1 Liquidation Preference plus (z) the Series A1 Warrant Shares Liquidation Preference.

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          (c) If any shares of Company Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement, stock option exercise agreement or other agreement with the Company, then the Parent Shares issued in exchange for such shares of Company Common Stock will also be unvested and/or subject to the same repurchase option, risk of forfeiture or other condition, and the certificates representing such Parent Shares may accordingly be marked with appropriate legends.

     2.2 Exchange of Cash and Certificates.

          (a) Exchange Procedures. From and after the Effective Time, a third party designated by Parent will act as exchange agent (the “Exchange Agent”) in effecting the exchange of the applicable Cash Consideration, Parent Shares and Promissory Note Amount for certificates which immediately prior to the Effective Time represented outstanding shares of Company Stock (“Company Share Certificates”) and which were converted into the right to receive the applicable Cash Consideration, Parent Shares and Promissory Note Amount pursuant to Section 2.1. As promptly as practicable after the Effective Time, Parent and the Exchange Agent shall mail to each record holder of Company Share Certificates a letter of transmittal (the “Letter of Transmittal”) in a form approved by Parent and the Company and instructions for use in surrendering such Company Share Certificates and receiving the applicable Cash Consideration, Parent Shares and Promissory Note Amount pursuant to Section 2.1. Promptly after the Effective Time, but in no event later than ten (10) business days following the Effective Time, Parent shall cause to be deposited in trust with the Exchange Agent the Cash Consideration and Parent Shares, and shall cause the Promissory Note to be delivered to the Shareholders’ Representative, with a copy to the Exchange Agent.

     Upon the surrender of each Company Share Certificate for cancellation to the Exchange Agent, together with a properly completed Letter of Transmittal and such other documents as may reasonably be required by Parent:

               (i) Parent shall cause to be issued to the holder of such Company Share Certificate in exchange therefor (x) the portion of the Cash Consideration to which such holder is entitled pursuant to Section 2.1, and (y) a separate stock certificate representing the Parent Shares to which such holder is entitled pursuant to Section 2.1; and

               (ii) the Company Share Certificates so surrendered shall forthwith be cancelled.

     Until surrendered as contemplated by this Article II, each Company Share Certificate shall, subject to appraisal rights under the CGCL and Section 2.6, be deemed at any time after the Effective Time to represent only the right to receive upon surrender the applicable Cash Consideration, Promissory Note Amount, and Parent Shares with respect to the shares of Company Stock formerly represented thereby to which such holder is entitled pursuant to Section 2.1.

          (b) Distributions with Respect to Unexchanged Parent Shares. No dividends or other distributions declared or made after the Effective Time with respect to Parent Shares comprising part of the Aggregate Merger Consideration and with a record date after the Effective Time shall be paid to the holder of any unsurrendered Company Share Certificate with respect to the Parent Shares represented thereby until the holder of such Company Share Certificate shall surrender such Company Share Certificate in accordance with this Section 2.2.

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          (c) No Further Rights in Company Stock. The Aggregate Merger Consideration issuable upon the conversion of shares of Company Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Stock.

          (d) No Fractional Shares. Notwithstanding any other provision of this Agreement, and subject to the provisions of the CGCL, no fractional shares of Parent Common Stock shall be issued upon the conversion and exchange of Company Share Certificates, and no holder of Company Share Certificates shall be entitled to receive a fractional share of Parent Common Stock. In the event that any holder of Company Stock would otherwise be entitled to receive a fractional share of Parent Common Stock (after aggregating all shares and fractional shares of Parent Common Stock issuable to such holder), then such holder will receive an aggregate number of shares of Parent Common Stock rounded up or down to the nearest whole share (with 0.5 being rounded up).

          (e) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any holder of shares of Company Stock for any such shares of Parent Common Stock (or dividends or distributions with respect thereto) or cash properly and legally delivered to a public official pursuant to any abandoned property, escheat or similar Law (as defined in Section 3.6(a)).

          (f) Withholding Rights. Each of the Exchange Agent, the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax (as defined in Section 3.15(c)) Law. To the extent that amounts are so withheld by the Exchange Agent, the Surviving Corporation or Parent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Stock in respect of which such deduction and withholding were made by the Exchange Agent, the Surviving Corporation or Parent, as the case may be.

          (g) Lost Certificates. If any Company Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Share Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Company Share Certificate, Parent shall issue in exchange for such lost, stolen or destroyed Company Share Certificate, the applicable Cash Consideration, Promissory Note Amount and Parent Shares (and dividends or other distributions pursuant to Section 2.2(b)) to which such person is entitled pursuant to the provisions of this Article II.

          (h) Return of Parent Shares. Promptly following the end of the third full calendar month after the Effective Time, the Exchange Agent shall return to Parent all of the remaining Cash Consideration and Parent Shares in the Exchange Agent’s possession. Thereafter, upon the surrender of a Company Share Certificate to Parent, together with a properly executed Letter of Transmittal and forms of stock power and such other documents as may reasonably be required by Parent, and subject to applicable abandoned property, escheat and similar Laws, the holder of such Company Share Certificate shall be entitled to receive in exchange therefor the applicable Cash Consideration, Promissory Note Amount and Parent Shares (and dividends or other distributions pursuant to Section 2.2(c)) without any interest thereon.

     2.3 Stock Transfer Books. Commencing on the date hereof, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of shares of Company Stock thereafter on the records of the Company other than as required to comply with the terms

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of this Agreement. From and after the Effective Time, each holder of a Company Share Certificate shall cease to have any rights as a shareholder of the Company, except as otherwise provided in this Agreement or by Law.

     2.4 Company Stock Options; Company Warrants.

          (a) At the Effective Time, all options to purchase Company Common Stock issued by the Company pursuant to the Stock Plan, as defined in Section 3.4(b) (each a “Company Option”), shall terminate. A reasonable period prior to the Effective Time, the Company shall deliver to each holder of a Company Option a written notice advising him or her of the opportunity to exercise such Company Option prior to the Effective Time and, if applicable, the acceleration of such Company Option. In the case of a Company Option that becomes exercisable only as of the Effective Time pursuant to this Subsection (a), any exercise of such Company Option shall be contingent on the consummation of the Merger. Shares of Company Common Stock acquired by exercising Company Options (including contingent exercises) shall be subject to Section 2.1(a)(i). The Company’s repurchase right with respect to any unvested shares acquired by the exercise of Company Options prior to the Effective Time shall be assigned to Parent by virtue of the Merger and without any further action on the part of the Company or the holder of such unvested shares.

          (b) Parent shall not assume any warrants or other rights to acquire shares of Company Stock. Prior to the Effective Time, each warrant to purchase Company Stock (a “Company Warrant”), and any agreement evidencing such warrant, that has not otherwise been exercised or converted shall have been terminated and of no further force and effect.

     2.5 Securities Laws Issues. Parent intends to issue the shares of Parent Common Stock as provided in this Agreement pursuant to a “private placement” exemption or exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation D promulgated under the Securities Act and an exemption from qualification under the laws of the State of California and other applicable state securities laws. Parent and the Company shall comply with all applicable provisions of and rules under the Securities Act and applicable state securities laws in connection with the offering and issuance of the shares of Parent Common Stock pursuant to this Agreement. Such shares of Parent Common Stock will be “restricted securities” under the Federal and state securities laws and cannot be offered or resold except pursuant to registration under the Securities Act or an available exemption from registration.

     2.6 Dissenting Shares.

          (a) Notwithstanding any provision of this Agreement to the contrary, shares of Company Stock that are outstanding immediately prior to the Effective Time and which are held by shareholders who have exercised and perfected appraisal rights for such shares of Company Stock in accordance with the CGCL (collectively, the “Dissenting Shares”) shall not be converted into or represent the right to receive the applicable Cash Consideration, Promissory Note Amount, and Parent Shares. Such shareholders shall be entitled to receive payment of the appraised value of such shares of Company Stock held by them in accordance with the CGCL, unless and until such shareholders fail to perfect or effectively withdraw or otherwise lose their appraisal rights under the CGCL. All Dissenting Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Company Stock under the CGCL shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the applicable Cash Consideration, Promissory Note Amount and Parent Shares, without any interest thereon, upon the surrender in the manner provided in Section 2.2 of the corresponding Company Share Certificate.

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          (b) The Company shall give Parent (i) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands, and any other related instruments served pursuant to the CGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the CGCL. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Merger Sub that the statements contained in this Article III are true and correct except as set forth in the disclosure schedule delivered by the Company to Parent and Merger Sub concurrently with the execution of this Agreement (the “Company Disclosure Schedule”). The Company Disclosure Schedule shall be arranged according to specific sections in this Article III and shall provide exceptions to, or otherwise qualify in reasonable detail, only the corresponding section in this Article III and any other section hereof where it is clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed, that the disclosure is intended to apply to such other section.

     3.1 Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to own, lease and otherwise hold and operate its properties and other assets and to carry on its business as it is now being conducted and as currently proposed to be conducted, except where the failure to be so organized, existing or in good standing or to have such corporate power and authority has not had, and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (as defined below). The Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing has not had, and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Section 3.1 of the Company Disclosure Schedule sets forth each jurisdiction where the Company is qualified or licensed as a foreign corporation and each other jurisdiction in which the Company owns, uses, licenses or leases real property or has employees or engages independent contractors. The term “Company Material Adverse Effect” means any event, change, violation, inaccuracy, circumstance or effect (regardless of whether or not such events, changes, violations, inaccuracies, circumstances or effects are inconsistent with the representations or warranties made by the Company in this Agreement) that is, or could reasonably be expected to be, individually or in the aggregate, materially adverse to the business, operations, condition (financial or otherwise), assets (tangible or intangible), liabilities, properties, capitalization or results of operations of the Company, except for any such events, changes, violations, inaccuracies, circumstances or effects resulting from or arising in connection with (i) any changes in general economic or business conditions that do not disproportionately impact the Company or (ii) any changes or events affecting the industry in which the Company operates that do not disproportionately impact the Company (it being understood that in any controversy concerning the applicability of the preceding exceptions, the Company shall have the burden of proof with respect to the elements of such exceptions).

     3.2 Articles of Incorporation and Bylaws. The Company has heretofore made available to Parent a complete and correct copy of (a) the Articles of Incorporation and the Bylaws of the Company including all amendments thereto, (b) the minute books containing all consents, actions and meeting of the shareholders of the Company and the Company’s Board of Directors and any committees

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thereof, and (c) the stock transfer books of the Company setting forth all issuances or transfers of any capital stock of the Company. Such Articles of Incorporation and Bylaws are in full force and effect. The Company is not in violation of any of the provisions of its Articles of Incorporation or Bylaws. The corporate minute books, stock certificate books, stock registers and other corporate records of the Company are complete and accurate in all material respects, and the signatures appearing on all documents contained therein are the true or facsimile signatures of the persons purported to have signed the same.

     3.3 No Subsidiaries. The Company does not own, of record or beneficially, or control any direct or indirect equity or other interest, or any right (contingent or otherwise) to acquire the same, in any corporation, partnership, limited liability company, joint venture, association or other entity. The Company is not a member of (nor is any part of the Company’s business conducted through) any partnership, nor is the Company a participant in any joint venture or similar arrangement. There are no contractual obligations of the Company to provide funds to, or make any investment in (whether in the form of a loan, capital contribution or otherwise), any other person.

     3.4 Capitalization.

          (a) The authorized capital stock of the Company consists of 50,000,000 shares of Company Common Stock, 17,500,000 shares of Company Series A Preferred Stock and 11,111,111 shares of Company Series A1 Preferred Stock. As of the date hereof, (i) 9,013,352 shares of Company Common Stock are issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable, and (ii) 4,259,500 shares of Company Common Stock are reserved for future issuance pursuant to outstanding Company Options. As of the date of this Agreement, (A) 17,335,000 shares of Company Series A Preferred Stock are issued and outstanding, and (B) 11,036,088 shares of Company Series A1 Preferred Stock are issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable. Each share of Company Preferred Stock is convertible into one share of Company Common Stock. There are no other shares of Company Preferred Stock outstanding. As of the date hereof, the outstanding shares of Company Common Stock, Company Series A Preferred Stock and Company Series A1 Preferred Stock are owned as set forth in Section 3.4(a) of the Company Disclosure Schedule. Section 3.4(a) of the Company Disclosure Schedule also provides an accurate and complete description of the terms of each repurchase option or right of first refusal which is held by the Company and to which any of such shares are subject.

          (b) The Company has reserved 2,380,000 shares of Company Common Stock for issuance under the Company’s 2003 Equity Incentive Plan and 2,500,000 shares of Company Common Stock for issuance under the Company’s 2004 Equity Incentive Plan (collectively, the “Stock Plan”) of which options to purchase 1,772,500 and 2,487,000 shares of Company Common Stock, respectively, are outstanding as of the date of this Agreement. Section 3.4(b) of the Company Disclosure Schedule accurately sets forth with respect to each Company Option that is outstanding as of the date of this Agreement: (i) the name of the holder of such Company Option; (ii) the total number of shares of Company Common Stock that was originally subject to such Company Option; (iii) the number of shares of Company Common Stock that remain subject to such Company Option, (iv) the date on which such Company Option was granted and the term of such Company Option; (v) the vesting schedule and vesting commencement date for such Company Option; (vi) the exercise price per share of Company Common Stock purchasable under such Company Option; (vii) whether such Company Option has been designated an “incentive stock option” as defined in Section 422 of the Code; (viii) the current employee or independent contractor status of the holder of such Company Option; and (ix) the current State of residence of the holder of such Company Option. No Company Option will by its terms require an adjustment in connection with the Merger, except as contemplated by this Agreement. Neither the consummation of transactions contemplated by this Agreement, nor any action taken or to be taken by

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Company in connection with such transactions, will result in (i) any acceleration of exercisability or vesting, whether or not contingent on the occurrence of any event after consummation of the Merger, in favor of any optionee under any Company Option; (ii) any additional benefits for any optionee under any Company Option, except as contemplated by this Agreement; or (iii) the inability of Parent after the Effective Time to exercise any right or benefit held by Company prior to the Effective Time with respect to any shares of Company Common Stock previously issued upon exercise of a Company Option, including, without limitation, the right to repurchase an optionee’s unvested shares on termination of such optionee’s employment. The termination of all Company Options in accordance with Section 2.4(a) hereunder will not give rise to any event described in clauses (i) through (iii) in the immediately preceding sentence or constitute a breach of the Stock Plan or any agreement entered into pursuant to such plan.

          (c) The Company previously reserved 3,557,316 shares of Company Common Stock for issuance pursuant to the exercise or conversion of warrants to purchase Company Common Stock, 165,000 shares of Company Series A Preferred Stock for issuance pursuant to the exercise or conversion of warrants to purchase Company Series A Preferred Stock, and 75,023 shares of Company Series A1 Preferred Stock for issuance pursuant to the exercise or conversion of warrants to purchase Company Series A1 Preferred Stock. As of the Closing, all Company Warrants will have been exercised or converted pursuant to their terms or terminated. Section 3.4(c) of the Company Disclosure Schedule sets forth, with respect to each Company Warrant issued to any person by the Company since the Company’s date of incorporation: (i) the name of the holder of such Company Warrant; (ii) the total number and type of shares of Company Stock that are subject to such Company Warrant; (iii) the exercise price per share of Company Stock purchasable under such Company Warrant; (iv) the total number of shares of Company Stock with respect to which such warrant is immediately exercisable; (v) the vesting schedule for such Company Warrant; and (vi) the disposition (i.e., exercised or converted or terminated) of such Company Warrant.

          (d) Except as described in Section 3.4(b) above or as set forth in Sections 3.4(b), 3.4(c) and 3.4(d) of the Company Disclosure Schedule, there are no options, warrants or other rights, agreements, arrangements or commitments of any character, whether or not contingent, relating to the issued or unissued capital stock of the Company or obligating the Company to issue or sell any share of capital stock of, or other equity interest in, the Company. All shares of Company Stock so subject to issuance, upon issuance in accordance with the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. The holders of Company Options and Company Warrants have been or will be given, or shall have properly waived, any required notice of the Merger or the termination of such Company Warrants or Company Options prior to Effective Time, and all such rights, if any, will terminate at or prior to the Effective Time.

          (e) Except as described in Section 3.4(e) of the Company Disclosure Schedule, the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter.

          (f) All of the securities offered, sold or issued by the Company (i) have been offered, sold or issued in compliance with the requirements of the Federal securities laws and any applicable state securities or “blue sky” laws, and (ii) are not subject to any preemptive right, right of first refusal (other than the Company’s right of first refusal), right of first offer or right of rescission.

          (g) Except as set forth in Section 3.4(g) of the Company Disclosure Schedule, the Company has never repurchased, redeemed or otherwise reacquired any shares of capital

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stock or other securities of the Company, other than unvested securities in the ordinary course upon termination of employment or consultancy. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any share of capital stock of, or other equity interest in, the Company. There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company is a party, or of which the Company is aware, that (i) relate to the voting, registration or disposition of any securities of the Company, (ii) grant to any person or group of persons the right to elect, or designate or nominate for election, a director to the Board of Directors of the Company, or (iii) grant to any person or group of persons information rights.

          (h) An updated Section 3.4 of the Company Disclosure Schedule reflecting changes permitted by this Agreement in the capitalization of the Company between the date hereof and the Effective Time shall be delivered by the Company to Parent on the Closing Date.

     3.5 Authority Relative to This Agreement.

          (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining the necessary approvals of the Company Shareholders, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Merger and the other transactions contemplated by this Agreement (other than the approval and adoption of this Agreement and the Merger by the Company Shareholders as described in Section 3.16 hereof and the filing and recordation of appropriate merger documents as required by the CGCL). This Agreement has been duly and validly executed and delivered by the Company and, assuming Company Shareholder approval and the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity.

          (b) Without limiting the generality of the foregoing, the Board of Directors of the Company, at a meeting duly called and held, has unanimously (i) determined that the Merger and the other transactions contemplated hereby are fair to, and in the best interests of, the Company and its shareholders, (ii) approved and adopted the Merger, this Agreement and the other transactions contemplated hereby in accordance with the provisions of the CGCL and the Company’s charter documents, and (iii) directed that this Agreement and the Merger be submitted to the Company Shareholders for their approval and adoption and (iv) resolved to recommend that the Company Shareholders vote in favor of the approval and adoption of this Agreement.

     3.6 No Conflict; Required Filings and Consents.

          (a) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the transactions contemplated hereby will not, (i) conflict with or violate the Articles of Incorporation or Bylaws of the Company, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 3.6(b) have been obtained and all filings and obligations described in Section 3.6(b) have been made or complied with, conflict with or violate in any material respect any foreign or domestic (Federal, state or local) law, statute, ordinance, franchise, permit, concession, license, writ, rule, regulation, order, injunction, judgment or decree (“Law”) applicable to the Company or any property or asset of the Company, or (iii) conflict with, result

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in any material breach of or constitute a material default (or an event which with notice or lapse of time or both would become a default) under, require consent, approval or notice under, give to others any right of termination, amendment, acceleration or cancellation of, require any payment under, or result in the creation of a lien or other encumbrance on any property or asset of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which any property or asset of the Company is bound.

          (b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, order, permit or authorization from, or registration, filing or notification with, any domestic or foreign governmental, regulatory or administrative authority, agency or commission, any court, tribunal or arbitral body, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental authority (a “Governmental Entity”), except for such consents, approvals, orders, permits, authorizations, registrations, filings or notifications, which if not obtained or made could not reasonably be expected, individually or in the aggregate, to prevent or materially delay the consummation of the transactions contemplated by this Agreement.

     3.7 Permits; Compliance.

          (a) The Company is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for the Company to own, lease and otherwise hold and operate its properties and other assets and to carry on its business as it is now being conducted and as currently proposed to be conducted (the “Company Permits”). All Company Permits are in full force and effect and will remain so after the Closing and no suspension or cancellation of any Company Permit is pending or, to the knowledge of the Company, threatened. The Company has received no notice or other communication from any Governmental Entity regarding (i) any actual or possible violation of or failure to comply with any term or requirement of any Company Permit, or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Company Permit.

          (b) The Company is not, in any material respect, in conflict with, or in default or violation of (i) any Law applicable to the Company or by which any property or asset of the Company is bound or affected, (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which the Company or any property or asset of the Company is bound or affected, or (iii) any Company Permit.

     3.8 Financial Statements.

          (a) True and complete copies of (i) the audited consolidated balance sheets of the Company at December 31, 2005, and the unaudited consolidated balance sheets of the Company at December 31, 2004, and December 31, 2003, and the related audited statements of operations, changes in shareholders’ equity and changes in cash flows for the years then ended, together with all related notes and schedules thereto (collectively referred to herein as the “Company Audited Financial Statements”), and (ii) the unaudited consolidated balance sheet of the Company as of August 31, 2006 (the “Company Reference Balance Sheet”), and the related statements of operations, changes in shareholders’ equity and changes in cash flows for the eight months ended August 31, 2006 (collectively referred to herein as the “Company Interim Financial Statements”), are attached as Section 3.8(a) of the Company Disclosure Schedule. The Company Audited Financial Statements and the Company Interim Financial Statements (including, in each case, any notes thereto) were prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as

14

permitted by U.S. GAAP and except for (i) the absence of footnotes, and (ii) normal, recurring year-end adjustments that would not reasonably be expected, either individually or in the aggregate, to be material) and each present fairly, in all material respects, the consolidated financial position of the Company as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to be material).

          (b) Except as set forth in Section 3.8(b) of the Company Disclosure Schedule, the Company does not have any debts, liabilities or obligations of a type required by generally accepted accounting principles to be reflected in the Company Reference Balance Sheet that were not so reflected in the Company’s Reference Balance Sheet (“Liabilities”), other than Liabilities (i) recorded or reserved against on the Company Reference Balance Sheet and (ii) in an aggregate amount not exceeding $50,000 incurred since August 31, 2006 in the ordinary course of the business, consistent with past practice. Except as set forth in Section 3.8(b) of the Company Disclosure Schedule, reserves are reflected on the Company Reference Balance Sheet and on the books of account and other financial records of the Company against all Liabilities of the Company in amounts that have been established on a basis consistent with the past practice of the Company and in accordance with U.S. GAAP. Except as set forth in Section 3.8(b) of the Company Disclosure Schedule, there are no outstanding warranty claims against the Company.

     3.9 Absence of Certain Changes or Events. Since December 31, 2005, except as contemplated by or as disclosed in this Agreement, the Company has conducted its business only in the ordinary course and in a manner consistent with past practice and, since such date, (a) there has not been any Company Material Adverse Effect and (b) the Company has not taken or legally committed to take any of the following actions:

          (a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Company Audited Financial Statements, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse;

          (b) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results, prospects or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

          (c) any waiver by the Company of a valuable right or of a material debt owed to it;

          (d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

          (e) any material change or amendment to a Material Contract or arrangement by which the Company or any of its assets or properties is bound or subject;

          (f) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

          (g) any sale, assignment or transfer of any Company Intellectual Property other than in the ordinary course of business consistent with past practice;

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          (h) any resignation or termination of employment of any key officer of the Company; and the Company, to its knowledge, does not know of the impending resignation or termination of employment of any such officer or key employee;

          (i) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

          (j) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except Liens for Taxes not yet due or payable and Liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

          (k) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

          (l) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company, other than repurchase of Company Common Stock from employees, consultants or other persons performing services for Company pursuant to agreements under which Company has the option to repurchase such shares at cost upon the termination of employment or other services;

          (m) to the Company’s knowledge, any other event or condition of any character that might materially and adversely affect the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted); or

          (n) any agreement or commitment by the Company to do any of the things described in this Section 3.9.

     3.10 Absence of Litigation. There is no litigation, suit, claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company, or any property or asset owned or used by the Company or any person whose liability the Company has or may have assumed, either contractually or by operation of Law, before any arbitrator or Governmental Entity (a “Company Legal Proceeding”). To the Company’s knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that could reasonably be expected to give rise to or serve as a basis of the commencement of any Company Legal Proceeding. None of the Company, the officers or directors thereof (in their capacity as such), or any material property or asset of the Company is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, continuing investigation by, any Governmental Entity, or any order, writ, judgment, injunction, decree, determination or award of any court, arbitrator or Governmental Entity. The Company has no plans to initiate any Company Legal Proceeding against any third party.

     3.11 Employee Benefit Plans; Labor Matters.

          (a) Schedule 3.11(a) of the Company Disclosure Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) and all bonus, stock option, stock purchase, stock appreciation right, restricted stock, phantom stock, incentive, deferred compensation, retiree medical, disability or life

16

insurance, cafeteria benefit, dependent care, disability, director or employee loan, fringe benefit, sabbatical, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements (whether legally enforceable or not, whether formal or informal and whether in writing or not) to which the Company is a party, with respect to which the Company has any obligation or which are maintained, contributed to or sponsored by the Company for the benefit of any current or former employee, officer or director of the Company, (ii) each employee benefit plan for which the Company could incur liability under Section 4069 of ERISA in the event such plan has been or were to be terminated, (iii) any plan in respect of which the Company could incur liability under Section 4212(c) of ERISA, and (iv) any employment agreements, offer letters or other contracts, arrangements or understandings between the Company and any employee of the Company (whether legally enforceable or not, whether formal or informal and whether in writing or not) including, without limitation, any contracts, arrangements or understandings relating to a sale of the Company (each, a “Company Plan,” and collectively, the “Company Plans”). The Company has no express or implied commitment, whether legally enforceable or not, (x) to create, incur liability with respect to, or cause to exist, any other employee benefit plan, program or arrangement, (y) to enter into any contract or agreement to provide compensation or benefits to any individual, or (z) to modify, change or terminate any Company Plan, other than with respect to a modification, change or termination required by ERISA or the Code.

          (b) Each Company Plan is in writing and the Company has furnished Parent with a true and complete copy of each Company Plan (or a written summary where the Company Plan is not in writing) and a true and complete copy of each material document, if any, prepared in connection with each such Company Plan, including, without limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the three (3) most recent annual reports (Form 5500 series and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Plan, (iv) the most recently received Internal Revenue Service determination letter for each Company Plan intended to qualify under ERISA or the Code, (v) the most recently prepared actuarial report and financial statement in connection with each such Company Plan, (vi) any correspondence with the Internal Revenue Service or the Department of Labor with respect to each such Company Plan and (vii) each form of notice of grant and stock option agreement used to document Company Options.

          (c) Neither the Company nor any ERISA Affiliate has ever maintained or contributed to a plan subject to Title IV of ERISA. Each Company Plan is subject only to the Laws of the United States or a political subdivision thereof.

          (d) Except for benefits paid as a result of the termination of the Company’s 401(k) Plan as set forth in Section 6.1 hereof, none of the Company Plans provides for the payment of separation, severance, termination or similar benefits to any person or obligates the Company to pay separation, severance, termination or similar-type benefits solely or partially as a result of any transaction contemplated by this Agreement or as a result of a “change in ownership or control,” within the meaning of such term under Section 280G of the Code. Except for benefits paid as a result of the termination of the Company’s 401(k) Plan as set forth in Section 6.1 hereof, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, either alone or together with another event, will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, forgiveness of indebtedness or otherwise) becoming due under any Company Plan, whether or not such payment is contingent, (ii) increase any benefits otherwise payable under any Company Plan or other arrangement, (iii) result in the acceleration of the time of payment, vesting or funding of any benefits including, but not limited to, the acceleration of the vesting and exercisability of any Company Option, whether or not contingent, or (iv) affect in any material respects any Company Plan’s current treatment under any Laws including any Tax or social contribution Law. No

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Company Plan provides, or reflects or represents any liability to provide, retiree health, disability, or life insurance benefits to any person for any reason, except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or other applicable statute, and the Company has never represented, promised or contracted (whether in oral or written form) to any employee (either individually or to employees as a group) or any other person that such employee or other person would be provided with retiree health, disability, or life insurance benefits, except to the extent required by statute.

          (e) Each Company Plan is now and always has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws, regulations and rules promulgated thereunder including, without limitation, ERISA and the Code. The Company has performed all obligations required to be performed by it under, is not in any respect in default under or in violation of, and has no knowledge of any default or violation by any party to, any Company Plan. No action, claim or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Company Plan (other than claims for benefits in the ordinary course) and no fact or event exists that could give rise to any such action, claim or proceeding. Neither the Company is nor any person that is a member of the same controlled group as the Company or under common control with the Company within the meaning of Section 414 of the Code (each, a “Company ERISA Affiliate”) is subject to any penalty or Tax with respect to any Company Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. Each Company Plan can be amended, terminated or otherwise discontinued at any time without material liability to Parent, the Company or any of their respective ERISA Affiliates (other than ordinary administration expenses). Neither the Company nor any affiliate has, prior to the Effective Time and in any material respect, violated any of the health care continuation requirements of COBRA, the requirements of the Family Medical Leave Act of 1993, the requirements of the Health Insurance Portability and Accountability Act of 1996, the requirements of the Women’s Health and Cancer Rights Act of 1998, the requirements of the Newborns’ and Mothers’ Health Protection Act of 1996, or any amendment to each such act, or any similar provisions of state Law applicable to its employees.

          (f) Each Company Plan intended to qualify under Section 401(a) or Section 401(k) of the Code and each trust intended to qualify under Section 501(a) of the Code (i) has received a favorable determination, opinion, notification or advisory letter from the Internal Revenue Service with respect to each such Company Plan as to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, and no fact or event has occurred since the date of such determination letter or letters from the Internal Revenue Service to adversely affect the qualified status of any such Company Plan or the exempt status of any such trust, or (ii) has remaining a period of time under applicable Treasury regulations or Internal Revenue Service pronouncements in which to apply for such a letter and make any amendments necessary to obtain a favorable determination as to the qualified status of each such Company Plan.

          (g) All contributions, premiums or payments required to be made or accrued with respect to any Company Plan have been made on or before their due dates. All such contributions have been fully deducted for income tax purposes and no such deduction has been challenged or disallowed by any Governmental Entity and no fact or event exists which could give rise to any such challenge or disallowance.

          (h) The Company is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or in the Company’s business, and currently there are no organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit that could affect the Company. In addition: (i) there are no controversies, strikes, slowdowns or work stoppages pending or, to the best knowledge of the Company

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after due inquiry, threatened between the Company and any of its employees, and the Company has not experienced any such controversy, strike, slowdown or work stoppage within the past three years; (ii) the Company is currently in compliance with all applicable Laws relating to the employment of labor, including those related to wages, hours, worker classification (including the proper classification of independent contractors and consultants), collective bargaining, workers’ compensation and the payment and withholding of Taxes and other sums as required by the appropriate Governmental Entity and has withheld and paid to the appropriate Governmental Entity or is holding for payment not yet due to such Governmental Entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing; (iii) the Company has paid in full to all employees or adequately accrued for in accordance with U.S. GAAP consistently applied all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees; (iv) there is no claim with respect to payment of wages, salary, overtime pay, workers compensation benefits or disability benefits that has been asserted or threatened against the Company or that is now pending before any Governmental Entity with respect to any person currently or formerly employed by the Company; (v) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employees or employment practices; (vi) the Company is in compliance with all Laws and regulations relating to occupational safety and health Laws and regulations, and there is no charge or proceeding with respect to a violation of any occupational safety or health standards that has been asserted or is now pending or threatened with respect to the Company; (vii) the Company is in compliance with all Laws and regulations relating to discrimination in employment, and there is no charge of discrimination in employment or employment practices for any reason, including, without limitation, age, gender, race, religion or other legally protected category, which has been asserted or, to the knowledge of the Company, threatened against the Company or that is now pending before the United States Equal Employment Opportunity Commission or any other Governmental Entity; and (viii) each employee of the Company who is located in the United States and is not a United States citizen has all approvals, authorizations and papers necessary to work in the United States in accordance with applicable Law.

          (i) Section 3.11(i) of the Company Disclosure Schedule contains a true and complete list of (i) all individuals who serve as employees of or consultants to the Company as of the date hereof, (ii) in the case of such employees, the position and base compensation payable to each such individual, and (iii) in the case of each such consultant, the consulting rate payable to such individual.

          (j) To the Company’s knowledge, no employee of or consultant to the Company has been injured in the workplace or in the course of his or her employment or consultancy, except for injuries which are covered by insurance or for which a claim has been made under worker’s compensation or similar Laws.

     3.12 Contracts.

          (a) The Company has provided to Parent true and correct copies of all of the following written or oral contracts and agreements of the Company (such contracts and agreements being the “Company Material Contracts”):

               (i) each contract and agreement for the purchase or lease of personal property with any supplier or for the furnishing of services to the Company with payments greater than $25,000 per year;

               (ii) all broker, exclusive dealing or exclusivity, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing, consulting

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and advertising contracts and agreements to which the Company is a party or any other contract that compensates any person based on any sales by the Company;

               (iii) all leases and subleases of real property;

               (iv) all contracts and agreements relating to indebtedness other than trade indebtedness of the Company, including any contracts and agreements in which the Company is a guarantor of indebtedness;

               (v) all contracts and agreements with any Governmental Entity to which the Company is a party;

               (vi) all contracts and agreements that limit or purport to limit the ability of the Company to compete in any line of business or with any person or in any geographic area or during any period of time;

               (vii) all contracts containing confidentiality requirements (including all nondisclosure agreements);

               (viii) all contracts and agreements between or among the Company and any shareholder of the Company or any affiliate of such person;

               (ix) all contracts and agreements relating to the voting and any rights or obligations of a shareholder of the Company;

               (x) all contracts to manufacture for, supply to or license or distribute to any third party any products or components;

               (xi) all contracts regarding the acquisition, issuance or transfer of any securities and each contract affecting or dealing with any securities of the Company, including, without limitation, any restricted stock agreements or escrow agreements;

               (xii) all contracts providing for indemnification of any officer, director, employee or agent of the Company;

               (xiii) all contracts related to or regarding the performance of consulting, advisory or other services or work of any type by any third party;

               (xiv) all other contracts that have a term of more than 60 days and that may not be terminated by the Company, without penalty, within 30 days after the delivery of a termination notice by the Company;

               (xv) any agreement of the Company that is terminable upon or prohibits assignment or a change of ownership or control of the Company, or is silent as to whether consent is required upon assignment or upon a change of ownership or control of the Company;

               (xvi) all other contracts and agreements, whether or not made in the ordinary course of business, that contemplate an exchange of consideration with an aggregate value greater than $25,000; and

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               (xvii) any agreement of guarantee, assumption or endorsement of, or any similar commitment with respect to, the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any person other than software licenses or professional services contracts entered into in the ordinary course of business.

          (b) Each Company Material Contract (i) is valid and binding on the Company and, to the knowledge of the Company, on the other parties thereto, and is in full force and effect, and (ii) subject to restrictions on assignment of the Material Contracts described in Section 3.12(b) of the Company Disclosure Schedule, upon consummation of the transactions contemplated by this Agreement, shall continue in full force and effect without penalty or other adverse consequence. The Company is not in breach or violation of, or default under, any Company Material Contract with a retailer (a “Retailer Company Material Contract”) and, to the knowledge of the Company, no other party to any Retailer Company Material Contract is in breach or violation thereof or default thereunder. The Company is not in material breach or material violation of, or material default under, any non-Retailer Company Material Contract and, to the knowledge of the Company, no other party to any non-Retailer Company Material Contract is in material breach or material violation thereof or material default thereunder

          (c) Except as set forth in Section 3.12(c) of the Company Disclosure Schedule, to the Company’s knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, (i) result in a breach or violation of, or default under, any Retailer Company Material Contract, (ii) result in a material breach or material violation of, or material default under, any non-Retailer Company Material Contract, (iii) give any entity the right to declare a default, seek damages or exercise any other remedy under any Company Material Contract, (iv) give any entity the right to accelerate the maturity or performance of any Company Material Contract or (v) give any entity the right to cancel, terminate or modify any Company Material Contract.

     3.13 Environmental Matters.

          (a) To the Company’s knowledge, the Company (i) is in compliance with all applicable Environmental Laws (as defined below), (ii) holds all Environmental Permits (as defined below) necessary to conduct the Company’s business and (iii) is in material compliance with its Environmental Permits.

          (b) The Company has not released Hazardous Materials (as defined below) on any real property owned or leased by the Company or, during their ownership or occupancy of such property, on any property formerly owned or leased by the Company, in violation of Environmental Laws in effect as of the date of this Agreement.

          (c) The Company has received no written request for information, or been notified that it is a potentially responsible party, under CERCLA (as defined below) or any similar Law of any state, locality or any other jurisdiction. The Company has not entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials and, to the knowledge of the Company, no investigation, litigation or other proceeding is pending or threatened in writing with respect thereto.

          (d) To the knowledge of the Company, none of the real property currently or formerly owned or leased by the Company is listed or, to the knowledge of the Company, proposed to be listed on the “National Priorities List” under CERCLA, as updated through the date of this Agreement, or any similar list of sites in the United States or any other jurisdiction requiring investigation or cleanup.

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     For purposes of this Agreement:

     “CERCLA” means the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended as of the date hereof.

     “Environmental Laws” means any Federal, state or local statute, law, ordinance, regulation, rule, code or order of the United States, or any other jurisdiction and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials, as in effect as of the date of this Agreement.

     “Environmental Permits” means any permit, approval, identification number, license and other authorization required under any applicable Environmental Law.

     “Hazardous Materials” means (i) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant or contaminant or waste under any applicable Environmental Law.

     3.14 Intellectual Property.

          (a) The Company owns or has a license to, and in any event possesses sufficient and legally enforceable rights with respect to, all Company Intellectual Property (as defined below) relevant to its business, as presently conducted, or necessary to conduct any such business without any conflict with or infringement or misappropriation of any rights or property of any person (“Infringement”), except for such items as have yet to be conceived or developed or that may reasonably be expected to be available for licensing on reasonable terms from third parties. Such ownership, licenses and rights are exclusive (A) except with respect to Inventions (as defined below) in the public domain that are not important differentiators of the Company’s business as currently conducted and as proposed to be conducted by the Company and (B) except with respect to standard, generally commercially available, “off-the-shelf” third party products. “Intellectual Property” means (i) inventions (whether or not patentable); trade names, trade and service marks, logos, domains, URLs, websites, addresses and other designations (“Marks”); works of authorship; mask works; data; technology, know-how, trade secrets, ideas and information; designs; formulas; algorithms; processes; methods; schematics; computer software (in source code and/or object code form); and all other intellectual property of any sort (“Inventions”) and (ii) patent rights; Mark rights; copyrights; mask work rights; sui generis database rights; trade secret rights; and all other intellectual and industrial property rights of any sort throughout the world, and all applications, registrations, issuances and the like with respect thereto (“IP Rights”). “Company Intellectual Property” means all Intellectual Property that is used, exercised, or exploited (“Used”) or is proposed by the Company to be used in any business of the Company, or that may be necessary to conduct any such business as presently conducted and as proposed to be conducted by the Company. All copyrightable matter within Company Intellectual Property that is relevant to the Company has been created by persons who were employees of the Company at the time of creation and no third party has or will have “moral rights” or rights to terminate any assignment or license with respect thereto.

          (b) To the extent included in Company Intellectual Property, Section 3.14(b) of the Company Disclosure Schedule lists (by name, number, jurisdiction and owner) all patents and patent applications; all registered and unregistered Marks; and all registered copyrights. All the foregoing (i) are valid, enforceable and subsisting, and (ii) along with all related filings, registrations and correspondence, have been provided to Parent. No cancellation, termination, expiration or abandonment

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of any of the foregoing (except natural expiration or termination at the end of the full possible term, including extensions and renewals) is anticipated by the Company. The Company has no knowledge of any material questions or challenges (or any potential basis therefor) with respect to the patentability or validity of any claims of any of the foregoing patents or patent applications or the validity (or any other aspect or status) of any such IP Rights.

          (c) Section 3.14(c) of the Company Disclosure Schedule lists: (i) all licenses, sublicenses and other agreements to which the Company is a party (or by which it or any Company Intellectual Property is bound or subject) and pursuant to which any person has been or may be assigned, authorized to Use, granted any lien or encumbrance regarding, or given access to any Company Intellectual Property. The Company has not entered into any agreement to indemnify, hold harmless or defend any other person with respect to any assertion of Infringement, other than indemnification provisions contained in standard forms of customer service or license agreements.

          (d) To the Company’s knowledge, no event or circumstance has occurred, exists or is contemplated (including, without limitation, the authorization, execution or delivery of this Agreement or the consummation of any of the transactions contemplated hereby) that (with or without notice or the lapse of time) could reasonably be expected to result in (i) the breach or violation of any license, sublicense or other agreement required to be listed in Section 3.14 of the Company Disclosure Schedule (or specifically exempted in Section 3.14 from being listed), (ii) the loss or expiration of any material right or option by the Company (or the gain thereof by any third party) under any such license, sublicense or other agreement, or (iii) except as otherwise set forth in those agreements listed in Section 3.14(d) of the Company Disclosure Schedules, the release, disclosure or delivery to any third party of any part of the source code of the Company’s products (“Company Source Materials”). Further, the Company makes all the same representations and warranties with respect to each license, sublicense and agreement listed on Section 3.14 of the Company Disclosure Schedule as are made with respect to the Company Material Contracts elsewhere in this Agreement.

          (e) There is, to the knowledge of the Company, no unauthorized Use, disclosure, or Infringement of any Company Intellectual Property by any third party, including, without limitation, any employee or former employee of the Company or any of its Subsidiaries. The Company has not brought or threatened any action, suit or proceeding against any third party for any Infringement of any Company Intellectual Property or any breach of any license, sublicense or agreement involving Company Intellectual Property.

          (f) The Company has taken all reasonable steps to protect and preserve the confidentiality of all Company Intellectual Property not otherwise disclosed in published patents or patent applications or registered copyrights (“Company Confidential Information”). All use by and disclosure to employees or others of Company Confidential Information has been pursuant to the terms of valid and binding written confidentiality and nonuse/restricted-use agreements or agreements that contain similar obligations. The Company has not disclosed or delivered to any third party, or permitted the disclosure or delivery to any escrow agent or other third party, any part of the Company Source Materials.

          (g) Each current and former employee and contractor of the Company has executed and delivered (and to the Company’s knowledge, is in compliance with) an agreement in substantially the form of the Company’s standard Proprietary Information and Inventions Agreement (in the case of an employee) or Consulting Agreement (in the case of a contractor) (which agreements provide valid written assignments to the Company of all title and rights to any Company Intellectual Property conceived or developed thereunder but not already owned by the Company by operation of Law).

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          (h) The Company has not received any communication alleging or suggesting that or questioning whether the Company has been or may be (whether in its past, current or proposed business or otherwise) engaged in, liable for or contributing to any Infringement, nor does the Company have any particular reason to expect that any such communication will be forthcoming.

          (i) To the Company’s knowledge, none of its employees or contractors is obligated under any agreement, commitment, judgment, decree, order or otherwise (an “Employee Obligation”) that would interfere with the use of his or her best efforts to promote the interests of the Company or that would conflict with any of their businesses as conducted or proposed to be conducted. Neither the execution nor delivery of this Agreement nor the conduct of the Company’s business as conducted or proposed to be conducted, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any Employee Obligation. To the Company’s knowledge, the Company is not Using, and it will not be necessary to Use, (i) any Inventions of any of their past or present employees or contractors (or people currently intended to be hired) made prior to their employment by the Company, or (ii) any confidential information or trade secret of any former employer of any such person.

          (j) To its knowledge, all Company Software is free of all viruses, worms, trojan horses and other material known infections or harmful routines and does not contain any bugs, errors, or problems of a material nature that, to the Company’s knowledge, would disrupt its operation or have a material adverse impact on the operation of other software programs or operating systems. “Company Software” means software, programs, databases and related documentation, in any form (including Internet sites, Internet content and links) that is (i) material to the operation of the business of the Company, including, but not limited to, that operated by the Company on its web sites or used by the Company in connection with processing customer orders, storing customer information, or storing or archiving data, or (ii) manufactured, distributed, sold, licensed or marketed by the Company.

          (k) The Company has obtained all approvals and agreements necessary or appropriate (including, without limitation, assurances from customers regarding further export) for exporting any Company Intellectual Property outside the United States and importing any Company Intellectual Property into any country in which they are or have been disclosed, sold or licensed for Use, and all such export and import approvals in the United States and throughout the world are valid, current, outstanding and in full force and effect.

     3.15 Taxes.

          (a) All Tax (as defined below) returns, statements, reports, declarations and other forms and documents (including without limitation estimated Tax returns and reports and material information returns and reports) required to be filed with any Tax Authority (as defined below) with respect to any Taxable (as defined below) period ending on or before the Closing (collectively, “Tax Returns” and individually, a “Tax Return”), by or on behalf of the Company, have been or will be completed and filed when due (including any extensions of such due date). Except to the extent that a reserve for Taxes has been established on the Company Reference Balance Sheet, all such Returns are true, complete and correct and were prepared in substantial compliance with all applicable Laws. Company has paid all Taxes due and owing (whether or not shown on any Tax Return) for all periods through the August 31, 2006, except to the extent reserves for Taxes have been established on the Company Reference Balance Sheet. The Company Interim Financial Statements (i) fully accrue all actual and contingent liabilities for Taxes (as defined below) with respect to all periods through August 31, 2006, and the Company has not and will not incur any Tax liability in excess of the amount reflected (excluding any amount thereof that reflects timing differences between the recognition of income for purposes of U.S. GAAP and for Tax purposes) on the Reference Balance Sheet included in the Company

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Interim Financial Statements with respect to such periods, and (ii) properly accrues in accordance with U.S. GAAP all material liabilities for Taxes payable after August 31, 2006, with respect to all transactions and events occurring on or prior to such date. All information set forth in the notes to the Company Interim Financial Statements relating to Tax matters is true, complete and accurate in all material respects. The Company has not incurred any material Tax liability since August 31, 2006 other than in the ordinary course of business and the Company has made adequate provisions for all Taxes since that date in accordance with U.S. GAAP on at least a quarterly basis.

          (b) The Company has withheld and paid to the applicable financial institution or Tax Authority all amounts required to be withheld. To the knowledge of the Company, no Tax Returns filed with respect to Taxable years through the Taxable year ended December 31, 2005, in the case of the United States, have been examined and closed. The Company (or any member of any affiliated or combined group of which the Company has been a member) has not granted any extension or waiver of the limitation period applicable to any Tax Returns that is still in effect and there is no material claim, audit, action, suit, proceeding, or (to the knowledge of the Company) investigation now pending or threatened against or with respect to the Company in respect of any Tax or assessment. No notice of deficiency or similar document of any Tax Authority has been received by the Company, and there are no liabilities for Taxes (including liabilities for interest, additions to Tax and penalties thereon and related expenses) with respect to the issues that have been raised (and are currently pending) by any Tax Authority that could, if determined adversely to the Company, materially and adversely affect the liability of the Company for Taxes. There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. The Company has never been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code. The Company is in full compliance with all the terms and conditions of any Tax exemption or other Tax-sharing agreement or order of a foreign government, and the consummation of the Merger will not have any adverse effect on the continued validity and effectiveness of any such Tax exemption or other Tax-sharing agreement or order. None of the assets of the Company directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code. None of the assets of the Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code. The Company has not made and will not make a deemed dividend election under Treas. Reg. §1.1502-32(f)(2) or a consent dividend election under Section 565 of the Code. The Company has never been a party (either as a distributing corporation, a distributed corporation or otherwise) to any transaction intended to qualify under Section 355 of the Code or any corresponding provision of state Law. The Company has not participated in (and will not participate in) an international boycott within the meaning of Section 999 of the Code. No Company Shareholder is other than a United States person within the meaning of the Code. The Company does not have and has not had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country and the Company has not engaged in a trade or business within any foreign country. The Company has never elected to be treated as an S-corporation under Section 1362 of the Code or any corresponding provision of Federal or state Law. All material elections with respect to the Company’s Taxes made during the fiscal years ending December 31, 2003, 2004 and 2005, are reflected on the Tax Returns for such periods, copies of which have been provided to Parent. After the date of this Agreement, no material election with respect to Taxes will be made without the prior written consent of Parent, which consent will not be unreasonably withheld or delayed. The Company is not party to any joint venture, partnership, or other arrangement or contract which could be treated as a partnership for Federal income tax purposes. The Company is not currently and never has been subject to the reporting requirements of Section 6038A of the Code. There is no agreement, contract or arrangement to which the Company is a party that could, individually or collectively, result in the payment of any amount that would not be deductible by reason of Sections 280G (as determined without regard to Section 280G(b)(4)), 162 (other than 162(a)) or 404 of the Code. The Company is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten or arising under operation of Federal Law as a result of being a member of

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a group filing consolidated Tax Returns, under operation of certain state Laws as a result of being a member of a unitary group, or under comparable Laws of other states or foreign jurisdictions) that includes a party other than the Company nor does the Company owe any amount under any such agreement. The Company has previously provided or made available to Parent true and correct copies of all income, franchise, and sales Tax Returns, and, as reasonably requested by Parent, prior to or following the date hereof, presently existing information statements and reports. The Company is not, and has not been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Other than by reason of the Merger, the Company has not been and will not be required to include any material adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any comparable provision under state or foreign Tax Laws as a result of transactions, events or accounting methods employed prior to the Merger.

          (c) For purposes of this Agreement, the following terms have the following meanings: “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and all taxes including, without limitation, (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign) (a “Tax Authority”), (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any Taxable period or as the result of being a transferee or successor thereof and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other person. As used in this Section 3.15, the term “Company” means the Company and any entity included in, or required under U.S. GAAP to be included in, any of the Company Audited Financial Statements or the Company Interim Financial Statements.

          (d) The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. The Company has not consummated or participated in, and is not currently participating in, any transaction which was or is a “Tax shelter” transaction as defined in Section 6662, 6011, 6111 or 6112 of the Code, the Regulations or other published guidance from the Internal Revenue Service.

     3.16 Vote Required. The only votes of the holders of any classes or series of capital stock of the Company necessary to approve and adopt this Agreement, the Merger and the other transactions contemplated by this Agreement are the affirmative vote of the holders of at least a majority of the outstanding shares of the Company Common Stock, Company Series A Preferred Stock and Company Series A1 Preferred Stock, voting as separate classes, in favor of the approval and adoption of this Agreement and the Merger, and at least seventy five percent (75%) of all outstanding shares of the Company Common Stock, Company Series A Preferred Stock and Company Series A1 Preferred Stock voting together as a single class.

     3.17 Assets; Absence of Liens and Encumbrances. Except as set forth in Section 3.17 of the Company Disclosure Schedule, the Company owns, leases or has the legal right to use all of the material assets, properties and rights of every kind, nature, character and description, including, without limitation, real property and personal property (other than Intellectual Property, which is covered by Section 3.14 hereof), used or intended to be used in the conduct of the business of the Company or otherwise owned or leased by the Company and, with respect to contract rights, is a party to and enjoys

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the right to the benefits of all material contracts, agreements and other arrangements used or intended to be used by the Company in or relating to the conduct of the business of the Company (all such properties, assets and contract rights being the “Company Assets”). The Company has good and marketable title to, or, in the case of leased or subleased Company Assets, valid and subsisting leasehold interests in, all the Company Assets, free and clear of all mortgages, liens, pledges, charges, claims, defects of title, restrictions, infringements, security interests or encumbrances of any kind or character (“Liens”) except for (x) Liens for current Taxes not yet due and payable, and (y) Liens that have arisen in the ordinary course of business and that do not, individually or in the aggregate, materially detract from the value, or materially interfere with the present or contemplated use, of the Company Assets subject thereto or affected thereby. The equipment of the Company used in the operations of their business is, taken as a whole, in good operating condition and repair, ordinary wear and tear excepted.

     3.18 Owned Real Property. The Company does not own any real property.

     3.19 Certain Interests.

          (a) No officer or director of the Company and, to the knowledge of the Company, no immediate relative or spouse (or immediate relative of such spouse) who resides with, or is a dependent of, any such officer or director and to the knowledge of the Company, no holder of greater than 1% of the voting power of the Company or its affiliates:

               (i) has any direct or indirect financial interest in any creditor, competitor, supplier manufacturer, agent, representative, distributor or customer of the Company; provided, however, that the ownership of securities representing no more than 1% of the outstanding voting power of any creditor, competitor, supplier manufacturer, agent, representative, distributor or customer, and which are listed on any national securities exchange or traded actively in the national over-the-counter market, shall not be deemed to be a “financial interest” as long as the person owning such securities has no other connection or relationship with such creditor, competitor, supplier manufacturer, agent, representative, distributor or customer;

               (ii) owns, directly or indirectly, in whole or in part, or has any other interest in, any tangible or intangible property that the Company uses in the conduct of its business (except for any such ownership or interest resulting from the ownership of securities in a public company);

               (iii) has any claim or cause of action against the Company; or

               (iv) has any outstanding indebtedness to the Company.

          (b) Except for the payment of employee compensation in the ordinary course of business, consistent with past practice, and except as described in Section 3.19(b) of the Company Disclosure Schedule, the Company has no liability or any other obligation of any nature whatsoever to any Company Shareholder or any affiliate thereof or to any officer or director of the Company or, to the knowledge of the Company, to any immediate relative or spouse (or immediate relative of such spouse) of any such officer or director.

     3.20 Insurance Policies. Section 3.20 of the Company Disclosure Schedule sets forth (i) a true and complete list of all insurance policies to which the Company is a party or is a beneficiary or named insured and (ii) any claims made thereunder or made under any other insurance policy within the past three years other than claims made by employees under the Company’s health plans. True and complete copies of all such policies have been provided to Parent. All premiums due on such policies

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have been paid, and the Company is otherwise in compliance with the material terms of such policies. The Company has not failed to give any notice or present any material claim under any such policy in a timely fashion. Such insurance to the date hereof has been maintained in full force and effect and not been canceled or changed, except to extend the maturity dates thereof. Since December 31, 2005, the Company has not received any notice or other communication regarding any actual or possible (i) cancellation or threatened termination of any insurance policy, (ii) refusal of any coverage or rejection of any claim under any insurance policy (other than claims made by employees under the Company’s health plans), or (iii) material adjustment in the amount of the premiums payable with respect to any insurance policy.

     3.21 Restrictions on Business Activities. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or to which the Company is a party which has or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice material to the Company, any acquisition of property by the Company or the conduct of business by the Company as currently conducted or as proposed to be conducted.

     3.22 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the origination, negotiation or execution of this Agreement, the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

     3.23 Customers and Suppliers. No customer has, within the past 12 months, cancelled or otherwise terminated, or made any threat to cancel or terminate, its relationship with the Company, or decreased materially its usage of the Company’s services or products. No material supplier of the Company has cancelled or otherwise terminated any contract with the Company prior to the expiration of the contract term, or to the Company’s knowledge, made any threat to the Company to cancel, reduce the supply or otherwise terminate its relationship with the Company. The Company has not (i) breached (so as to provide a benefit to the Company that was not intended by the parties) any agreement with or (ii) engaged in any fraudulent conduct with respect to, any customer or supplier of the Company.

     3.24 Accounts Receivable; Bank Accounts. All accounts receivable of the Company reflected on the Company Reference Balance Sheet are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable), net of the applicable reserve for bad debts on the Company Reference Balance Sheet. All accounts receivable reflected in the financial or accounting records of the Company that have arisen since the date of Company Reference Balance Sheet are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable), net of a reserve for bad debts in an amount proportionate to the reserve shown on the Company Reference Balance Sheet. Section 3.24 of the Company Disclosure Schedule describes each account maintained by or for the benefit of the Company at any bank or other financial institution.

     3.25 Powers of Attorney. There are no outstanding powers of attorney executed on behalf of the Company.

     3.26 Warranties. No product or service manufactured, sold, leased, licensed or delivered by the Company is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than the applicable standard terms and conditions of sale or lease of the Company, which are set forth in Section 3.26 of the Company Disclosure Schedule.

     3.27 Books and Records. The minute books and other similar records of the Company contain complete and accurate records of all actions taken at any meetings of the Company’s

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shareholders, Board of Directors or any committee thereof and of all written consents executed in lieu of the holder of any such meeting. The books and records of the Company accurately reflect in all material respects the assets, liabilities, business, financial condition and results of operations of the Company and have been maintained in accordance with good business and bookkeeping practices.

     3.28 No Misstatements. No representation or warranty made by the Company in this Agreement, the Company Disclosure Schedule or any certificate delivered or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

     3.29 409A Compliance. No stock options, stock appreciation rights or other equity-based awards issued or granted by the Company are subject to the requirements of Section 409A of the Code. Each “nonqualified deferred compensation plan” (as such term is defined under Section 409A(d)(1) of the Code and the guidance thereunder) under which the Company makes, is obligated to make or promises to make, payments (each, a “409A Plan”) complies in all material respects, in both form and operation, with the requirements of Section 409A of the Code and the guidance thereunder. No payment to be made under any 409A Plan, to the knowledge of the Company, is or will be subject to the penalties of Section 409A(a)(1) of the Code.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     Parent and Merger Sub hereby represent and warrant to the Company that the statements contained in this Article IV are true and correct, except as set forth in the disclosure schedule delivered by Parent to the Company concurrently with the execution of this Agreement (the “Parent Disclosure Schedule”). The Parent Disclosure Schedule shall be arranged according to specific sections in this Article IV and shall provide exceptions to, or otherwise qualify in reasonable detail, only the corresponding section in this Article IV and any other section hereof where it is clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed, that the disclosure is intended to apply to such other section.

     4.1 Organization and Qualification.

          (a) Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and otherwise hold and operate its properties and other assets and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such corporate power and authority have not had, and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect (as defined below). Parent is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing has not had, and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The term “Parent Material Adverse Effect” means any event, change or effect that is materially adverse to the business, operations, condition (financial or otherwise), assets (tangible or intangible), liabilities, or results of operations of Parent and its subsidiaries taken as a whole, except for any such events, changes or effects resulting from or arising in connection with (i) any changes in general economic or business conditions that do not disproportionately impact Parent and its

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subsidiaries taken as a whole, or (ii) any changes or events affecting the industry in which Parent and its subsidiaries operate that do not disproportionately impact Parent and its subsidiaries taken as a whole.

          (b) Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California.

     4.2 Certificate of Incorporation and Bylaws. Parent has heretofore made available to the Company a complete and correct copy of (a) the Certificate of Incorporation and the Bylaws of Parent including all amendments thereto, (b) the minute books containing all consents, actions and meeting of the stockholders of Parent and Parent’s Board of Directors and any committees thereof, and (c) the stock transfer books of Parent setting forth all issuances or transfers of any capital stock of Parent. Such Certificate of Incorporation and Bylaws are in full force and effect. Parent is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws. The corporate minute books, stock certificate books, stock registers and other corporate records of Parent are complete and accurate, and the signatures appearing on all documents contained therein are the true or facsimile signatures of the persons purported to have signed the same.

     4.3 Capitalization.

          (a) As of the date hereof, the authorized capital stock of Parent consists of (i) 51,300,000 shares of Parent Common Stock and (ii) 27,235,729 shares of preferred stock, par value $0.001 per share, of Parent (“Parent Preferred Stock”). As of October 3, 2006, (i) 27,022,234 shares of Parent Preferred Stock were issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, (ii) 10,949,221 shares of Parent Common Stock were issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, (iii) options to purchase 10,197,968 shares of Parent Common Stock were issued and outstanding under Parent’s 1999 Equity Incentive Plan, (iv) options to purchase 999,056 shares of Parent Common Stock were available for grant under Parent’s 1999 Equity Incentive Plan, (v) warrants to purchase 150,000 shares of Parent Common Stock were issued and outstanding, and (vi) warrants to purchase 213,495 shares of Parent Preferred Stock were issued and outstanding (collectively, the “Parent Fully Diluted Total”). Except as set forth above, there are no options, warrants or other rights, agreements, arrangements or commitments of any character, whether or not contingent, relating to the issued or unissued capital stock of the Parent or obligating the Parent to issue or sell any share of capital stock of, or other equity interest in, the Parent. All shares of capital stock of Parent so subject to issuance, upon issuance in accordance with the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable.

     4.4 Authority Relative to This Agreement. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, and to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the Merger and the other transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to consummate the Merger and the other transactions contemplated by this Agreement (other than the filing and recordation of appropriate merger documents as required by the CGCL). This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or

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similar Laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity.

     4.5 No Conflict; Required Filings and Consents.

          (a) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each of Parent and Merger Sub will not, (i) conflict with or violate their respective organizational documents, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 4.5(b) have been obtained and all filings and obligations described in Section 4.5(b) have been made or complied with, conflict with or violate in any material respect any Law applicable to Parent or Merger Sub or by which any property or asset of Parent or Merger Sub is bound or affected, or (iii) conflict with, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Parent or Merger Sub pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or Merger Sub is a party, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults, or other occurrences that could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

          (b) Except for the consents of Silicon Valley Bank and Gold Hill Venture Lending 03, LP under that certain Loan and Security Agreement dated July 25, 2006, and the consent of Silicon Valley Bank under certain additional loan agreements, copies of which have been provided to the Company, the execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each of Parent and Merger Sub will not, require any consent, approval, order, authorization, registration or permit of, or filing with or notification to, any Governmental Entity, except (i) for the filing and recordation of appropriate merger documents as required by the CGCL, (ii) for applicable requirements of Federal and state securities laws, and (iii) for such other consents, approvals, orders authorizations, registrations or permits, filings or notifications that if not obtained or made could not reasonably be expected, individually or in the aggregate, to prevent or materially delay the consummation of the transactions contemplated by this Agreement.

     4.6 Permits; Compliance.

     (a) Parent is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for Parent to own, lease and otherwise hold and operate its properties and other assets and to carry on its business as it is now being conducted and as currently proposed to be conducted (the “Parent Permits”), except where the failure of Parent to possess such Parent Permits could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. All Parent Permits are in full force and effect and will remain so after the Closing and no suspension or cancellation of any Parent Permit is pending or, to the knowledge of Parent, threatened. Parent has not received any notice or other communication from any Governmental Entity regarding (i) any actual or possible violation of or failure to comply with any term or requirement of any Parent Permit, or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Parent Permit.

     (b) Parent is not in conflict with, or in default or violation of, in each case, in any material respect, (i) any Law applicable to Parent or by which any property or asset of Parent is bound or affected, (ii) any material note, bond, mortgage, indenture, contract, agreement, lease, license,

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permit, franchise or other instrument or obligation to which Parent is a party or by which Parent or any property or asset of Parent is bound or affected, or (iii) any Parent Permit.

     4.7 Financial Statements. True and complete copies of (i) the audited balance sheets of Parent as of the last day of February 2004, 2005, and 2006, and the related audited statements of operations, changes in stockholders’ equity and changes in cash flows for the years then ended, together with all related notes and schedules thereto (collectively referred to herein as the “Parent Audited Financial Information”), and (ii) the unaudited balance sheet of Parent as of August 31, 2006, and the related statements of operations, changes in stockholders’ equity and changes in cash flows for the six months ended August 31, 2006 (collectively referred to herein as the “Parent Interim Financial Information”), are attached as Section 4.7(a) of the Parent Disclosure Schedule. The Parent Audited Financial Statements and the Parent Interim Financial Information (including, in each case, any notes thereto) were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by U.S. GAAP) and for (i) the absence of footnotes, and (ii) normal, recurring year-end adjustments that would not reasonably be expected, either individually or in the aggregate, to be material) and each present fairly, in all material respects, the consolidated financial position of Parent as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to be material).

     4.8 Absence of Certain Changes or Events. Since August 31, 2006 until the date of this Agreement, except as contemplated by or as disclosed in this Agreement (including as disclosed in the Parent Interim Financial Information), the Parent has conducted its business only in the ordinary course and in a manner consistent with past practice and, since such date until the date of this Agreement, (a) there has not been any Parent Material Adverse Effect and (b) the Parent has not taken or legally committed to take any of the following actions:

          (a) any change in the assets, liabilities, financial condition or operating results of the Parent from that reflected in the Parent Interim Financial Information, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse;

          (b) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results, prospects or business of the Parent (as such business is presently conducted and as it is proposed to be conducted);

          (c) any waiver by the Parent of a valuable right or of a material debt owed to it;

          (d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Parent, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Parent (as such business is presently conducted and as it is proposed to be conducted);

          (e) any material change or amendment to a material contract or arrangement by which the Parent or any of its assets or properties is bound or subject;

          (f) any sale, assignment or transfer of any intellectual property of Parent that is necessary to conduct its business, other than in the ordinary course of business consistent with past practice;

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          (g) any resignation or termination of employment of any key officer of the Parent; and the Parent, to its knowledge, does not know of the impending resignation or termination of employment of any such officer or key employee;

          (h) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Parent;

          (i) any mortgage, pledge, transfer of a security interest in, or lien, created by the Parent, with respect to any of its material properties or assets, except Liens for Taxes not yet due or payable and Liens that arise in the ordinary course of business and do not materially impair the Parent’s ownership or use of such property or assets;

          (j) any declaration, setting aside or payment or other distribution in respect of any of the Parent’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Parent, other than repurchase of Parent Common Stock from employees, consultants or other persons performing services for Parent pursuant to agreements under which Parent has the option to repurchase such shares at cost upon the termination of employment or other services;

          (k) to the Parent’s knowledge, any other event or condition of any character that might materially and adversely affect the assets, properties, financial condition, operating results or business of the Parent (as such business is presently conducted and as it is proposed to be conducted); or

          (l) any agreement or commitment by the Parent to do any of the things described in this Section 4.8.

     4.9 Absence of Litigation. There is no litigation, suit, claim, action, proceeding or investigation pending or, to the knowledge of Parent, threatened against the Parent or any property or asset owned or used by Parent or any person whose liability Parent has or may have assumed, either contractually or by operation of Law, before any arbitrator or Governmental Entity (a “Parent Legal Proceeding”) that could reasonably be expected, if resolved adversely to Parent, to (i) materially impair the operations of Parent as currently conducted, including, without limitation, any claim of Infringement of any intellectual property right, (ii) materially impair the ability of Parent to perform its obligations under this Agreement or (iii) prevent, delay or make illegal the consummation of the transactions contemplated by this Agreement. To Parent’s knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that could reasonably be expected to give rise to or serve as a basis of the commencement of any Parent Legal Proceeding. None of Parent, its officers or directors (in their capacity as such) or any material property or asset of Parent is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of Parent, continuing investigation by, any Governmental Entity, or any order, writ, judgment, injunction, decree, determination or award of any court, arbitrator or Governmental Entity. Parent does not have any plans to initiate any Parent Legal Proceeding against any third party.

     4.10 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the origination, negotiation or execution of this Agreement, the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.

     4.11 Valid Issuance of Parent Shares. The shares of Parent Common Stock to be issued pursuant to this Agreement will, when issued, be duly authorized, validly issued, fully paid and non-assessable, and assuming the accuracy of the Company’s representations, warranties and covenants hereunder and the accuracy of the Company Shareholders’ representations, warranties and covenants in

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the Shareholder Certificates, will be issued in compliance with all applicable Federal and state securities laws.

     4.12 Taxes.

           (a) All Tax Returns by or on behalf of Parent due on or before the Closing (giving effect to any available extensions of such due date) have been or will be completed and filed when due (including any extensions of such due date). Except to the extent that a reserve for Taxes has been established on the Parent Reference Balance Sheet, all such Tax Returns are true, complete and correct and were prepared in substantial compliance with all applicable Laws. Parent has paid all Taxes due and owing (whether or not shown on any Tax Return) for all periods through the August 31, 2006, except to the extent reserves for Taxes have been established on the Parent Reference Balance Sheet. Except as set forth on Schedule 4.12 of the Parent Disclosure Schedule, Parent Interim Financial Information (i) fully accrue all actual and contingent liabilities for Taxes with respect to all periods through August 31, 2006 and Parent has not and will not incur any Tax liability in excess of the amount reflected (excluding any amount thereof that reflects timing differences between the recognition of income for purposes of U.S. GAAP and for Tax purposes) on the Parent Reference Balance Sheet included in the Parent Interim Financial Information with respect to such periods, and (ii) properly accrues in accordance with U.S. GAAP all material liabilities for Taxes payable after August 31, 2006 with respect to all transactions and events occurring on or prior to such date. Parent has not incurred any material Tax liability since August 31, 2006 other than in the ordinary course of business.

          (b) Parent has withheld and paid to the applicable financial institution or Tax Authority all amounts required to be withheld. To the knowledge of Parent, no Tax Returns filed with respect to Taxable years through the Taxable year ended February 28, 2006, in the case of the United States, have been examined and closed. Parent (or any member of any affiliated or combined group of which Parent has been a member) has not granted any extension or waiver of the limitation period applicable to any Tax Returns that is still in effect and there is no material claim, audit, action, suit, proceeding, or (to the knowledge of Parent) investigation now pending or threatened against or with respect to Parent in respect of any Tax or assessment. Since February 28, 2006 no notice of deficiency or similar document of any Tax Authority has been received by Parent, and there are no liabilities for Taxes (including liabilities for interest, additions to Tax and penalties thereon and related expenses) with respect to the issues that have been raised (and are currently pending) by any Tax Authority that could, if determined adversely to Parent, materially and adversely affect the liability of Parent for Taxes. There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of Parent. Parent has never been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code. Parent is in full compliance with all the terms and conditions of any Tax exemption or other Tax-sharing agreement or order of a foreign government, and the consummation of the Merger will not have any adverse effect on the continued validity and effectiveness of any such Tax exemption or other Tax-sharing agreement or order. None of the assets of Parent is “tax-exempt use property” within the meaning of Section 168(h) of the Code. Parent has not made and will not make a deemed dividend election under Treas. Reg. §1.1502-32(f)(2) or a consent dividend election under Section 565 of the Code. Parent has never been a party (either as a distributing corporation, a distributed corporation or otherwise) to any transaction intended to qualify under Section 355 of the Code or any corresponding provision of state Law. Parent has not participated in (and will not participate in) an international boycott within the meaning of Section 999 of the Code. Parent does not have and has not had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country. Parent has never elected to be treated as an S-corporation under Section 1362 of the Code or any corresponding provision of Federal or state Law. All material elections with respect to Parent’s Taxes made during the fiscal years ended the last day of February 2004, 2005 and 2006, are reflected on Parent’s Tax Returns for such periods, copies of which have been provided to Parent. Parent is not currently and never has been subject to the reporting requirements of Section 6038A of the Code. Parent is not, and has not been, a United States real property

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holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Other than by reason of the Merger, Parent has not been and will not be required to include any material adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any comparable provision under state or foreign Tax Laws as a result of transactions, events or accounting methods employed prior to the Merger.

          (c) Parent has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. Parent has not consummated or participated in, and is not currently participating in, any transaction which was or is a “Tax shelter” transaction as defined in Section 6662, 6011, 6111 or 6112 of the Code, the Regulations or other published guidance from the Internal Revenue Service.

          (d) As used in this Section 4.12, the term “Parent” means Parent and any entity included in, or required under U.S. GAAP to be included in, any of the Parent Audited Financial Statements or the Parent Interim Financial Information.

     4.13 Compliance. Parent has complied and is in compliance with all governmental laws, regulations and orders regarding environmental, employee benefit and labor matters applicable to its business, properties and personnel with which a failure to comply would be reasonably likely to have a Parent Material Adverse Effect. Parent has not received notice from any applicable governmental authority of any alleged violation of any such laws, regulations or orders, and knows of no basis existing which is likely to result in a violation thereof that would have a Parent Material Adverse Effect. To its knowledge, Parent is not in breach of any promise, commitment or agreement the breach of which would be reasonably likely to have a Parent Material Adverse Effect.

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

     5.1 Conduct of Business by the Company Pending the Merger. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, the Company agrees (except to the extent that Parent shall otherwise consent in writing), to carry on its business in the usual, regular and ordinary course and in substantially the same manner as previously conducted, to pay its debts and Taxes when due (subject to good faith disputes over such debts or Taxes), to pay or perform other obligations when due and, to the extent consistent with such business, to use all reasonable efforts consistent with past practices and policies to preserve intact its present business organization, keep available the services of its present officers and key employees and consultants and preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that its goodwill and ongoing businesses would be unimpaired at the Effective Time. The Company shall promptly notify Parent of any event or occurrence not in the ordinary course of business of the Company.

     By way of amplification and not limitation, except as specifically contemplated by this Agreement or as specifically set forth in Section 5.1 of the Company Disclosure Schedule, the Company shall not, between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following without the prior written consent of Parent:

          (a) amend or otherwise change its Articles of Incorporation or Bylaws;

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          (b) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale, pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary, except pursuant to the terms of options, warrants or preferred stock outstanding on the date of this Agreement;

          (c) sell, lease, license, pledge, grant, encumber or otherwise dispose of any of its properties or assets which are material, individually or in the aggregate, to its business, except in the ordinary course of business, consistent with past practice;

          (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock;

          (e) split, combine, subdivide, redeem or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or purchase or otherwise acquire, directly or indirectly, any shares of its capital stock except from former employees, directors and consultants in accordance with agreements providing for the repurchase of shares in connection with any termination of service by such party;

          (f) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest or any assets in any corporation, partnership, other business organization or any division thereof;

          (g) institute or settle any Company Legal Proceeding;

          (h) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances;

          (i) authorize any capital expenditure in excess of $25,000 individually or in the aggregate;

          (j) enter into any lease or contract for the purchase or sale of any property, real or personal;

          (k) waive or release any material right or claim;

          (l) increase, or agree to increase, the compensation payable, or to become payable, to its officers or employees, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any of its directors, officers or other employees, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided, however, that the foregoing provisions of this subsection shall not apply to any amendments to employee benefit plans described in Section 3(3) of ERISA that may be required by Law;

          (m) accelerate, amend or change the period of exercisability or the vesting schedule of restricted stock or Company Options granted under any option plan, employee stock plan or other agreement or authorize cash payments in exchange for any Company Options granted under any of such plans, except as specifically required by the terms of such plans or any such agreement or any

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related agreement in effect as of the date of this Agreement and disclosed in the Company Disclosure Schedule;

          (n) extend any offers of employment to potential employees, consultants or independent contractors or terminate any existing employment relationships;

          (o) amend or terminate any Company Material Contract;

          (p) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 5.1;

          (q) other than in the ordinary course of business consistent with past practice, enter into any licensing, distribution, OEM, sponsorship, advertising, merchant program or other similar contracts, agreements or obligations that may not be cancelled without penalties by the Company upon notice of 30 days or less;

          (r) enter into any contract or agreement material to the business, results of operations or financial condition of the Company;

          (s) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted, unasserted, contingent or otherwise);

          (t) take any action with respect to accounting policies, principles or procedures;

          (u) make or change any material Tax or accounting election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any Subsidiary, surrender any right to claim refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any Subsidiary, or take any other action or omit to take any action that would have the effect of increasing the Tax liability of the Company or any Subsidiary or Parent;

          (v) (i) sell, assign, lease, terminate, abandon, transfer, permit to be encumbered or otherwise dispose of or grant any security interest in and to any item of the Company Intellectual Property, in whole or in part, (ii) grant any license with respect to any Company Intellectual Property, other than a license of software granted to customers of the Company or any Subsidiary to whom the Company or any Subsidiary licenses such software in the ordinary course of business, (iii) develop, create or invent any Intellectual Property jointly with any third party, or (iv) disclose, or allow to be disclosed, any confidential Company Intellectual Property, unless such disclosure is subject to a confidentiality or non-disclosure covenant protecting against the loss of its confidentiality;

          (w) make (or become obligated to make) any bonus payments to any of its officers or employees;

          (x) revalue any of its assets, including writing down the value of inventory or writing off notes or accounts receivable;

          (y) fail to maintain its equipment and other assets in good working condition and repair according to the standards it has maintained up to the date of this Agreement, subject only to ordinary wear and tear;

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          (z) take any action or fail to take any action that would cause there to be a Company Material Adverse Effect;

          (aa) permit any insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Parent, except policies providing coverage for losses not in excess of $25,000 which are replaced without diminution of or gaps in coverage;

          (bb) write off as uncollectible, or establish any extraordinary reserve with respect to, any account receivable or other indebtedness; or

          (cc) take, or agree in writing or otherwise to take, any of the actions described in subsections (a) through (bb) above, or any action which is reasonably likely to make any of the Company’s representations or warranties contained in this Agreement untrue or incorrect in any material respect on the date made (to the extent so limited) or as of the Effective Time.

     5.2 Litigation. Each of the Company and Parent shall notify the other in writing promptly after learning of any material claim, action, suit, arbitration, mediation, proceeding or investigation by or before any court, arbitrator or arbitration panel, board or other Governmental Entity initiated by it or against it, or known by it to be threatened against it or any of its officers, directors, employees or stockholders in their capacity as such.

     5.3 Notification of Certain Matters. Parent shall give prompt notice to the Company, and the Company shall give prompt notice to Parent, of (i) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause (x) any representation or warranty contained in this Agreement to be untrue or inaccurate or (y) any covenant, condition or agreement contained in this Agreement not to be complied with or satisfied; or (z) any Company Material Adverse Effect or Parent Material Adverse Effect, as the case may be; and (ii) any failure or inability of Parent or the Company, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.3 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. The parties hereto acknowledge that reliance shall not be an element of any claim or cause of action by any party hereto for misrepresentation or breach of a representation, warranty or covenant under this Agreement.

ARTICLE VI

ADDITIONAL AGREEMENTS

     6.1 Employee Matters.

          (a) Except for the termination of the Company’s 401(k) Plan, as anticipated below, all employees of the Company shall continue in their existing benefit plans until such time as, in Parent’s sole discretion, an orderly transition can be accomplished to employee benefit plans and programs maintained by Parent for its and its affiliates’ employees in the United States. Parent shall take such reasonable actions, to the extent permitted by Parent’s benefits programs, as are necessary to allow eligible employees of the Company to participate in the health, welfare and other benefits programs of Parent or alternative benefits programs in the aggregate that are substantially equivalent to those applicable to employees of Parent in similar functions and positions on similar terms (it being understood that equity incentive plans are not considered employee benefits). Pending such action, Parent shall maintain the effectiveness of the Company’s benefit plans.

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          (b) As soon as practicable following the execution of this Agreement, Parent shall tender employment offer letters (collectively, the “Offer Letters,” and, individually, an “Offer Letter”) to the individuals set forth on Schedule III hereto.

          (c) Prior to the Effective Time, the Company shall take all necessary actions to obtain the requisite shareholder approval under Section 280G(b)(5) of the Code of any payments or benefits to the extent that they are “excess parachute payments” within the meaning of Section 280G of the Code and shall require all “disqualified individuals” within the meaning of Section 280G of the Code to subject such excess parachute payments to the shareholder approval requirements of Section 280G(b)(5) of the Code, as contemplated in the Proposed Treasury Regulations promulgated thereunder. The Company further agrees that whether or not its shareholders approve any such excess parachute payments, neither Parent nor the Surviving Corporation shall have any responsibility or liability with respect to any excise taxes owed by the recipients of any such payments.

          (d) By giving the Company written notice not less than three business days prior to the Closing Date, Parent may request that the Company take all necessary corporate action to terminate its 401(k) plan (the “401(k) Plan”) effective as of the date immediately prior to the Closing Date, but contingent on the Closing. If Parent provides such notice to the Company, Parent shall receive from the Company evidence that the Company’s Board of Directors has adopted resolutions to terminate the 401(k) Plan (the form and substance of which resolutions shall be subject to review and approval of Parent), effective as of the date immediately preceding the Closing Date.

          (e) The Company and, as applicable, each Company ERISA Affiliates agree to terminate any and all group severance, separation or salary continuation plans, programs or arrangements immediately prior to Closing. Parent shall receive from the Company evidence that the plans, programs or arrangements of the Company and, as applicable, each ERISA Affiliate have been terminated pursuant to resolutions adopted by of each such entity’s Board of Directors (the form and substance of which resolutions shall be subject to review and approval of the Parent), effective as of the day immediately preceding the Closing Date but contingent on the Closing.

     6.2 Further Action; Consents; Filings. Upon the terms and subject to the conditions hereof, each of the parties hereto shall use its reasonable best efforts to (a) take, or cause to be taken, all appropriate action and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the Merger and the other transactions contemplated by this Agreement, (b) obtain from any Governmental Entity or any other person all consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Parent or the Company or any of their subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement, and (c) make all necessary filings, and thereafter make any other required submission, with respect to this Agreement, the Merger and the other transactions contemplated by this Agreement required under applicable Law. The parties hereto shall cooperate with each other in connection with the making of all such filings, including by providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, by accepting all reasonable additions, deletions or changes suggested in connection therewith.

     6.3 No Public Announcement. The Company shall not issue any press release or otherwise make any public statements with respect to this Agreement, the Merger or any of the other transactions contemplated by this Agreement without the prior written consent of Parent, which consent shall not be unreasonably withheld to the extent any blackout notice is required under the 401(k) Plan.

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     6.4 Expenses. All costs and expenses incurred in connection with this Agreement, the Merger and other transactions contemplated by this Agreement (including, without limitation, the fees and expenses of financial advisors, accountants and legal counsel) (i) if incurred by Parent and Merger Sub, shall be paid by Parent and (ii) if incurred by the Company or its shareholders (the “Shareholder Expenses”), shall be paid by the Company Shareholders.

     6.5 Conversion Schedule. Simultaneously with the execution of this Agreement, the Company shall deliver a pro-forma Conversion Schedule to Parent, certificated by the Company’s Chief Executive Officer, showing (a) the name of each holder of Company Stock, each holder of a Company Option and each holder of a Company Warrant, (b) the number of shares of Company Stock owned by such holder and/or issuable upon exercise of each Company Option and Company Warrant held by such holder (separated into shares of Company Common Stock, Company Series A Preferred Stock, December 2004 Company Series A1 Preferred Stock, March 2005 Company Series A1 Preferred Stock and Series A1 Warrant Shares), (c) the portion of the Cash Consideration to which such holder is entitled pursuant to Article II above, (d) the portion of the Parent Shares to which such holder is entitled pursuant to Article II above, and (e) the portion of the Promissory Note Amount to which such holder is entitled pursuant to Article II above. At the Closing, the Company shall deliver a final Conversion Schedule to Parent, certificated by the Company’s Chief Executive Officer, showing the information described above as of the Effective Time and reflecting exercises (including contingent exercises) of Company Options and Company Warrants between the date of execution of this Agreement and the Closing.

     6.6 Tax Filings. Unless otherwise advised by its tax advisers, Parent will not knowingly take any position in its tax filings inconsistent with the treatment of this transaction as a tax-free reorganization within the meaning of Section 368(a) of the Code.

     6.7 Shareholder Solicitation. Parent and Company will cooperate in preparing and distributing to Company shareholders as soon as practicable after execution of this Agreement an information statement to solicit the approval of the shareholders of Company to the Merger, this Agreement and the transactions contemplated hereunder (the “Information Statement”). The Company shall ensure that such approval is solicited and obtained in compliance with applicable Law, the Company’s Articles of Incorporation and Bylaws, and all other applicable legal requirements. Each party covenants that the information it includes in the Information Statement or otherwise provides to the shareholders of Company in connection with the solicitation of their consent to the Merger will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Information Statement shall include the unanimous recommendation of the Company’s Board of Directors in favor of the Merger and this Agreement. No amendment or supplement to the Information Statement will be made by the Company without the prior approval of Parent, which shall not be unreasonably withheld. The Company will engage an independent investment advisor to meet with and advise Company shareholders regarding the Merger and the implications of their receipt of shares of Parent Common Stock. Parent agrees that up to $20,000 of expenses for this independent investment advisor may be incurred by the Company. Any expenses above $20,000 shall be paid by the Company Shareholders.

     6.8 Access to Information; Confidentiality. From the date of this Agreement to the Effective Time, the Company shall: (i) provide to Parent (and its officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other representatives (collectively, “Representatives”)) access at reasonable times upon prior notice to the directors, officers, employees, agents, books, records, properties, offices and other facilities of the Company, and (ii) furnish promptly such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of the Company as reasonably requested by Parent or its Representatives.

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     6.9 No Solicitation by the Company.

          (a) The Company will not, directly or indirectly, and will instruct its officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other representatives (collectively, “Company Representatives”) not to, directly or indirectly, solicit, initiate or encourage (including by way of furnishing nonpublic information), or take any other action to facilitate, any inquiries or the making of any proposal or offer (including, without limitation, any proposal or offer to its shareholders) that constitutes, or may reasonably be expected to lead to, any Company Competing Transaction (as defined below), or enter into or maintain or continue discussions or negotiate with any person in furtherance of such inquiries or to obtain a Company Competing Transaction, or agree to or endorse any Company Competing Transaction, or authorize or permit any Company Representatives to take any such action; provided, however, that the foregoing shall not be deemed to prohibit the Board of Directors from taking any action with regard to an unsolicited offer received by the Company after the date of this Agreement if the Company’s Board of Directors determines, upon the written advice of counsel, that such action is necessary for the fulfillment of its fiduciary duties. The Company will notify Parent immediately after receipt by the Company (or any Company Representatives) of any proposal for, or inquiry respecting, any Company Competing Transaction, or any request for nonpublic information in connection with such proposal or inquiry or for access to the properties, books or records of the Company by any person that informs or has informed the Company that it is considering making or has made such a proposal or inquiry. Such notice to Parent shall indicate in reasonable detail the identity of the person making such proposal or inquiry and the terms and conditions of such proposal or inquiry. The Company immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to a Company Competing Transaction. The Company agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which it is a party.

          (b) A “Company Competing Transaction” means any of the following involving the Company (other than the Merger and the other transactions contemplated by this Agreement): (i) a merger, consolidation, share exchange, business combination or other similar transaction; (ii) any sale, lease, exchange, transfer or other disposition of a material portion of the assets or debt or equity securities of such party; (iii) a tender offer or exchange offer for the outstanding voting securities of such party; or (iv) any solicitation in opposition to approval by the Company Shareholders of this Agreement and the Merger.

ARTICLE VII

CONDITIONS TO THE MERGER

     7.1 Conditions to the Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions:

          (a) Representations and Warranties. Each of the representations and warranties made by the Company in this Agreement that are qualified as to materiality or Company Material Adverse Effect, or any similar standard or qualification, shall be true and correct in all respects, and each of the representations and warranties made by the Company in this Agreement that are not qualified as to materiality or Company Material Adverse Effect, or any similar standard or qualification, shall be true and correct in all material respects, in each case as of the Effective Time with the same force and effect as if made on and as of the Effective Time, except that those representations and warranties that address matters only as of a particular date shall remain true and correct as of such date, and Parent shall have received a certificate of the Chief Executive Officer of the Company to that effect.

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          (b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time and Parent shall have received a certificate of the Chief Executive Officer of the Company to that effect.

          (c) Company Board and Shareholder Approval.

               (i) The Merger, this Agreement and the transactions contemplated hereunder shall have been approved and adopted (i) unanimously by the Board of Directors of the Company, (ii) by the holders of at least 98% of the outstanding shares of Company Series A Preferred Stock, (iii) by the holders of at least 98% of the outstanding shares of Company Series A1 Preferred Stock, (iv) by the holders of at least 98% of the outstanding shares of Company Common Stock and (v) by the holders of at least 75% of the outstanding shares of Company Common Stock, Company Series A Preferred Stock and Company Series A1 Preferred Stock, voting together as a single class; and

               (ii) The percentage of the outstanding shares of Company Stock for which the holders thereof remain eligible to exercise dissenters’ rights under the CGCL shall have been reduced below the percentage that Parent, on advice of counsel, concludes would disqualify the Merger as a tax-free reorganization within the meaning of Section 368(a) of the Code. The parties shall determine and agree on the above percentage as soon as practicable after the next independent third-party appraisal of Parent Common Stock. No other event, including but not limited to an independent third-party appraisal of Parent Common Stock, shall have occurred that Parent, on advice of counsel, concludes would disqualify the Merger as a tax-free reorganization within the meaning of Section 368(a) of the Code.

          (d) Approvals. Parent shall have received, each in form and substance reasonably satisfactory to Parent, all authorizations, consents, orders and approvals set forth in Sections 3.6(a) and (b) of the Company Disclosure Schedule.

          (e) No Company Material Adverse Effect. No event or events shall have occurred, or could be reasonably likely to occur, which, individually or in the aggregate, have, or could reasonably be expected to have, a Company Material Adverse Effect.

          (f) Offer Letters. Each individual set forth on Schedule III hereto shall remain employed by the Company and the Offer Letters entered into with such individual shall remain in full force and effect and shall not have been anticipatorially breached or repudiated by such individual.

          (g) Non-Competition and Non-Solicitation Agreements. Each of the Non-Competition and Non-Solicitation Agreements entered into with the individuals set forth on Schedule II hereto shall remain in full force and effect and shall not have been anticipatorially breached or repudiated by any of such individuals.

          (h) Shareholder Certificates. Each Company Shareholder shall have executed and delivered to Parent a Shareholder Certificate.

          (i) Secretary’s Certificate. Parent shall have received (i) a certificate executed by the Secretary of the Company attaching and certifying as to matters customary for a transaction of this sort, including, without limitation, the true and correct copies of the Company’s current Articles of Incorporation and Bylaws and copies of the resolutions of the Company’s Board of Directors and the Company Shareholders approving and adopting this Agreement and the transactions relating

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hereto, and (ii) such other documents relating to the transactions contemplated by this Agreement as Parent may reasonably request.

          (j) Estoppel Certificate. Parent shall have received an estoppel certificate, dated as of a date not more than five days prior to the Closing Date and satisfactory in form and content to Parent, executed by each of National Partners Limited Partnership and Safeway, Inc.

          (k) FIRPTA Compliance. The Company shall, prior to the Closing Date, provide Parent with a properly executed Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) Notification Letter, in form and substance satisfactory to Parent, which states that shares of capital stock of the Company do not constitute “United States real property interests” under Section 897(c) of the Code, for purposes of satisfying Parent’s obligations under Treasury Regulation Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such Notification Letter, the Company shall have provided to Parent, as agent for the Company, a form of notice to the Internal Revenue Service in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2) along with written authorization for Parent to deliver such notice form to the Internal Revenue Service on behalf of the Company upon the consummation of the Merger.

          (l) Parachute Payments. Prior to the Effective Time, the Company shall have obtained the requisite shareholder approval under Section 280G(b)(5) of the Code of any payments or benefits that are “excess parachute payments” within the meaning of Section 280G of the Code, and any “disqualified individuals” as defined in Section 280G of the Code shall have agreed to forfeit any payments, to the extent that they would otherwise be non-deductible if such shareholder approval is not obtained.

          (m) Board and Officer Resignations. The Company shall have received written letters of resignation from each of the current members of the Board of Directors and officers of the Company, in each case effective at the Effective Time.

          (n) Termination of the Company’s Agreements and Warrants. Parent shall have been furnished evidence satisfactory to it that all rights granted by the Company to its shareholders and in effect prior to the Closing, including, but not limited to, rights of co-sale, voting, registration, first refusal, first offer, preemptive, board observation or information or operational covenants, and all warrants to purchase Company Stock shall have terminated (or been exercised in full, in the case of the warrants) prior to the Closing Date.

          (o) Amendment to Articles of Incorporation. The Company shall have filed an amendment to its Articles of Incorporation (the “Charter Amendment”) that provides for the distribution of the Aggregate Merger Consideration in the manner described in Article II above, which amendment shall have been unanimously approved by the Company’s Board of Directors and shall have been approved by the holders of at least 98% of the outstanding Company Common Stock, the holders of at least 98% of the outstanding shares of Company Series A Preferred Stock, the holders of at least 98% of the outstanding shares of Company Series A1 Preferred Stock, and the holders of at least 75% of the outstanding shares of Company Common Stock, Company Series A Preferred Stock and Company Series A1 Preferred Stock, voting together as a single class.

          (p) Conversion Schedule. The Company shall have delivered the final Conversion Schedule certified by the Company’s Chief Executive Officer pursuant to Section 6.5 above.

          (q) Termination of 401(k) Plan. If requested by Parent pursuant to Section 6.1(d), the Company shall have terminated the 401(k) Plan effective at least one day prior to the Closing

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Date and all contributions payable to the 401(k) Plan shall have been made. The Company shall have provided to Parent (i) executed resolutions of the Board of Directors of the Company authorizing the termination and (ii) an executed amendment to the 401(k) Plan sufficient to ensure compliance with all applicable requirements of the Code and regulations thereunder so that the tax-qualified status of the 401(k) Plan will be maintained at the time of termination, provided, however, that Parent shall provide the Company with a reasonable and sufficient amount of time prior to the Closing necessary for the Company to provide notice of the cessation of deferrals and/or to make all filings required or deemed appropriate to terminate the 401(k) Plan.

          (r) Termination of Employee Plans. The Company shall have terminated the Company Plans identified by Parent prior to Closing, and the Company shall have provided Parent with evidence, reasonably satisfactory to Parent, as to the termination of such Company Plans.

     7.2 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions: (a) Representations and Warranties. Each of the representations and warranties made by Parent and Merger Sub in this Agreement that are qualified as to materiality or Parent Material Adverse Effect, or any similar standard or qualification, shall be true and correct, and each of the representations and warranties made by Parent and Merger Sub in this Agreement that are not qualified as to materiality or Parent Material Adverse Effect, or any similar standard or qualification, shall be true and correct in all material respects, in each case as of the Effective Time with the same force and effect as if made on and as of the Effective Time, except that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date, and the Company shall have received a certificate of a duly authorized officer of Parent to such effect.

          (b) Agreements and Covenants. Each of Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, and the Company shall have received a certificate of a duly authorized officer of Parent to that effect.

          (c) Tax-Free Reorganization. The percentage of the outstanding shares of Company Stock for which the holders thereof remain eligible to exercise dissenters’ rights under the CGCL, shall have been reduced below the percentage that the Company, on advice of counsel, concludes would disqualify the Merger as a tax-free reorganization within the meaning of Section 368(a) of the Code. The parties shall determine and agree on the above percentage as soon as practicable after the next independent third-party appraisal of Parent Common Stock. No other event, including but not limited to an independent third-party appraisal of Parent Common Stock, shall have occurred that the Company, on advice of counsel, concludes would disqualify the Merger as a tax-free reorganization within the meaning of Section 368(a) of the Code.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

     8.1 Termination. This Agreement may be terminated and the Merger and the other transactions contemplated by this Agreement may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated by this Agreement, as follows:

          (a) by mutual written consent duly authorized by the Boards of Directors of each of Parent and the Company;

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          (b) by either Parent or the Company if the Effective Time shall not have occurred on or before November 15, 2006; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before November 15, 2006;

          (c) by either Parent or the Company upon the issuance of any Order which is final and nonappealable which would (i) prevent the consummation of the Merger, (ii) prohibit Parent’s or the Company’s ownership or operation of any portion of the business of the Company or (iii) compel Parent or the Company to dispose of or hold separate, as a result of the Merger, any portion of the business or assets of the Company or Parent;

          (d) by Parent upon a breach of any material representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Sections 7.1(a) and 7.1(b) would not be satisfied (“Terminating Company Breach”); provided, however, that, if such Terminating Company Breach is by its nature curable by the Company and for so long as the Company continues to exercise best efforts to cure such breach after notice thereof, Parent may not terminate this Agreement under this Section 8.1(d) unless such breach is not cured within twenty (20) days after notice thereof is provided by Parent to the Company (but no cure period is required for a breach which, by its nature, cannot be cured); or

          (e) by the Company upon a breach of any material representation, warranty, covenant or agreement on the part of Parent and Merger Sub set forth in this Agreement, or if any representation or warranty of Parent and Merger Sub shall have become untrue, in either case such that the conditions set forth in Sections 7.2(a) and 7.2(b) would not be satisfied (“Terminating Parent Breach”); provided, however, that, if such Terminating Parent Breach is by its nature curable by Parent and Merger Sub and for so long as Parent and Merger Sub continue to exercise best efforts to cure such breach after notice thereof, the Company may not terminate this Agreement under this Section 8.1(e) unless such breach is not cured within twenty (20) days after notice thereof is provided by the Company to Parent (but no cure period is required for a breach which, by its nature, cannot be cured).

     8.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of Parent, Merger Sub or the Company or any of their respective officers or directors, and all rights and obligations of each party hereto shall cease; provided, however, that (i) Section 6.3, Section 6.4, Section 8.2 and Article X shall remain in full force and effect and survive any termination of this Agreement, and (ii) nothing herein shall relieve any party from liability for the willful breach of any of its representations or warranties or the breach of any of its covenants or agreements set forth in this Agreement.

     8.3 Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

     8.4 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. Notwithstanding the foregoing, Parent shall not waive the obligation of any of Sienna Limited

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Partnership III, Tesla Capital, LLC, Charles Merrill Magowan or Southcoast Capital (the “Major Holders”) to execute and deliver to Parent the Shareholder Certificate without the prior written consent of each of the other Major Holders.

ARTICLE IX

INDEMNIFICATION

     9.1 Survival of Representations and Warranties. The representations and warranties of the Company and the Company Shareholders contained in this Agreement, the Shareholder Certificates and any other document or certificate relating hereto (collectively, the “Acquisition Documents”) shall survive the Effective Time until September 1, 2007; provided, however, that the representations and warranties set forth in Sections 3.1 (Organization and Qualification), 3.4 (Capitalization), 3.14 (Intellectual Property) and 3.15 (Taxes) shall survive the Effective Time for a period of 24 months from the Effective Time. The representations and warranties of Parent contained in the Acquisition Documents shall not survive beyond the Effective Time; provided, however, that the representations and warranties set forth in Section 4.3 (Capitalization) shall survive until September 1, 2007. Neither the period of survival nor the liability of the Company and the Company Shareholders (as the case may be) with respect to such party’s representations and warranties shall be affected by any investigation made at any time (whether before or after the Effective Time) by or on behalf of Parent or Merger Sub or by any actual, implied or constructive knowledge or notice of any facts or circumstances that such party may have as a result of any investigation or otherwise. The parties hereto agree that reliance shall not be an element of any claim for misrepresentation or indemnification under this Agreement. The waiver of any condition based on the accuracy of any such representation or warranty, or based on the performance of, or compliance with, any covenant or obligation, shall not affect the right to indemnification or other remedy based on such representations, warranties, covenants or obligations. If written notice of a claim has been given, prior to the expiration of the applicable representations and warranties, by Parent to the Shareholders’ Representative, then the relevant representations and warranties shall survive as to such claim until such claim has been finally resolved.

     9.2 Indemnification by the Company Series A Preferred Holders and Parent.

          (a) After the Effective Time, Parent and its affiliates (including, after the Effective Time, the Surviving Corporation), officers, directors, employees, agents, successors and assigns (collectively, the “Parent Indemnified Parties”) shall be indemnified and held harmless by the holders of Company Series A Preferred Stock (the “Company Series A Preferred Holders”), jointly and severally, for any and all liabilities, losses, damages of any kind, diminution in value, claims, costs, expenses, fines, fees, deficiencies, interest, awards, judgments, amounts paid in settlement and penalties (including, without limitation, reasonable attorneys’, consultants’ and experts’ fees and expenses and other costs of defending, investigating or settling claims) suffered, incurred, accrued (in accordance with U.S. GAAP) or paid by them (including, without limitation, in connection with any action brought or otherwise initiated by any of them) (collectively, “Losses”), without adjustment for any tax deduction relating thereto, arising out of or resulting from:

               (i) any inaccuracy or breach of any representation or warranty (without giving effect to any qualification as to materiality (or similar qualifications) contained therein) made by the Company or any Company Shareholder in the Acquisition Documents;

               (ii) the breach of any covenant or agreement made by the Company or any Company Shareholder in the Acquisition Documents;

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               (iii) Losses from breach of contract or other claims made by any party alleging to have had a contractual or other right to acquire the Company’s capital stock or assets;

               (iv) in the event that any Company Shareholder properly exercises appraisal rights under applicable Law, the amount, if any, by which the fair market value (determined in accordance with applicable Law) of the Dissenting Shares exceeds the amount such Company Shareholder was otherwise entitled to receive pursuant to Section 2.1 of this Agreement;

               (v) any cost, loss or other expense (including the value of any Tax deduction lost) as a result of the application of Section 280G of the Code to any of the transactions contemplated by this Agreement plus any necessary gross up amount; or

               (vi) any Shareholder Expenses payable by the Surviving Corporation following the Closing.

          (b) As used herein, “Losses” are not limited to matters asserted by third parties, but include Losses incurred or sustained by the Parent Indemnified Parties in the absence of claims by third parties.

          (c) Notwithstanding anything to the contrary contained in this Agreement, except with respect to (A) claims for equitable remedies and (B) claims based on fraud or willful misrepresentation or willful misconduct:

               (i) the maximum aggregate amount of indemnifiable Losses arising out of or resulting from the causes enumerated in Section 9.2(a) that may be recovered from the Company Series A Preferred Holders shall not exceed (x) $3,000,000 in the case of claims for any inaccuracy or breach of the representations and warranties contained in Section 3.4 (Capitalization), or (y) $1,800,000 in the case of all other causes enumerated in Section 9.2(a) (collectively, the “Indemnification Cap”) and no such indemnifiable Losses may be recovered from the holders of Company Common Stock in their capacity as such; and

               (ii) no indemnification payment by the Company Series A Preferred Holders with respect to any indemnifiable Losses otherwise payable under Section 9.2(a) shall be payable until such time as all such indemnifiable Losses shall aggregate to more than $50,000, after which time the Company Series A Preferred Holders shall be liable in full for all indemnifiable Losses (including the first $50,000).

          (d) After the Effective Time, the Company Shareholders shall be indemnified for any breach of the representations and warranties set forth in Section 4.3 (Capitalization), but only to the extent that such breach results in the Parent Shares representing less than 4.34% (i.e., the quotient of 2,150,000 divided by 49,531,974) of the Parent Fully Diluted Total. In the case of such breach, and subject to the provisions of this Article IX, the definition of “Parent Shares” set forth in Section 2.1(b) above shall be deemed amended, automatically and without the necessity of any consent or other action of any party hereto (notwithstanding the provisions of Section 10.14 hereof), such that it means a number of shares of Parent Common Stock equal to 4.34% of the Parent Fully Diluted Total, which shall be the sole and exclusive remedy of the Company Shareholders in the event of such breach. As a result of such amendment, the Common Exchange Ratio shall be modified accordingly, and the holders of Company Stock shall be entitled to adjustments to the number of shares of Parent Common Stock to which they are entitled as a result of their holdings. Upon such adjustment, Parent shall issue additional shares of Parent Common Stock to the holders of Company Stock accordingly.

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          (e) Notwithstanding any other provision hereof, any misrepresentation by a party shall not constitute fraud or willful misrepresentation by that party if, after reviewing its relevant records and inquiring of its relevant personnel, exercising reasonable diligence, that party did not have actual knowledge that the representation was false.

     9.3 Recoveries. The amount of indemnifiable Losses required to be paid under this Article IX shall be reduced by (or if already paid, shall be promptly repaid in the amount of) any recoveries actually received by a Parent Indemnified Party under insurance policies or other form of payment received from a third party. The Parent Indemnified Parties shall take all actions reasonably necessary to mitigate any indemnifiable Losses in connection with an indemnity claim made pursuant to this Article IX. Except for such remedies as are explicitly provided for elsewhere in this Agreement, after the Effective Time, in the absence of fraud, intentional misrepresentation or willful misconduct, the sole and exclusive remedy of any Parent Indemnified Party or Company Shareholder with respect to any claim arising out of this Agreement (whether based on contract, tort or any other theory, at law or in equity) or breach of any representation or warranty contained in this Agreement or in any agreement, certificate, instrument or other document entered into in connection herewith, shall be restricted to the indemnification rights set forth herein.

     9.4 Indemnification Procedures – Third Party Claims.

          (a) For purposes of this Section 9.4, a party against which indemnification may be sought is referred to as the “Indemnifying Party” and the party that may be entitled to indemnification is referred to as the “Indemnified Party.”

          (b) The obligations and liabilities of Indemnifying Parties under this Article IX with respect to Losses arising from actual or threatened claims or demands by any third party which are subject to the indemnification provided for in this Article IX (“Third Party Claims”) shall be governed by and contingent upon the following additional terms and conditions: if an Indemnified Party shall receive notice of any Third Party Claim, the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim within 90 days of the receipt by the Indemnified Party of such notice; provided, however, that the failure to provide such notice shall not release an Indemnifying Party from any of its obligations under this Article IX except to the extent that such Indemnifying Party is materially prejudiced by such failure. The notice of claim shall describe in reasonable detail the facts known to the Indemnified Party giving rise to such Indemnification Claim (as defined below), and the amount or good faith estimate of the amount arising therefrom.

          (c) If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then the Indemnifying Party shall be entitled to assume and control the defense of such Third Party Claim through counsel of its choice (such counsel to be reasonably acceptable to the Indemnified Party) if it gives notice of its intention to do so to the Indemnified Party within 20 days of the receipt of such notice from the Indemnified Party; provided, however, that the Indemnifying Party shall not have the right to assume the defense of the Third Party Claim if (i) any such claim seeks, in addition to or in lieu of monetary losses, any injunctive or other equitable relief, (ii) there is reasonably likely to exist a conflict of interest that would make it inappropriate (in the judgment of the Indemnified Party in its reasonable discretion) for the same counsel to represent both the Indemnified Party and the Indemnifying Party, or (iii) settlement of, or an adverse judgment with respect to, the Third Party Claim may establish (in the good faith judgment of the Indemnified Party) a precedential custom or practice adverse to the business interests of the Indemnified Party or would increase the Tax liability of the Indemnified Party; provided further, that if by reason of the Third Party Claim a Lien, attachment, garnishment, execution or other encumbrance is placed upon any of the property or assets of such Indemnified Party, the Indemnifying

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Party, if it desires to exercise its right to assume such defense of the Third Party Claim, must agree to use a portion of the Indemnification Cap to furnish a satisfactory indemnity bond to obtain the prompt release of such Lien, attachment, garnishment, execution or other encumbrance. If the Indemnifying Party assumes the defense of a Third Party Claim, it will conduct the defense actively, diligently and at its own expense, and it will hold all Indemnified Parties harmless from and against all Losses caused by or arising out of any settlement thereof. The Indemnified Party shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably requested by the Indemnifying Party. Except with the written consent of the Indemnified Party (not to be unreasonably withheld), the Indemnifying Party will not, in the defense of a Third Party Claim, consent to the entry of any judgment or enter into any settlement (i) which does not include as an unconditional term thereof the giving to the Indemnified Party by the third party of a release from all liability with respect to such suit, claim, action, or proceeding; (ii) unless there is no finding or admission of (A) any violation of Law by the Indemnified Party (or any affiliate thereof), (B) any liability on the part of the Indemnified Party (or any affiliate thereof) or (C) any violation of the rights of any person and no effect on any other claims of a similar nature that may be made by the same third party against the Indemnified Party (or any affiliate thereof); or (iii) which exceeds the Promissory Note Amount.

          (d) In the event that the Indemnifying Party fails or elects not to assume the defense of an Indemnified Party against such Third Party Claim which the Indemnifying Party had the right to assume pursuant to Section 9.4(c), the Indemnified Party shall have the right, at the expense of the Indemnifying Party, to defend or prosecute such claim in any manner as it may reasonably deem appropriate and may settle such claim after giving written notice thereof to the Indemnifying Party, on such terms as such Indemnified Party may deem appropriate, and the Promissory Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company Series A Preferred Holders shall be obligated to pay) the amount of any Losses incurred in connection with such settlement. If no settlement of such Third Party Claim is made, the Promissory Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company Series A Preferred Holders shall be obligated to pay) the amount of any Losses arising out of any judgment rendered with respect to such claim. Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in accordance with U.S. GAAP). If the Indemnifying Party does not elect to assume the defense of a Third Party Claim which it has the right to assume hereunder, the Indemnified Party shall have no obligation to do so.

          (e) In the event that the Indemnifying Party is not entitled to assume the defense of the Indemnified Party against such Third Party Claim pursuant to Section 9.4(c), the Indemnified Party shall have the right, at the expense of the Indemnifying Party, to defend or prosecute such claim and consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim in any manner it may reasonably deem appropriate after giving written notice thereof to the Indemnifying Party, and the Promissory Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company Series A Preferred Holders shall be obligated to pay) the amount of any Losses incurred in connection with such judgment or settlement. In such case, the Indemnified Party shall conduct the defense of the Third Party Claim actively and diligently, and the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party’s expense, all such witnesses, records, materials and information in the Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is reasonably requested by the Indemnified Party. If no settlement of such Third Party Claim is made, the Promissory Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company

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Series A Preferred Holders shall be obligated to pay) the amount of any Losses arising out of any judgment rendered with respect to such claim. Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in accordance with U.S. GAAP).

     9.5 Indemnification Procedures – Generally.

          (a) If, at any time prior to 5:00 p.m. Pacific time on the date that is 24 months from the Effective Time (the “Expiration Date”), a Parent Indemnified Party shall have suffered, incurred, accrued (in accordance with U.S. GAAP) or paid a Loss for which it is entitled to indemnification, compensation or reimbursement hereunder (an “Indemnification Claim”), such Parent Indemnified Party shall deliver to the Shareholders’ Representative, not more than 30 days after the Expiration Date, a certificate executed by a Parent Indemnified Party or an authorized officer of a Parent Indemnified Party (an “Indemnification Certificate”), which Indemnification Certificate shall:

               (i) state that such Parent Indemnified Party has an Indemnification Claim;

               (ii) state the aggregate amount of such Indemnification Claim (the “Indemnification Amount”); and

               (iii) specify in reasonable detail the nature and amount of each individual Indemnification Claim.

          (b) If the Shareholders’ Representative shall object to any amount claimed in connection with any Indemnification Claim specified in any Indemnification Certificate, the Shareholders’ Representative shall, within fifteen business days after receipt of such Indemnification Certificate (the “Response Period”), deliver to Parent a certificate, executed by the Shareholders’ Representative (a “Shareholders’ Representative Certificate”), which shall specify in reasonable detail (i) each such amount to which the Shareholders’ Representative objects and (ii) the nature and basis for each such objection.

          (c) If Parent shall not have received a Shareholders’ Representative Certificate objecting to the amount claimed with respect to an Indemnification Claim prior to the expiration of the applicable Response Period, the Company Series A Preferred Holders and the Shareholders’ Representative shall be deemed to have agreed to the Indemnification Certificate and to have acknowledged the correctness of the Indemnification Amount claimed with respect to such Indemnification Claim, or (ii) if Parent shall have received a Shareholders’ Representative Certificate pursuant to Section 9.5(d) below prior to the expiration of the Response Period with respect to an Indemnification Claim as to which any portion of the Indemnification Amount claimed is not objected to, the Company Series A Preferred Holders and the Shareholders’ Representative shall be deemed to have agreed to that portion of the Indemnification Certificate and to have acknowledged the correctness of that portion of the Indemnification Amount claimed as to which no objection is raised in the Shareholders’ Representative Certificate, and, in either case, the Principal Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company Series A Preferred Holders agree to pay) an amount equal to the Indemnification Amount (or the portion of the Indemnification Amount not objected to in a Shareholders’ Representative Certificate).

          (d) If Parent shall have received within the applicable Response Period a Shareholders’ Representative Certificate contesting the amount claimed with respect to any Indemnification Claim specified in the Indemnification Certificate (a “Contested Claim”), the amount so

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contested (the “Contested Amount”) shall not be deducted from the Promissory Note Amount (or if the Promissory Note or any replacement thereof is no longer outstanding, shall not yet be due from the Company Series A Preferred Holders), except in accordance with any of the following:

               (i) a written agreement executed by each of an authorized officer of the Parent Indemnified Party and the Shareholders’ Representative; or

               (ii) if the Contested Claim concerns amounts that are subject to third party claims brought against the Parent Indemnified Parties in a litigation or arbitration, the determination of the validity of such claims and amounts in a final, non-appealable decision, award or settlement of such litigation or arbitration; or

               (iii) if the Contested Claim concerns amounts that are not subject to third party claims and if the Shareholders’ Representative and Parent, on behalf of the Parent Indemnified Parties, are unable to resolve any such Contested Claim within 30 days after delivery of the Shareholders’ Representative Certificate, the settlement of such Contested Claim by a binding arbitration proceeding which shall take place in San Mateo County, California. All Contested Claims shall be settled by three arbitrators in accordance with the Commercial Arbitration Rules then in effect of the American Arbitration Association (the “AAA Rules”). The Shareholders’ Representative and Parent shall each designate one arbitrator within 15 days after the termination of such 30-day period. The Shareholders’ Representative and Parent shall cause such designated arbitrators mutually to agree upon and designate a third arbitrator; provided, however, that (i) failing such agreement within 50 days of delivery of the Shareholders’ Representative Certificate, the third arbitrator shall be appointed in accordance with the AAA Rules and (ii) if either the Shareholders’ Representative or Parent fails to timely designate an arbitrator, the Contested Claim shall be resolved with the participation of the one arbitrator timely designated. The Shareholders’ Representative and Parent shall cause the arbitrators to decide the Contested Claim within 20 days after the appointment of the last arbitrator. The arbitrators’ decision shall relate solely to whether the Contested Amount (or a portion thereof) shall be deducted from the Promissory Note Amount pursuant to the applicable terms of this Agreement (or if the Promissory Note or any replacement thereof is no longer outstanding, whether the Company Series A Preferred Holders are obligated to pay the Contested Amount (or a portion thereof)). The final decision of the majority of the arbitrators shall be furnished to the Shareholders’ Representative and Parent in writing and shall constitute the conclusive determination of the issue in question, be binding upon the Shareholders’ Representative, the Company Series A Preferred Holders and the Parent Indemnified Parties, and shall not be contested by any of them. Each of Parent and the Company Series A Preferred Holders will pay 50% of the compensation to be paid to the arbitrators in any such arbitration and 50% of the costs of transcripts and other normal and regular expenses of such arbitration proceeding; provided, however, that the substantially prevailing party in any arbitration will be entitled to an award of attorneys’ fees and costs, and all costs of arbitration, including those provided for above, which will be paid by the losing party, and the arbitrators will be authorized to make such determinations.

          (e) After (i) the receipt of written instructions pursuant to Section 9.5(d)(i) of this Agreement, (ii) the final, non-appealable decision, award or settlement of a third-party claim pursuant to Section 9.5(d)(ii) of this Agreement, or (iii) the final arbitration decision pursuant to Section 9.5(d)(iii) of this Agreement, the Principal Note Amount shall be automatically reduced by (or if the Promissory Note or any replacement thereof is no longer outstanding, the Company Series A Preferred Holders shall be obligated to pay) an amount equal to the lesser of (x) the amount specified in such written instructions, decision, award, settlement or arbitration decision, as the case may be (or, if not so specified in the written instructions, decision, award, settlement or arbitration decision, the amount equal to amount set forth in the written instructions, decision, award, settlement or arbitration decision, as the case may be), and (y) the balance of the Indemnification Cap not yet recovered by Parent.

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          (f) Notwithstanding the limitations set forth in Section 9.5(a) of this Agreement, following the Expiration Date, the Parent Indemnified Parties shall be entitled to assert claims under this Section 9.5 with respect to those Losses that were included in determining the Reserved Amount. For purposes of this Agreement, the “Reserved Amount” shall be equal to the aggregate dollar value of all amounts claimed and unpaid in all Indemnification Certificates delivered by Parent prior to the Expiration Date which claims or amounts shall not have been resolved on or prior to the Expiration Date.

          (g) If, on the one year anniversary of the Effective Time (the “Anniversary Date”), the aggregate dollar value of all amounts claimed and unpaid in all Indemnification Certificates delivered by Parent prior to the Anniversary Date which claims or amounts shall not have been resolved on or prior to the Anniversary Date (the “Initial Reserved Amount”) is less than the Promissory Note Amount, then on the Anniversary Date Parent shall (i) issue a new promissory note to the Shareholders’ Representative (with a copy to the Exchange Agent), in substantially the same form as the Promissory Note, on behalf of the Company Series A Preferred Holders, in the principal amount equal to the Initial Reserved Amount, which new promissory note shall have a maturity date of the later of the Expiration Date or the date all amounts claimed and unpaid with respect to all of the Indemnification Certificates delivered by Parent prior to the Anniversary Date are paid or otherwise resolved pursuant to the terms of this Agreement, and (ii) upon delivery to Parent by the Shareholders’ Representative of the original Promissory Note, transfer to the Exchange Agent an amount equal to the Promissory Note Amount less the Initial Reserved Amount for immediate distribution to the Company Series A Preferred Holders.

          (h) If, on the Anniversary Date, the Initial Reserved Amount is greater than the Promissory Note Amount, then the maturity date of the Promissory Note shall automatically be extended without any further action on the part of the Company, the Company Series A Preferred Holders or the Shareholders’ Representative to the later of the Expiration Date or until all amounts claimed and unpaid with respect to all of the Indemnification Certificates delivered to Parent prior to the Anniversary Date are paid or otherwise resolved pursuant to the terms of this Agreement.

          (i) Notwithstanding any other provision of this Agreement to the contrary, at any time prior to the termination of this Agreement, if agreed to in a writing signed by the Shareholders’ Representative, the Promissory Note Amount, as agreed to in such writing, shall be automatically reduced by the amount agreed to by Parent and the Shareholders’ Representative.

          (j) Subject to the provisions of this Article IX, the automatic reductions of amounts from the Promissory Note Amount with respect to Indemnification Claims shall be without prejudice to any other rights the Parent Indemnified Parties may have under this Agreement to seek indemnity or other recourse for such Indemnification Claims.

          (k) Notwithstanding any other provision of this Agreement to the contrary, Parent may deliver notices, sign certificates, authorize actions, settlements or compromises, make or receive payments and otherwise act on behalf of the Parent Indemnified Parties, and Shareholders’ Representative may deliver notices, sign certificates, authorize actions, settlements or compromises, make or receive payments and otherwise act on behalf of the Company Series A Preferred Holders in connection with any Indemnification Claim hereunder.

          (l) Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in accordance with U.S. GAAP).

          (m) If, at any time prior to 5:00 p.m. Pacific time on August 31, 2007, the Company Shareholders shall have suffered a breach for which they are entitled to indemnification

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hereunder, the Shareholders’ Representative shall pursue the Company Shareholders’ sole and exclusive remedy set forth in Section 9.2(d) above pursuant to the applicable procedures set forth in this Section 9.5, and, where applicable, all references to “Parent” and “Parent Indemnified Party” shall instead refer to the Shareholders’ Representative, all references to “Company Series A Preferred Holders” and the “Shareholders’ Representative” shall instead refer to Parent, and all references to “Expiration Date” shall instead refer to August 31, 2007, and references to deductions of principal from the Promissory Note Amount and amounts due from Company Series A Preferred Holders shall, where applicable, instead refer to Parent’s obligation to issue additional shares of Parent Common Stock.

     9.6 Shareholders’ Representative.

          (a) Charles Magowan (such person and any successor or successors being the “Shareholders’ Representative”) shall act as the representative of the Company Series A Preferred Holders, and shall be authorized to act on behalf of the Company Series A Preferred Holders and to take any and all actions required or permitted to be taken by the Shareholders’ Representative under this Agreement with respect to any claims (including the settlement thereof) made by a Parent Indemnified Party for indemnification pursuant to this Article IX (including, without limitation, the exercise of the power to (i) authorize the right of setoff set forth in Section 9.5 in satisfaction of claims by a Parent Indemnified Party, (ii) agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to any claims for indemnification and (iii) take all actions necessary in the judgment of the Shareholders’ Representative for the accomplishment of the foregoing). In all matters relating to this Article IX, the Shareholders’ Representative shall be the only party entitled to assert the rights of the Company Series A Preferred Holders, and the Shareholders’ Representative shall perform all of the obligations of the Company Series A Preferred Holders hereunder. The Parent Indemnified Parties shall be entitled to rely on all statements, representations and decisions of the Shareholders’ Representative.

          (b) The Company Series A Preferred Holders shall be bound by all actions taken by the Shareholders’ Representative in his, her or its capacity thereof, except for any action that conflicts with the limitations set forth in subsection (d) below. The Shareholders’ Representative shall promptly, and in any event within ten (10) business days, provide written notice to the Company Series A Preferred Holders of any action taken on behalf of them by the Shareholders’ Representative pursuant to the authority delegated to the Shareholders’ Representative under this Section 9.6. The Shareholders’ Representative shall at all times act in his, her or its capacity as Shareholders’ Representative in a manner that the Shareholders’ Representative believes to be in the best interest of the Company Series A Preferred Holders. Neither the Shareholders’ Representative nor any of its directors, officers, agents or employees, if any, shall be liable to any person for any error of judgment, or any action taken, suffered or omitted to be taken under this Agreement, except in the case of its gross negligence, bad faith or willful misconduct. The Shareholders’ Representative may consult with legal counsel, independent public accountants and other experts selected by it.

          (c) Each Company Series A Preferred Holder shall indemnify and hold harmless and reimburse the Shareholders’ Representative from and against such Company Series A Preferred Holder’s ratable share of any and all liabilities, losses, damages, claims, costs or expenses suffered or incurred by the Shareholders’ Representative arising out of or resulting from any action taken or omitted to be taken by the Shareholders’ Representative under this Agreement, other than such liabilities, losses, damages, claims, costs or expenses arising out of or resulting from the Shareholders’ Representative’s gross negligence, bad faith or willful misconduct.

          (d) Notwithstanding anything to the contrary herein, the Shareholders’ Representative is not authorized to, and shall not, accept on behalf of any Company Shareholder any

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merger consideration to which such Company Shareholder is entitled under this Agreement (other than to take delivery and hold in trust on behalf of the Company Series A Preferred Holders the Promissory Note and any replacement thereof) and the Shareholders’ Representative shall not in any manner exercise, or seek to exercise, any voting power whatsoever with respect to shares of capital stock of the Company or Parent now or hereafter owned of record or beneficially by any Company Shareholder unless the Shareholders’ Representative is expressly authorized to do so in a writing signed by such Company Shareholder.

ARTICLE X

GENERAL PROVISIONS

     10.1 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.1):

(a)	if to Parent or Merger Sub:
	DemandTec, Inc.
	1 Circle Star Way, Suite 200
	San Carlos, California 94070
	Attention: CFO and General Counsel
(b)	if to the Company:
	TradePoint Solutions, Inc.
	6140 Stoneridge Mall Road
	Suite 175
	Pleasanton, California 94588
	Facsimile No.: 925-460-0516
	Attention: Chief Executive Officer
(c)	if to the Shareholders’ Representative:
	Charles Magowan
	5847 California Street
	San Francisco, CA 94121
	Facsimile No.: 925-460-0516

     10.2 Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:

          (a) “affiliate” of a specified person means a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified person.

          (b) “beneficial owner” with respect to any shares means a person who shall be deemed to be the beneficial owner of such shares (i) which such person or any of its affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially

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owns, directly or indirectly, (ii) which such person or any of its affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding, or (iii) which are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its affiliates or associates or person with whom such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares.

          (c) “business day” means any day on which banks are not required or authorized to close in California.

          (d) “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

          (e) “knowledge” means, with respect to any party hereto, actual or deemed knowledge of the directors, officers, legal or financial personnel of such party and such knowledge that would be imputed to such persons upon reasonable inquiry or due investigation. In the case of the Company, “knowledge” shall include the actual or deemed knowledge of Mike Frandsen, Charles Magowan, Avril England, Bud Gray, David Allen, Don Holman, R. Brooke Hanson, Russ Hafferkamp Dan Skaff and Richard Rodriquez. An individual will be deemed to have knowledge of a particular fact, circumstance, event or other matter if (i) such fact circumstance, event or other matter is reflected in one or more documents, written or electronic, that are or have been in such individual’s possession or that would reasonably be expected to be reviewed by an individual who has the duties and responsibilities of such individual in the customary performance of such duties and responsibilities, or (ii) such knowledge could be obtained from reasonable inquiry of those persons employed by the Company or Parent (as the case may be) and their respective subsidiaries, if any, charged with administrative or operational responsibility for such matter for such party.

          (f) “person” means an individual, corporation, partnership, limited partnership, syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

          (g) “subsidiary” or “subsidiaries” of any person means any corporation, partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

     10.3 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.

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     10.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

     10.5 Incorporation of Exhibits. The Company Disclosure Schedule, the Parent Disclosure Schedule, the Schedules and all Exhibits attached hereto and referred to herein are hereby incorporated herein and made a part hereof for all purposes as if fully set forth herein.

     10.6 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of the Acquisition Documents was not performed in accordance with the terms thereof and that the parties shall be entitled to specific performance of the terms thereof in addition to any other remedy at law or in equity.

     10.7 Governing Law; Forum. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California applicable to contracts executed in and to be performed in that state and without regard to any applicable conflicts of law. In any action between the parties hereto arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement: (i) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of either the state courts located in San Mateo County, California or the United States District Court for the Northern District of California and (ii) each of the parties irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid.

     10.8 Time of the Essence. For purposes of this Agreement and the transactions contemplated by this Agreement, time is of the essence.

     10.9 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby to the extent permitted by law.

     10.10 Construction and Interpretation.

          (a) For purposes of this Agreement, whenever the context requires, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders.

          (b) Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman. The parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all parties hereto.

          (c) As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

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          (d) Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections,” “Schedules” and “Exhibits” are intended to refer to an Article or Section of, or Schedule or Exhibit to, this Agreement.

          (e) Except as otherwise indicated, all references (i) to any agreement (including this Agreement), contract or Law are to the agreement, contract or Law as amended, modified, supplemented or replaced from time to time, and (ii) to any government entity include any successor to that government entity.

     10.11 Further Assurances. Each party hereto shall execute and cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.

     10.12 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

     10.13 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

     10.14 Entire Agreement. This Agreement (including the Exhibits, the Schedules, the Company Disclosure Schedule and the Parent Disclosure Schedule) and the Non-Disclosure Agreement between Parent and the Company, executed by the parties in 2006, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings among the parties with respect thereto. No addition to or modification of any provision of this Agreement shall be binding upon any party hereto unless made in writing and signed by all parties hereto.

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     IN WITNESS WHEREOF, each of Parent, Merger Sub, the Company and the Shareholders’ Representative has executed or has caused this Agreement to be executed by its duly authorized officer as of the date first written above.

DemandTec, Inc.
By:	/s/ Jon Appleton
	VP Corporate Development and Legal Affairs
TP Acquisition Corp.
By:	/s/ Jon Appleton
	Vice President
TradePoint Solutions, Inc.
By:	/s/ Michael Frandsen
	President and Chief Executive Officer
Shareholders’ Representative
	/s/ Charles Magowan
	Charles Magowan, solely as Shareholders’
	Representative

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Schedule I

Schedule of Individuals Entering Into Voting Agreements

Sienna Limited Partnership III
Tesla Capital, LLC
Charles Merrill Magowan
Russell A. Hafferkamp
R. Brooke Hanson
Mary G. & Michael L. Frandsen
Southcoast Capital
Merrill L. Magowan

S-1

Schedule II

Schedule of Individuals Entering Into Non-Competition and Non-Solicitation Agreements

Michael L. Frandsen
Charles Merrill Magowan
R. Brooke Hanson
Russell A. Hafferkamp

S-2

Schedule III

Schedule of Individuals Receiving Offer Letters to Be Employed at Closing

Michael L. Frandsen
Patricia Avril England
Don Holman
David Allen

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EXHIBIT A

Form of Shareholder Certificate

SHAREHOLDER CERTIFICATE

          SHAREHOLDER CERTIFICATE, dated as of October 6, 2006 (this “Certificate”), by and between the holder of shares of capital stock of Tradepoint Software, Inc., a California corporation (the “Company”), identified on the signature page of this Certificate (the “Shareholder”) and DemandTec, Inc. a Delaware corporation (“Parent”).

WITNESSETH:

          WHEREAS, Parent, TP Acquisition Corp., a California corporation and wholly owned subsidiary of Parent (“Merger Sub”), the Company and Charles Magowan (as Shareholders’ Representative) have entered into that certain Agreement and Plan of Merger and Reorganization dated as of October 6, 2006 (the “Merger Agreement”) that provides, among other things, that Merger Sub will merge with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms not defined in this Certificate shall have the meanings ascribed to them in the Merger Agreement);

          WHEREAS, the Shareholder owns the number of shares of Common Stock of the Company (the “Company Common Stock”), the number of shares of Series A Preferred Stock of the Company (the “Company Series A Preferred Stock”) and/or the number of shares of Series A1 Preferred Stock of the Company (together with Company Common Stock and the Company Series A Preferred Stock, the “Company Stock”), and the number of shares of Company Stock issuable upon exercise of options and warrants to purchase Company Stock, set forth on the signature page hereto and desires to surrender certificates evidencing such shares of Company Stock to Parent in order to receive certificates evidencing shares of Common Stock of Parent (the “Parent Common Stock”) to which the Shareholder is entitled pursuant to the Merger Agreement upon the consummation of the Merger;

          WHEREAS, in connection with the Merger, Parent will issue to the Company’s shareholders shares of Parent Common Stock in a private placement effected in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on exemptions from the qualification requirements of applicable state securities laws; and

          WHEREAS, the Merger Agreement requires the Shareholder to provide this Certificate to Parent in connection with the Merger in order to receive shares of Parent Common Stock in connection with the Merger.

          NOW THEREFORE, in consideration of the foregoing and the respective agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby with the intention that Parent and its advisors rely upon the representations and covenants contained herein, the Shareholder hereby certifies and represents to Parent and agrees as follows:

     1. Restrictions on Resale of Parent Common Stock.

          1.1 Issuance Not Registered. The Shareholder understands and acknowledges that the issuance of the shares of Parent Common Stock pursuant to the Merger Agreement will not be registered under the Securities Act and that the shares of Parent Common Stock will be issued to the Shareholder in a private placement transaction effected in reliance on an exemption from the registration requirements of the Securities Act and in reliance on exemptions from the qualification requirements of

applicable state securities laws. The Shareholder acknowledges that the shares of Parent Common Stock so issued to the Shareholder will be “restricted securities” under Federal and state securities laws and must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Shareholder represents and acknowledges that the Shareholder is familiar with Rule 144 and Rule 145 of the Securities Act as presently in effect and understands the restrictions and resale limitations imposed thereby and by the Securities Act.

          1.2 Limitations on Transfer. The Shareholder understands and agrees that such shares of Parent Common Stock cannot be offered, resold or otherwise transferred except pursuant to (i) an effective registration statement under the Securities Act covering such offer, sale or transfer and such offer, sale or transfer is made in accordance with such registration statement, or (ii) an available exemption from registration, in which case the Shareholder shall furnish Parent with (1) a written statement of the circumstances surrounding the proposed sale or transfer and (2) an opinion of counsel, in form and substance reasonably satisfactory to Parent, that such sale or transfer will not require registration under the Securities Act. The Shareholder hereby covenants and agrees that he, she or it will not offer, sell or otherwise transfer such shares of Parent Common Stock except in compliance with this Section 1.2 and with applicable Federal and state securities laws.

          1.3 Right of First Refusal.

               (a) The Right. In the event that the Shareholder proposes to sell, pledge or otherwise transfer to a third party any Parent Common Stock, or any interest in Parent Common Stock, Parent shall have the Right of First Refusal with respect to all (and not less than all) of such Parent Common Stock. If the Shareholder desires to transfer Parent Common Stock, the Shareholder shall give a written transfer notice to Parent describing fully the proposed transfer, including the number of shares of Parent Common Stock proposed to be transferred, the proposed transfer price, the name and address of the proposed transferee and proof satisfactory to Parent that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws. The transfer notice shall be signed both by the Shareholder and by the proposed transferee and must constitute a binding commitment of both parties to the transfer of the Parent Common Stock. Parent shall have the right to purchase all, and not less than all, of the Parent Common Stock on the terms of the proposal described in the transfer notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the transfer notice was received by Parent.

               (b) Transfer of Shares. If Parent fails to exercise its Right of First Refusal within 30 days after receiving the transfer notice, the Shareholder may, not later than 90 days after Parent received the transfer notice, conclude a transfer of the Parent Common Stock subject to the transfer notice on the terms and conditions described in the transfer notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which the Shareholder is bound. Any proposed transfer on terms and conditions different from those described in the transfer notice, as well as any subsequent proposed transfer by the Shareholder, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If Parent exercises its Right of First Refusal, the parties shall consummate the sale of the Parent Common Stock on the terms set forth in the transfer notice within 60 days after Parent received the transfer notice (or within such longer period as may have been specified in the transfer notice); provided, however, that in the event the transfer notice provided that payment for the Parent Common Stock was to be made in a form other than cash or cash equivalents paid at the time of transfer, Parent shall have the option of paying for the Parent Common Stock with cash or cash equivalents equal to the present value of the consideration described in the transfer notice.

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               (c) Additional or Exchanged Securities and Property. In the event of a merger or consolidation of Parent with or into another entity (subject to Subsection (d) below), any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting Parent’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Parent Common Stock subject to this Section 1.3 shall immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Parent Common Stock subject to this Section 1.3.

               (d) Termination of Right of First Refusal. Any other provision of this Section 1.3 notwithstanding, in the event that the Parent Common Stock (or securities issued in exchange for the Parent Common Stock in a merger or acquisition of Parent) is readily tradable on an established securities market when the Shareholder desires to transfer Parent Common Stock, Parent shall have no Right of First Refusal, and the Shareholder shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

               (e) Permitted Transfers. This Section 1.3 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Shareholder’s immediate family or to a trust established by the Shareholder for the benefit of the Shareholder and/or one or more members of the Shareholder’s immediate family or (iii) if Shareholder is a partnership, to one or more affiliates of Shareholder, provided in either case that the transferee agrees in writing on a form prescribed by Parent to be bound by all provisions of this Certificate. If the Shareholder transfers any Parent Common Stock, either under this Subsection (d) or after Parent has failed to exercise the Right of First Refusal, then this Certificate shall apply to the transferee to the same extent as to the Shareholder.

               (f) Termination of Rights as Stockholder. If Parent makes available, at the time and place and in the amount and form provided in this Certificate, the consideration for the Parent Common Stock to be purchased in accordance with this Section 1.3, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Parent Common Stock (other than the right to receive payment of such consideration in accordance with this Certificate). Such Parent Common Stock shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Certificate.

               (g) Assignment of Right of First Refusal. The Board of Directors of Parent may freely assign Parent’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from Parent shall assume all of Parent’s rights and obligations under this Section 1.3.

          1.4 Restrictive Legend. The certificates representing the shares of Parent Common Stock issued in the Merger shall bear, in addition to any other legends required under applicable state securities laws, the following legends:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, OFFERED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO REGISTRATION UNDER THE

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SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION AND (II) IN ACCORDANCE WITH THE RESTRICTIONS AND CONDITIONS SET FORTH IN A SHAREHOLDER CERTIFICATE BY AND BETWEEN THE ISSUER AND THE HOLDER OF THESE SECURITIES. A COPY OF SUCH SHAREHOLDER CERTIFICATE SHALL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT ANY SALE OR TRANSFER OF THESE SECURITIES WILL BE IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

“THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN DEMANDTEC, INC. AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO DEMANDTEC, INC. CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF DEMANDTEC, INC. WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

In order to prevent any transfer from taking place in violation of this Certificate or applicable law, Parent may cause a stop transfer order to be placed with its transfer agent with respect to the shares of Parent Common Stock. Parent will not be required to transfer on its books any shares of Parent Common Stock that have been sold or transferred in violation of any provision of this Certificate or applicable law.

          1.5 Questionnaire. The Shareholder has completed the Accredited Investor Questionnaire attached hereto as Exhibit A, and the Shareholder represents that the information provided therein is accurate and complete.

     2. Representations of the Shareholder.

          2.1 Authority of the Shareholder. The Shareholder has all necessary capacity, power and authority to execute and deliver this Certificate, to carry out the Shareholder’s obligations hereunder and to consummate the transactions contemplated hereby.

          2.2 Execution and Delivery by the Shareholder. The execution and delivery of this Certificate by the Shareholder, the performance by the Shareholder of the Shareholder’s obligations hereunder and the consummation by the Shareholder of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Shareholder. This Certificate has been duly executed and delivered by the Shareholder, and constitutes a legal, valid and binding obligation of the Shareholder enforceable against the Shareholder in accordance with its terms.

          2.3 Ownership of Company Stock and Company Options. The Shareholder owns of record and beneficially, free and clear of all liens, charges, security interests and other encumbrances or adverse claims, (i) the number of shares of Company Stock set forth on the signature page hereto and (ii) the number and type of options or other rights to purchase shares of Company Stock set forth on the signature page hereto. Except as set forth on the signature page hereto, the Shareholder owns no other shares of Company Stock and has no interest in, or right of any kind to, any securities of the Company. Other than the Amended and Restated Voting Agreement, dated as of December 28, 2004, and/or as set

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forth on Exhibit B hereto, the Shareholder is not a party to any voting trusts, shareholder agreement, proxy, right of first refusal, right of first offer or any other agreement or understanding in effect with respect to the voting or transfer of any such shares of Company Stock or options or other rights to acquire Company Stock.

          2.4 Investment Intent. The Shareholder will acquire the shares of Parent Common Stock issued in the Merger for the Shareholder’s own account for investment and not with a view to, or for resale in connection with, the distribution thereof. The Shareholder has no present intention of selling or otherwise distributing any portion of such shares of Parent Common Stock (or any interest therein). The Shareholder understands that the shares of Parent Common Stock so issued to the Shareholder will not be registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the Shareholder’s investment intent as expressed herein. The Shareholder has not been formed to acquire the shares of Parent Common Stock issuable to the Shareholder in connection with the Merger.

          2.5 No Public Market. The Shareholder understands and acknowledges that no public market now exists for the shares of Parent Common Stock and that Parent has made no assurance that a public market will ever exist for the shares of Parent Common Stock.

          2.6 Appointment of Purchaser Representative. The Shareholder hereby appoints Charles Magowan as purchaser representative (the “Purchaser Representative”) for the Shareholder in connection with evaluating the merits and risks of the Merger and the investment by the Shareholder in the shares of Parent Common Stock. The Shareholder acknowledges that the Shareholder has had an opportunity to meet with the Purchaser Representative via telephone or in person and, to the extent necessary, has relied in part on the advice of the Purchaser Representative in connection with the Merger and the investment in shares of Parent Common Stock.

          2.7 Investment Experience and Status; Purchaser Representative. The Shareholder, either alone or together with the Shareholder’s representative or Purchaser Representative, has such knowledge and experience in financial and business matters that the Shareholder is capable of evaluating the merits and risks of an investment in Parent Common Stock and protecting the Shareholder’s own interests in connection with such investment.

          2.8 Acknowledgement of Risk. The Shareholder acknowledges that an investment in Parent Common Stock involves a high degree of risk, and represents that Shareholder (i) has the financial ability to bear the economic risk an investment in shares of Parent Common Stock, (ii) is aware that the Shareholder may be required to bear the economic risk of such investment in Parent Common Stock for an indefinite period of time, (iii) has no need for liquidity with respect to the Shareholder’s investment in Parent Common Stock, and (iv) has adequate means of providing for his, her or its current needs and personal contingencies.

          2.9 Documents Delivered; Information. The Shareholder acknowledges that he, she or it has received and reviewed and understands the terms of the Merger Agreement and all schedules and exhibits thereto, and has received or has had access to all the information relating to Parent that the Shareholder has requested and considers necessary and relevant to making an informed investment decision with respect to the shares of Parent Common Stock. The Shareholder has been given the opportunity to make a thorough investigation of the proposed activities of Parent and has been furnished with materials relating to Parent and its proposed activities. The Shareholder has been afforded the opportunity to obtain any additional information deemed necessary by the Shareholder to verify the accuracy of any representations made or information conveyed by Parent to the Shareholder. The Shareholder has had an opportunity to ask questions of and receive answers from Parent, or from a person

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or persons acting on Parent’s behalf, concerning the terms and conditions of this investment. The Shareholder has relied upon, and is making his, her or its investment decision upon, the information made available to the Shareholder and other information publicly available about Parent.

          2.10 No General Solicitation. The Shareholder is not acquiring the shares of Parent Common Stock as a result of any general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

          2.11 Accuracy of Representations. The representations and warranties of the Shareholder contained in this Certificate are true and correct in all respects as of the date of this Certificate and will be true and correct in all respects on and as of the Effective Time.

     3. Covenants of Shareholder.

          3.1 Shareholders’ Representative. The Shareholder hereby agrees to, confirms and ratifies the appointment of Charles Magowan as Shareholders’ Representative and grants the Shareholders’ Representative the full power and authority specified in the Merger Agreement and the agreements contemplated thereby, and agrees to be bound by the actions of the Shareholders’ Representative taken on the Shareholder’s behalf pursuant to the terms of the Merger Agreement and the agreements contemplated thereby.

          3.2 Indemnification and Escrow. The Shareholder hereby acknowledges that, if the Shareholder is a holder of Company Series A Preferred Stock, the Shareholder is an indemnitor and agrees that the to be bound by Article IX of the Merger Agreement as if the Shareholder were a party thereto.

          3.3 “Market Stand-Off” Agreement. Each Shareholder hereby agrees that he, she or it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to an underwritten public offering of Parent Common Stock and ending on the date specified by Parent and the managing underwriter (such period not to exceed one hundred eighty (l80) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, shares of Parent Common Stock or any security convertible into or exercisable or exchangeable for shares of Parent Common Stock (whether such shares or any such securities are then owned by the Shareholder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares of Parent Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of the shares of Parent Common Stock or such other securities, in cash or otherwise. The underwriters involved with the public offering of Parent Common Stock are intended third party beneficiaries of this Section 3.3 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Shareholder further agrees to execute such agreements as may be reasonably requested by the underwriters in the Company’s initial public offering that are consistent with this Section 3.3 or that are necessary to give further effect thereto.

          In order to enforce the foregoing covenant, Parent may impose stop-transfer instructions with respect to the Shareholder’s shares of Parent Common Stock (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

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     4. Receipt of Information Statement. The Shareholder has received and carefully reviewed a copy of the Information Statement dated October 17, 2006 (including all exhibits, annexes and supplements thereto, the “Information Statement”).

     5. Professional Advice. With respect to the tax and other economic considerations involved in acquiring the shares of Parent Common Stock, the Shareholder is not relying on Parent or the Company, and the Shareholder has carefully considered and has, to the extent the Shareholder believes such discussion necessary, discussed with the Shareholder’s professional legal, tax, accounting and financial advisors the implications of acquiring the shares of Parent Common Stock for the Shareholder’s particular tax, financial and accounting situation.

     6. Counterparts. This Certificate may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     7. Successors and Assigns. This Certificate shall be enforceable by and shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. As used herein, the terms “successors and assigns” shall mean, where the context so permits, heirs, executors, administrators, trustees and successor trustees, and personal and other representatives, and the permitted transferees of the Parent Common Stock.

     8. Severability. If any provision of this Certificate is held to be unenforceable for any reason, such provision and all other related provisions shall be modified rather than voided, if possible, in order to achieve the intent of the parties to this Certificate to the extent possible. In any event, all other unrelated provisions of this Certificate shall be deemed valid and enforceable to the full extent.

     9. Governing Law. This Certificate shall be governed by, and construed in accordance with, the laws of the State of California applicable to contracts executed in and to be performed in that state and without regard to any applicable conflicts of law.

[Remainder of Page Intentionally Left Blank]

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          IN WITNESS WHEREOF, the Shareholder has executed this Certificate, or has caused this Certificate to be duly executed by its duly authorized representative, as of the date first written above.

SHAREHOLDER
By:
	Name:
	Title:
	Address:
	Facsimile:
	Attention:

Shares of Company  

Common Stock Owned                                                  

Shares of Company

Stock Issuable Upon

Exercise of Options/Warrants                                      

Shares of Company

Series A Preferred

Stock Owned                                                  

Shares of Company

Series A1 Preferred

Stock Owned                                                  

Accepted and Agreed To
as of the date first written above:

DEMANDTEC, INC.
By:
	Name:	Dan Fishback
	Title:	Chief Executive Officer

EXHIBIT A

ACCREDITED INVESTOR QUESTIONNAIRE

I. GENERAL INFORMATION (attach additional sheets if necessary)

1.	Name of Shareholder: __________________
2.	State of Residence: __________________
3.	Country of Citizenship: __________________

INSTRUCTIONS: It is not necessary to fill out all sections of this Questionnaire. Please review the list set forth below and complete only that portion of the Questionnaire applicable to you.

Individuals: Please complete Parts II and V below.

Trusts: Please complete Parts III and V below.

Partnerships/Corporations or Other Entities: Please complete only Parts IV and V below.

II. INDIVIDUALS: To confirm that each Shareholder meets the financial requirements established for receiving shares of Parent Common Stock in the Merger, please answer the questions set forth below, as appropriate.

Is your net worth (including spouse, if applicable), including home, home furnishings and automobiles greater than $1,000,000?

Yes                    No

Did you have income (exclusive of any income attributable to your spouse) in excess of $200,000 for 2004 and 2005 and do you reasonably expect to have income in excess of $200,000 in 2006?

Yes                    No

Did you and your spouse have joint income in excess of $300,000 for 2004 and 2005 and do you reasonably expect to have joint income in excess of $300,000 in 2006?

Yes                    No

This completes the questions applicable to individual investors. Please go to Part V.

III. TRUSTS: If the Shareholder is a trust, please answer each of the following questions.

A. ALL TRUSTS.

Is the trustee of the trust a national or state bank that is acting in its fiduciary capacity in making the investment on behalf of the trust?

Yes o                    No o

Was the trust organized for the specific purpose of acquiring shares of Parent Common Stock?

Yes o                    No o

Does this investment in the Company exceed 10% of the trust assets?

Yes o                    No o

B. If the trust is a revocable trust, please complete Question 1 below. If the trust is an irrevocable trust, please complete Question 2 below.

1. Revocable Trusts

If the trust is a revocable trust, please answer the following:

(a) Can the trust be amended or revoked at any time by its grantors?

Yes o                    No o

If yes, please answer the following questions relating to each grantor (please add sheets if necessary. If no, please complete Question 2 below.):

(h) Does the net worth of each grantor (including spouse, if applicable), including home, home furnishings and automobiles, exceed $1,000,000?

Yes o                    No o

(i) Was the income of each grantor (exclusive of any income attributable to his/her spouse) in excess of $200,000 for 2004 and 2005 and is reasonably expected to be in excess of $200,000 for 2006?

Yes o                    No o

(j) Was the income of each grantor (including income attributable to his/her spouse) in excess of $300,000 for 2004 and 2005 and is the income of each grantor reasonably expected to exceed $300,000 for 2006?

Yes o                    No o

2. Irrevocable Trusts

If the trust is an irrevocable trust, please answer the following questions about the trust and the trustee:

(a) Does the trust have assets greater than $5 million?

Yes o                    No o

(b) Does the trustee have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in             shares of Parent Common Stock?

Yes o                    No o

(c)                               
   (Name of Trustee)

This completes the questions applicable to trusts. Please go to Part V.

IV. PARTNERSHIPS/CORPORATIONS/OTHER ENTITIES: If the Shareholder is a partnership, corporation or other entity, please answer the questions set forth below, as appropriate.

A. Was the entity organized for the specific purpose of acquiring shares of Parent Common Stock?

Yes o     No o

B. Does the entity have assets greater than $5 million?

Yes o     No o

If you answered “No” to Question B, and if the entity is a corporation or partnership, please list on a separate page each partner or shareholder and indicate whether each partner or shareholder meets the “net worth” and/or “income” tests in Part II above for individuals.

This completes the questions applicable to corporations, partnerships and other entities.
Please go to Part V.

V. ALL SHAREHOLDERS

A. Do you have the knowledge and experience in financial and business matters to be able to evaluate the merits and risks of an investment in Parent?

Yes o     No o

B. Indicate how often you invest in:

(i) Marketable Securities

Often o     Occasionally o     Seldom o     Never o

(ii) Restricted Securities

Often o     Occasionally o     Seldom o     Never o

(iii) Venture Capital Limited Partnership Funds

Often o     Occasionally o     Seldom o     Never o

C. Do you, either alone by reason of your business or financial experience or through your professional advisor, have the capacity to protect your own interests in connection with a purchase of the shares of Parent Common Stock?

Yes o     No o

D. Are you (or the trust beneficiary for whom you are the fiduciary) able to bear the economic risk of an investment in the shares of Parent Common Stock, including a complete loss of the investment?

Yes o     No o

     The Shareholder hereby confirms that the foregoing statements are complete and accurate as the date hereof, and that the Shareholder undertakes to notify Parent immediately by facsimile or first class mail regarding any change in the information set forth above prior to the closing of the Merger.

(Signature)

Print Name:                                            

Print Title (if applicable):                                                     

Date:                                                            

Tax I.D. Number:	The Social Security number or Federal Tax I.D. number of the Shareholder is:
Address:

The phone number, fax number and contact person (if any) for the Shareholder are as follows:

Phone:                                            

Fax:                                                 

Contact Person:                                         

EXHIBIT B

Exceptions to Section 2.3

EXHIBIT B

Form of Non-Competition and Non-Solicitation Agreement

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

          This Non-Competition and Non-Solicitation Agreement is entered into between DemandTec, Inc., a Delaware corporation having its principal place of business at 1 Circle Star Way, Suite 200, San Carlos, California 94070 (“Parent”), and ___, an individual (“Shareholder”).

Recitals:

     A. Simultaneously with the execution of this Agreement, Parent, Merger Sub, a California corporation and a wholly owned subsidiary of Parent (the “Merger Sub”), TradePoint Solutions, Inc., a California corporation (“Company”), and Charles Magowan, as Stockholders’ Representative, are entering into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).

     B. Pursuant to the Merger Agreement, Merger Sub will be merged with and into Company (the “Merger”) and Company will become a wholly owned subsidiary of Parent.

     C. Shareholder owns a substantial equity interest in Company, has served in a position of significant authority at Company and has gained substantial knowledge and expertise in connection with Company’s products, organization and customers.

     D. Parent and Shareholder acknowledge that it would be detrimental to Company and Parent if Shareholder were to compete with Company or Parent in any part of the Business (as defined below) following the Merger.

     E. As a material inducement to Parent to enter into the Merger Agreement, Shareholder has agreed to execute this Agreement.

     F. Shareholder acknowledges that the delivery of this Agreement to Parent is a material element of the Merger, and this Agreement is executed by Shareholder to protect the legitimate interests of Parent in connection with the purchase and utilization of its ownership interest in Company.

          NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree as follows:

     1. Effective Date. This Agreement shall be effective at the effective time of the Merger (the “Effective Time”). This Agreement shall be null and void without any action required by the parties hereto if the Merger is not consummated as contemplated by the Merger Agreement.

     2. General Terms. This Agreement is entered into in connection with the Merger. The parties acknowledge that it would be detrimental to Parent and Company if Shareholder were to compete with Parent in any part of the Business following the Merger. The parties expressly understand and agree that the non-competition provisions contained in this Agreement are permissible and enforceable pursuant to California law.

     3. Definitions. For all purposes under this Agreement, the following terms shall have the meaning set forth below:

          (a) “Business” shall mean the business of the Company as conducted at the Effective Time, including without limitation, the development, manufacture, marketing, distribution, license or sale of Electronic Business Communication and Services to support trade promotion management in the CPG and Retail industries. Without limiting the generality of the foregoing, it is acknowledged and agreed that

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the “Business” includes software and services that (i) simplify the presentation, negotiation, and reconciliation of promotion allowances; (ii) manage the flow and effectiveness of promotional trade dollars; (iii) lets retailers, vendors and brokers and electronically prepare, present, negotiate, review, analyze and share deal sheets; and (iv) enables companies to accurately control, document and report all financial transactions, including trade promotions.

          (b) “Business Territory” shall mean the United States.

          (c) “Restricted Period” shall mean a period commencing at the Effective Time and ending on the second anniversary of the Effective Time.

     4. Non-Competition. During the Restricted Period, Shareholder shall not, as an employee, agent, consultant, advisor, independent contractor, general partner, officer, director, stockholder, investor, lender or guarantor of any corporation, partnership or other entity, or in any other capacity, directly or indirectly:

          (a) Participate in any manner in any person, firm, association, corporation or other entity that competes with, or has been formed to pursue a business that would compete with, the Business within the Business Territory;

          (b) Promote or assist, financially or otherwise, any person, firm, association, corporation or other entity engaged in the Business anywhere in the Business Territory; or

          (c) Solicit customers or business patronage that results in competition with the Business anywhere in the Business Territory.

     5. Non-Solicitation of Customers and Employees. During the Restricted Period, Shareholder shall not, directly or indirectly, in any capacity:

          (a) Solicit or encourage any customer of Parent or Company to terminate its relationship with Parent or Company; or

          (b) Solicit or encourage any person who at the time of such action is an employee or consultant of Parent or Company to terminate his or her employment or other relationship with Parent or Company.

     6. Exceptions. Section 4 and 5 notwithstanding, Shareholder may own, directly or indirectly, solely as an investment, up to one percent (1%) of any class of securities that is publicly traded of any company engaged in any business similar or identical to the Business of the Company. For all purposes of under this Agreement, the term “publicly traded” securities shall mean securities that are traded on a national securities exchange or on a securities market maintained by Nasdaq.

     7. Disclosure of Agreement. Shareholder shall disclose the existence and terms of this Agreement to any prospective employer, partner, co-venturer, investor or lender prior to entering into an employment, partnership or other business relationship with such person or entity.

     8. Severability. If any restriction set forth in this Agreement is held to be unreasonable or unenforceable, then Shareholder agrees, and hereby submits, to the reduction and limitation of such prohibition to the minimum extent necessary to make such reduction enforceable. Each provision of this Agreement is severable from the others. If any provision hereof is to any extent unenforceable, it and the other provisions hereof shall continue to be enforceable to the full extent allowable.

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     9. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Parent and its successors and assigns. This Agreement shall be binding upon Shareholder and shall inure to his benefit and to the benefit of his heirs, executors, administrators, and legal representatives, but shall not be assignable by Shareholder.

     10. Entire Agreement. This Agreement constitutes the entire agreement between Parent and Shareholder relating to the subject matter hereof. This Agreement supersedes and replaces any prior verbal or written agreement between the parties relating to the subject matter hereof. This Agreement may be amended or altered only in a written agreement executed by a duly authorized officer of Parent and by Shareholder.

     11. Applicable Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California, without regard to conflict-of-laws principles.

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     IN WITNESS WHEREOF, the parties have executed this Agreement, effective as of the Effective Date and subject to the consummation of the Merger.

DemandTec, Inc.	Shareholder
By:	Signature:
Name:	Print Name:
Title:

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EXHIBIT C

Form of Promissory Note

PROMISSORY NOTE

Up to $1,800,000 November ___, 2006

     FOR VALUE RECEIVED, DemandTec, Inc., a Delaware corporation (the “Borrower”), hereby promises to pay the Company Preferred Holders (collectively, the “Lender”) the Principal Amount (as defined below) pursuant to the terms and conditions of the Agreement and Plan of Merger and Reorganization made and entered into as of October 6, 2006, by and among Borrower, TP Acquisition Corp, a California corporation and a wholly-owned subsidiary of Borrower, Tradepoint Solutions, Inc., a California corporation, and Charles Magowan, as Shareholders’ Representative (the “Merger Agreement”). The Principal Amount shall be due and payable on the Anniversary Date (unless such maturity date is automatically extended pursuant to the terms of the Merger Agreement, in which case the Principal Amount shall be due a payable on such extended maturity date).

     1. Defined Terms. Unless otherwise defined, capitalized terms used herein shall have the same meanings defined in the Merger Agreement.

     2. Payment. All payments shall be made in lawful money of the United States of America at the principal office of the Exchange Agent. Prepayment may be made without Lender’s written consent. Borrower hereby waives demand, notice, presentment, protest and notice of dishonor.

     3. Security. This Promissory Note is a general unsecured obligation of Borrower.

     4. Principal Amount. The Principal Amount shall be One Million Eight Hundred Thousand dollars ($1,800,000), subject to downward adjustment as set forth in the Merger Agreement. If, as a result of such downward adjustment, the Principal Amount shall be zero dollars ($0), this Promissory Note shall automatically terminate and no longer be outstanding.

     5. Miscellaneous.

          5.1 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Promissory Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Promissory Note, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Promissory Note, except as expressly provided in this Promissory Note.

          5.2 Governing Law. This Promissory Note shall be governed by and construed under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. Notwithstanding any provision of this Promissory Note to the contrary, this Promissory Note shall be (to the extent necessary to satisfy the requirements of Section 22062(b)(3)(D) of the California Financial Code) subject to the implied covenant of good faith and fair dealing arising under Section 1655 of the California Civil Code.

          5.3 Notices. All notices and other communications given or made pursuant hereto shall be pursuant to Section 10.1 of the Merger Agreement.

          5.4 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Promissory Note, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

          5.5 Severability. If one or more provisions of this Promissory Note are held to be unenforceable under applicable law, such provision shall be excluded from this Promissory Note and the balance of the Promissory Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

          5.6 Entire Agreement; Amendments and Waivers. This Promissory Note, the Merger Agreement and the other documents delivered pursuant hereto and thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. Any term of this Promissory Note may be amended and the observance of any term may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of Borrower and the Lender. Any waiver or amendment effected in accordance with this section shall be binding upon each future holder of this Promissory Note and Borrower. No failure on the part of Lender or any holder of this Promissory Note to exercise any right or remedy hereunder, whether before or after the happening of a default, shall constitute a waiver thereof. No waiver of any past default shall constitute waiver of any future default or of any other default.

          5.7 Officers and Directors not Liable. In no event shall any officer or director of Borrower be liable for any amounts due and payable pursuant to this Promissory Note.

          5.8 Default; Breach. Borrower shall be deemed in default under this Promissory Note upon the occurrence of any one or more of the following events: (i) the failure of Borrower to pay any amount due hereunder within seven (7) business days of its due date; (ii) the filing by or against Borrower of a petition under any chapter of the bankruptcy laws of the United States or any of any (which in the case of an involuntary proceeding, is not discharged within sixty (60) days after filing); (iii) the making by Borrower of any assignment for the benefit of its creditors; or (iv) the liquidation or dissolution of Borrower. Upon the occurrence of any such default, at the election of Lender, the Principal Amount shall be immediately due and payable.

DEMANDTEC, INC.
By:
	Dan Fishback
	Chief Executive Officer

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DEMANDTEC, INC.

(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)

     DemandTec, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

     DOES HEREBY CERTIFY:

     FIRST: That the name of this corporation is DemandTec, Inc. and that this corporation was originally incorporated pursuant to the General Corporation Law on November 1, 1999 under the name DemandTec, Inc.

     SECOND: That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

     RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety as follows:

ARTICLE I

     The name of this corporation is DemandTec, Inc.

ARTICLE II

     The address of the registered office of this corporation in the State of Delaware is 15 East North Street, in the City of Dover, County of Kent. The name of its registered agent at such address is Incorporating Services, Ltd.

ARTICLE III

     The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE IV

     A. Classes of Stock. This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number

of shares that this corporation is authorized to issue is Seventy-Three Million Five Hundred Thirty-Five Thousand Seven Hundred Twenty-Nine (73,535,729) shares. Forty-Six Million Three Hundred Thousand (46,300,000) shares shall be Common Stock and Twenty-Seven Million Two Hundred Thirty-Five Thousand Seven Twenty-Nine (27,235,729) shares shall be Preferred Stock, each with a par value of $0.001 per share.

     B. Rights, Preferences and Restrictions of Preferred Stock. The rights, preferences, privileges, and restrictions granted to and imposed on the Series A Preferred Stock, which shall consist of Four Million Two Hundred Thousand (4,200,000) shares (the “Series A Preferred Stock”), the Series B Preferred Stock, which shall consist of Ten Million Four Hundred Thirty Seven Thousand Six Hundred Sixty-Five (10,437,665) shares (the “Series B Preferred Stock) and the Series C Preferred Stock, which shall consist of Twelve Million Five Hundred Ninety-Eight Thousand Sixty-Four (12,598,064) shares (the “Series C Preferred Stock”), are as set forth below in this Article IV(B).

     1. Dividend Provisions.

     (a) The holders of shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of this corporation) on the Common Stock of this corporation, at the rate of $0.05, $0.1312 and $0.2064 per share per annum for the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, respectively (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), payable when, as, and if declared by the Board of Directors. Such dividends shall not be cumulative. The holders of each of the outstanding Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (each voting individually as separate series, and on an as-converted basis) can waive any dividend preference that the holders of such series shall be entitled to receive under this Section 1 upon the affirmative vote or written consent of the holders of at least a majority of such series of Preferred Stock then outstanding.

     (b) After payment of such dividends, any additional dividends or distributions shall be distributed among all holders of Common Stock and all holders of Preferred Stock in proportion to the number of shares of Common Stock which would be held by each such holder if all shares of Preferred Stock were converted to Common Stock at the effective conversion rate.

     2. Liquidation Preference.

     (a) Preference. In the event of any liquidation, dissolution or winding up of this corporation, either voluntary or involuntary, the holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of this corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.50 for each outstanding share of Series A Preferred Stock (the “Original Series A Issue Price”), $1.64 for each outstanding share of Series B Preferred Stock (the “Original Series B Issue Price”) and $2.58 for each outstanding share of Series C Preferred Stock (the “Original Series C Issue

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Price”) (such prices per share to be appropriately adjusted to reflect any stock splits, stock dividends, combinations, recapitalizations and the like) and (ii) any declared but unpaid dividends on such respective shares. If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of this corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 2(a). Notwithstanding the foregoing, if the total net proceeds to be distributed to the Company’s stockholders in such liquidation, dissolution or winding up of the Company exceeds two hundred sixty million dollars ($260,000,000), then the holders of Preferred Stock shall not be entitled to receive any distribution pursuant to this Section 2(a) but instead shall be entitled to participate in any distribution pursuant to Section 2(b).

     (b) Remaining Assets. Upon completion of the distribution required by subsection (a) of this Section 2 (or in the event that Section 2(a) is inapplicable because the total net proceeds to be distributed to the Company’s stockholders in such liquidation, dissolution or winding up of the Company exceeds two hundred sixty million dollars ($260,000,000)), all of the remaining assets of this corporation available for distribution to stockholders shall be distributed among the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock pro rata based on the number of shares of Common Stock held by each (assuming full conversion of all such Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock).

(c) Certain Acquisitions.

          (i) Deemed Liquidation. For purposes of this Section 2, a liquidation, dissolution or winding up of this corporation shall be deemed to be occasioned by, or to include, (A) the acquisition of this corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation) that results in (x) the transfer of fifty percent (50%) or more of the outstanding voting power of this corporation or (y) the stockholders of this corporation immediately prior to such transaction or series of related transactions owning less than fifty percent (50%) of the outstanding voting power of this corporation immediately after such transaction or series of related transactions (except that the provisions of this Section 2(c)(i)(A) shall not apply to the sale of the corporation’s Series C Preferred Stock on the Purchase Date (as defined below)); or (B) a sale, lease, assignment, transfer or other disposition of all or substantially all of the assets of this corporation.

          (ii) Valuation of Consideration. In any of such events, if the consideration received by this corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

               (A) Securities not subject to investment letter or other similar restrictions on free marketability covered by (B) below:

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                    (1) If traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the thirty (30) day period ending three (3) days prior to the closing;

                    (2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and

                    (3) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of this corporation; provided, however, if the holders of a majority of the outstanding Preferred Stock object to such valuation, then the value shall be the fair market value thereof, as mutually determined by the Company and the holders of not less than a majority of the outstanding shares of Preferred Stock (voting together as a single class and not as separate series); and provided, further, that if the Company and the holders of a majority of the outstanding shares of Preferred Stock are unable to reach agreement, then by independent appraisal by an independent appraiser hired and paid for by the Company, but acceptable to the holders of a majority of the outstanding shares of Preferred Stock (voting together as a single class and not as separate series).

               (B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by this corporation and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

          (iii) Effect of Noncompliance. In the event the requirements of this subsection 2(c) are not complied with, this corporation shall forthwith either:

               (A) cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or

               (B) cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 2(c)(iv) hereof.

          (iv) Notice of Transaction. This corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than twenty (20) days prior to the stockholders’ meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 2, and this corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after this corporation has given the first notice provided for herein or sooner than ten (10) days after this corporation

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has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

     3. Redemption.

     (a) At any time after November 16, 2008, but within ninety (90) days after the receipt by this corporation of a written request from the holders of not less than a majority of the then outstanding Series B Preferred Stock and Series C Preferred Stock (voting together as a single class and not as separate series, and on an as-converted basis) that all or, if less than all, a specified percentage of such holders’ shares of Series B Preferred Stock and/or Series C Preferred Stock (which percentage shall be the same for the Series B Preferred Stock and Series C Preferred Stock) be redeemed, and concurrently with surrender by such holders of the certificates representing such shares, this corporation shall, to the extent it may lawfully do so, redeem in four (4) annual installments (each payment date being referred to herein as a “Redemption Date”) the shares specified in such request by paying in cash therefor an amount (i) per share of the Series B Preferred Stock equal to the Original Series B Issue Price (as adjusted to reflect any stock splits, stock dividends, combinations, recapitalizations and the like) plus all declared but unpaid dividends on such share (the “Series B Redemption Price”) and (ii) per share of the Series C Preferred Stock equal to the Original Series C Issue Price (as adjusted to reflect any stock splits, stock dividends, combinations, recapitalizations and the like) plus all declared but unpaid dividends on such share (the “Series C Redemption Price”). The number of shares of Series B Preferred Stock and/or Series C Preferred Stock that this corporation shall be required to redeem on any one Redemption Date shall be equal to the amount determined by dividing (i) the aggregate number of shares of Series B Preferred Stock and/or Series C Preferred Stock outstanding immediately prior to such Redemption Date that have been requested to be redeemed pursuant to this Section 3(a) by (ii) the number of remaining Redemption Dates (including the Redemption Date to which such calculation applies). Any redemption of Series B Preferred Stock and Series C Preferred Stock effected pursuant to this subsection 3(a) shall be made on a pro rata basis among the holders of the Series B Preferred Stock and Series C Preferred Stock in proportion to the number of shares of Series B Preferred Stock and Series C Preferred Stock proposed to be redeemed by such holders.

     (b) At least fifteen (15) but no more than thirty (30) days prior to each Redemption Date, written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice is given) of the Series B Preferred Stock and Series C Preferred Stock to be redeemed, at the address last shown on the records of this corporation for such holder, notifying such holder of the redemption to be effected on the applicable Redemption Date, specifying the number of shares to be redeemed from such holder, the Redemption Date, the applicable Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to this corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares to be redeemed (the “Redemption Notice”). Except as provided in subsection (3)(c), on or after each Redemption Date, each holder of Series B Preferred Stock and/or Series C Preferred Stock to be redeemed on such Redemption Date shall surrender to this corporation the certificate or certificates representing such shares, in the manner and at the place designated in the

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Redemption Notice, and thereupon the applicable Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

     (c) From and after each Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of shares of Series B Preferred Stock and Series C Preferred Stock designated for redemption on such Redemption Date in the Redemption Notice as holders of Series B Preferred Stock and Series C Preferred Stock (except the right to receive the applicable Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of this corporation or be deemed to be outstanding for any purpose whatsoever. If the funds of this corporation legally available for redemption of shares of Series B Preferred Stock and Series C Preferred Stock on a Redemption Date are insufficient to redeem the total number of shares of Series B Preferred Stock and Series C Preferred Stock to be redeemed on such date, those funds that are legally available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares to be redeemed such that each holder of a share of Series B Preferred Stock and Series C Preferred Stock receives the same percentage of the respective applicable Series B Redemption Price and Series C Redemption Price. The shares of Series B Preferred Stock and Series C Preferred Stock not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. At any time thereafter when additional funds of this corporation are legally available for the redemption of shares of Series B Preferred Stock and Series C Preferred Stock, such funds will immediately be used to redeem the balance of the shares that this corporation has become obliged to redeem on any Redemption Date but that it has not redeemed.

     (d) Notwithstanding anything herein to the contrary, on or prior to each Redemption Date, this corporation may deposit the Redemption Price of all shares of Series B Preferred Stock and Series C Preferred Stock designated for redemption on such Redemption Date in the Redemption Notice, and not yet redeemed or converted, with a bank or trust corporation having aggregate capital and surplus in excess of $50,000,000 as a trust fund for the benefit of the respective holders of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to publish the notice of redemption thereof and pay the respective Redemption Price for such shares to their respective holders on or after the Redemption Date, upon receipt of notification from this corporation that such holder has surrendered his, her or its share certificate to this corporation pursuant to subsection (3)(b) above. The balance of any moneys deposited by this corporation pursuant to this subsection (3)(d) remaining unclaimed at the expiration of two (2) years following the Redemption Date shall thereafter be returned to this corporation upon its request expressed in a resolution of its Board of Directors.

     4. Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

     (a) Right to Convert. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share and on or

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prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to such shares of the Series B Preferred Stock or Series C Preferred Stock, at the office of this corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series A Issue Price, Original Series B Issue Price or Original Series C Issue Price, as applicable, by the Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial Conversion Price per share for shares of Series A Preferred Stock shall be the Original Series A Issue Price, the initial Conversion Price per share for shares of Series B Preferred Stock shall be the Original Series B Issue Price and the initial Conversion Price per share for shares of Series C Preferred Stock shall be the Original Series C Issue Price; provided, however, that the Conversion Prices for the Preferred Stock shall be subject to adjustment as set forth in subsection 4(d).

     (b) Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the Conversion Price at the time in effect for such series of Preferred Stock immediately upon the earlier of (i) this corporation’s sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended, with aggregate gross proceeds of at least $30,000,000 or (ii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Preferred Stock (voting together as a single class and not as separate series, and on an as-converted basis).

     (c) Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, he or she shall surrender the certificate or certificates therefor, duly endorsed, at the office of this corporation or of any transfer agent for the Preferred Stock, and shall give written notice to this corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act of 1933, the conversion may, at the option of any holder tendering Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the persons entitled to receive the Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such sale of securities.

     (d) Conversion Price Adjustments of Preferred Stock for Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the Preferred Stock shall be subject to adjustment from time to time as follows:

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          (i) (A) Issuance of Additional Stock Below Purchase Price. If this corporation shall issue, after the date upon which any shares of Series C Preferred Stock are issued following the filing of this Amended and Restated Certificate of Incorporation (the “Purchase Date”), any Additional Stock (as defined below) without consideration or for a consideration per share less than the Conversion Price for Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in effect immediately prior to the issuance of such Additional Stock, the Conversion Price for such series in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of Shares outstanding immediately prior to such issuance plus the number of shares of capital stock that the aggregate consideration received by this corporation for such issuance would purchase at such Conversion Price; and the denominator of which shall be the number of Shares outstanding immediately prior to such issuance plus the number of shares of such Additional Stock. For purposes of this Section 4(d)(i)(A), Shares outstanding shall include only (i) shares of Common Stock outstanding (giving no effect to the provisions of Section 4(d)(i)(E)) and (ii) shares of Common Stock issuable upon conversion of shares of Preferred Stock outstanding.

               (A) No Fractional Adjustments. No adjustment of the Conversion Price for any series of Preferred Stock shall be made in an amount less than one cent per share, provided that any adjustments that are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to three (3) years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant to this subsection 4(d)(i) shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

               (B) Determination of Cash Considerations. In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by this corporation for any underwriting or otherwise in connection with the issuance and sale thereof.

               (C) Determination of Non-Cash Consideration. In the case of the issuance of the Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors irrespective of any accounting treatment.

               (D) Deemed Issuances of Common Stock. In the case of the issuance after the applicable Purchase Date of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall, except as provided, apply for all purposes of this subsection 4(d)(i) and subsection 4(d)(ii):

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                    (1) The aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential antidilution adjustments) of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)), if any, received by this corporation upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential antidilution adjustments) for the Common Stock covered thereby.

                    (2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by this corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by this corporation (without taking into account potential antidilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)).

                    (3) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to this corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Conversion Price of each series of Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

                    (4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of each series of Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.

                    (5) The number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to subsections 4(d)(i)(E)(1) and (2)

9

shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either subsection 4(d)(i)(E)(3) or (4).

          (ii) “Additional Stock” shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E)) by this corporation after the Purchase Date other than:

               (A) Common Stock issued pursuant to a transaction described in subsection 4(d)(iii) hereof;

               (B) Common Stock issuable or issued to employees, consultants, directors or other service providers (if in transactions with primarily non-financing purposes) of this corporation directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors of this corporation;

               (C) Common Stock issued upon conversion of Preferred Stock;

               (D) Securities issuable or issued to financial institutions or lessors in connection with credit or equipment financing arrangements, provided that such issuance is approved by the Board of Directors (including the affirmative vote of each of the directors appointed by the holders of Series B Preferred Stock and Series C Preferred Stock);

               (E) Securities issuable or issued in connection with a bona fide business acquisition by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, provided that such acquisition is approved by the Board of Directors (including the affirmative vote of each of the directors appointed by the holders of Series B Preferred Stock and Series C Preferred Stock);

               (F) Securities issuable or issued pursuant to warrants outstanding on the Purchase Date; or

               (G) Securities issuable or issued upon approval by the Board of Directors of the Company (including the directors appointed by the holders of Series B Preferred Stock and Series C Preferred Stock) to persons or entities with which the Company has business relationships provided such issuances are for other than primarily equity financing purposes.

          (iii) Stock Splits and Dividends. In the event this corporation should at any time or from time to time after the Purchase Date fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Conversion Price of each series of Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be

10

increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents.

          (iv) Reverse Stock Splits. If the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price for each series of Preferred Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

     (e) Other Distributions. In the event this corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by this corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 4(d)(iii), then, in each such case for the purpose of this subsection 4(e), the holders of each series of Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of this corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of this corporation entitled to receive such distribution.

     (f) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4 or Section 2) provision shall be made so that the holders of each series of Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock the number of shares of stock or other securities or property of this corporation or otherwise, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of each series of Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of each series of Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

     (g) No Impairment. This corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment.

     (h) No Fractional Shares and Certificate as to Adjustments.

          (i) No fractional shares shall be issued upon conversion of the Preferred Stock. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time

11

converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. If the conversion would result in any fractional share, this corporation shall, in lieu of issuing any fractional share, pay the holder an amount in cash equal to the fair market value of such fractional share on the date of conversion, as determined in good faith by the Board of Directors.

          (ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of any series of Preferred Stock pursuant to this Section 4, this corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. This corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for such series of Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received upon the conversion of a share of Preferred Stock.

     (i) Notices of Record Date. In the event of any taking by this corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, this corporation shall mail to each holder of Preferred Stock, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

     (j) Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, this corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Amended and Restated Certificate of Incorporation.

     (k) Notices. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of this corporation.

12

     5. Voting Rights.

     (a) General Voting Rights. The holder of each share of Preferred Stock shall have the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the bylaws of this corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

     (b) Voting for the Election of Directors. As long as at least twenty-five percent (25%) of the shares of Series B Preferred Stock originally issued remain outstanding, the holders of shares of Series B Preferred Stock shall be entitled to elect one (1) director of this corporation at each annual election of directors. As long as at least twenty-five percent (25%) of the shares of Series C Preferred Stock originally issued remain outstanding, the holders of shares of Series C Preferred Stock shall be entitled to elect one (1) director of this corporation at each annual election of directors. The holders of outstanding Common Stock shall be entitled to elect two (2) directors of this corporation at each annual election of directors. The holders of Preferred Stock and Common Stock (voting together as a single class and not as separate series, and on an as-converted basis) shall be entitled to elect any remaining directors of this corporation.

     In the case of any vacancy (other than a vacancy caused by removal) in the office of a director occurring among the directors elected by the holders of a class or series of stock pursuant to this Section 5(b), the remaining directors so elected by that class or series may by affirmative vote of a majority thereof (or the remaining director so elected if there be but one, or if there are no such directors remaining, by the affirmative vote of the holders of a majority of the shares of that class or series), elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class or series of stock or by any directors so elected as provided in the immediately preceding sentence hereof may be removed during the aforesaid term of office, either with or without cause, by, and only by, the affirmative vote of the holders of the shares of the class or series of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class or series of stock represented at the meeting or pursuant to written consent.

     6. Protective Provisions. So long as at least twenty-five percent (25%) of shares of Preferred Stock originally issued remain outstanding, this corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least sixty-six and two-thirds percent (66^2/3%) of the then outstanding shares of Preferred Stock (voting together as a single class and not as separate series, and on an as-converted basis):

13

     (a) sell, convey, or otherwise dispose of all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of this corporation is disposed of;

     (b) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Preferred Stock;

     (c) authorize or issue, or obligate itself to issue, any other equity security (including any other security convertible into or exercisable for any such equity security) having a preference over, or being on a parity with, the Preferred Stock with respect to dividends, liquidation, redemption or voting;

     (d) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of Common Stock in an amount which exceeds $25,000 during any twelve (12) month period; provided, however, that this restriction shall not apply to (i) the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for this corporation pursuant to agreements under which this corporation has the option to repurchase such shares upon the termination of employment or service or (ii) the exercise by this corporation of contractual rights of first refusal over shares of Common Stock;

     (e) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of Preferred Stock; provided, however, that this restriction shall not apply to the redemption of any share or shares of Preferred Stock in accordance with Section 3;

     (f) liquidate, dissolve or wind up the affairs of this corporation;

     (g) declare or pay dividends on or make any distribution on any shares of Common Stock;

     (h) take any action resulting in a sale of stock to a third party by a subsidiary of this corporation;

     (i) amend this corporation’s Certificate of Incorporation if such amendment would adversely change the rights, preferences, privileges or limitations of the Preferred Stock; or

     (j) grant an exclusive license for material technology of this corporation.

     7. Status of Redeemed or Converted Stock. In the event any shares of Preferred Stock shall be redeemed or converted pursuant to Section 3 or Section 4 hereof, the shares so redeemed or converted shall be cancelled and shall not be issuable by this corporation. The Amended and Restated Certificate of Incorporation of this corporation shall be appropriately amended to effect the corresponding reduction in this corporation’s authorized capital stock.

14

     C. Common Stock. The rights, preferences, privileges and restrictions granted to and imposed on the Common Stock are as set forth below in this Article IV(C).

     1. Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive, when and as declared by the Board of Directors, out of any assets of this corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors.

     2. Liquidation Rights. Upon the liquidation, dissolution or winding up of this corporation, the assets of this corporation shall be distributed as provided in Section 2 of Division (B) of Article IV hereof.

     3. Voting Rights. The holder of each share of Common Stock shall have the right to one vote for each such share, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of this corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law.

ARTICLE V

     Except as otherwise provided in this Amended and Restated Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of this corporation.

ARTICLE VI

     The number of directors of this corporation shall be fixed from time to time by resolution duly adopted by the Board of Directors or by the stockholders.

ARTICLE VII

     Elections of directors need not be by written ballot unless the Bylaws of this corporation shall so provide.

ARTICLE VIII

     Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of this corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of this corporation.

ARTICLE IX

     A director of this corporation shall, to the fullest extent permitted by the General Corporation Law as it now exists or as it may hereafter be amended, not be personally liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a

15

director, except for liability (i) for any breach of the director’s duty of loyalty to this corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the General Corporation Law is amended, after approval by the stockholders of this Article, to authorize corporation action further eliminating or limiting the personal liability of directors, then the liability of a director of this corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.

     Any amendment, repeal or modification of this Article IX, or the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article IX, by the stockholders of this corporation shall not apply to or adversely affect any right or protection of a director of this corporation existing at the time of such amendment, repeal, modification or adoption.

ARTICLE X

     This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE XI

     To the fullest extent permitted by applicable law, this corporation is authorized to provide indemnification of (and advancement of expenses to) agents of this corporation (and any other persons to which General Corporation Law permits this corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law, subject only to limits created by applicable General Corporation Law (statutory or non-statutory), with respect to actions for breach of duty to this corporation, its stockholders, and others.

     Any amendment, repeal or modification of the foregoing provisions of this Article XI shall not adversely affect any right or protection of a director, officer, agent, or other person existing at the time of, or increase the liability of any director of this corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

* * *

     THIRD: The foregoing amendment and restatement was approved by the holders of the requisite number of shares of said corporation in accordance with Section 228 of the General Corporation Law.

     FOURTH: That said amendment and restatement was duly adopted in accordance with the provisions of Section 242 and 245 of the General Corporation Law.

16

     IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by the President of this corporation on this 29^th day of May, 2003.

DEMANDTEC, INC.
 

/s/ Dan Fishback  

Dan Fishback, President 

CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DEMANDTEC, INC.

     DemandTec, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “General Corporation Law”).

     DOES HEREBY CERTIFY:

     FIRST: The name of this corporation is DemandTec, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on November 1, 1999 as DemandTec, Inc.

     SECOND: The Board of Directors of this corporation adopted resolutions setting forth a proposed amendment to the Amended and Restated Certificate of Incorporation of this corporation (the “Restated Certificate”), declaring said amendment to be advisable and in the best interests of this corporation and its stockholders and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders to such amendment. The proposed amendment is to effect the following amendment to the Restated Certificate:

     I. Replace Section A of Article IV of the Restated Certificate in its entirety with the following paragraph:

“A. Classes of Stock. This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares that this corporation is authorized to issue is One Hundred Twenty-Seven Million Two Hundred Thirty-Five Thousand Seven Hundred Twenty-Nine (127,235,729) shares. One Hundred Million (100,000,000) shares shall be Common Stock and Twenty-Seven Million Two Hundred Thirty-Five Thousand Seven Hundred Twenty-Nine (27,235,729) shares shall be Preferred Stock, each with a par value of $0.001 per share.”

     THIRD: That thereafter said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware by written consent of the stockholders holding the requisite number of shares required by statute given in accordance with and pursuant to Section 228 of the General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, DemandTec, Inc, has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer as of December 19, 2006.

/s/ Dan Fishback
Name:	Dan Fishback
Title:	President and Chief Executive Officer

EX-3.3

Exhibit 3.3

BYLAWS

OF

DEMANDTEC, INC.

(A DELAWARE CORPORATION)

Table Of Contents

		Page
ARTICLE I OFFICES			1
Section 1.	Registered Office
Section 2.	Other Offices
ARTICLE II CORPORATE SEAL			1
Section 3.	Corporate Seal		1
ARTICLE III STOCKHOLDERS’ MEETINGS			1
Section 4.	Place of Meetings		1
Section 5.	Annual Meeting		1
Section 6.	Special Meetings		4
Section 7.	Notice of Meetings		4
Section 8.	Quorum		4
Section 9.	Adjournment and Notice of Adjourned Meetings		5
Section 10.	Voting Rights		5
Section 11.	Joint Owners of Stock		5
Section 12.	List of Stockholders		6
Section 13.	Action Without Meeting		6
Section 14.	Organization		7
ARTICLE IV DIRECTORS			7
Section 15.	Number and Term of Office		7
Section 16.	Powers		7
Section 17.	Term of Directors		8
Section 18.	Vacancies		8
Section 19.	Resignation		9
Section 20.	Removal		9
Section 21.	Meetings		10
(a)	Annual Meetings		10
(b)	Regular Meetings		10
(c)	Special Meetings		10
(d)	Telephone Meetings		10
(e)	Notice of Meetings		10

i.

Table Of Contents
(CONTINUED)

		Page
(f)	Waiver of Notice		10
Section 22.	Quorum and Voting		10
Section 23.	Action Without Meeting		11
Section 24.	Fees and Compensation		11
Section 25.	Committees		11
(a)	Executive Committee		11
(b)	Other Committees		11
(c)	Term		12
(d)	Meetings		12
Section 26.	Organization		12
ARTICLE V OFFICERS			13
Section 27.	Officers Designated		13
Section 28.	Tenure and Duties of Officers		13
(a)	General		13
(b)	Duties of Chairman of the Board of Directors		13
(c)	Duties of President		13
(d)	Duties of Vice Presidents		14
(e)	Duties of Secretary		14
(f)	Duties of Chief Financial Officer		14
Section 29.	Delegation of Authority		14
Section 30.	Resignations		14
Section 31.	Removal		15
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION			15
Section 32.	Execution of Corporate Instruments		15
Section 33.	Voting of Securities Owned by the Corporation		15
ARTICLE VII SHARES OF STOCK			15
Section 34.	Form and Execution of Certificates		15
Section 35.	Lost Certificates		16
Section 36.	Transfers		16

ii.

Table Of Contents
(CONTINUED)

		Page
Section 37.	Fixing Record Dates		16
Section 38.	Registered Stockholders		17
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION			18
Section 39.	Execution of Other Securities		18
ARTICLE IX DIVIDENDS			18
Section 40.	Declaration of Dividends		18
Section 41.	Dividend Reserve		18
ARTICLE X FISCAL YEAR			19
Section 42.	Fiscal Year		19
ARTICLE XI INDEMNIFICATION			19
Section 43.	Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents		19
(a)	Directors and Executive Officers		19
(b)	Other Officers, Employees and Other Agents		19
(c)	Expenses		19
(d)	Enforcement		20
(e)	Non-Exclusivity of Rights		21
(f)	Survival of Rights		21
(g)	Insurance		.21
(h)	Amendments		21
(i)	Saving Clause		21
(j)	Certain Definitions		21
ARTICLE XII NOTICES			22
Section 44.	Notices		22
(a)	Notice to Stockholders		22
(b)	Notice to Directors		22
(c)	Affidavit of Mailing		22
(d)	Time Notices Deemed Given		23
(e)	Methods of Notice		23
(f)	Failure to Receive Notice		23

iii.

Table Of Contents
(CONTINUED)

		Page
(g)	Notice to Person with Whom Communication Is Unlawful		23
(h)	Notice to Person with Undeliverable Address		23
ARTICLE XIII AMENDMENTS			24
Section 45.	Amendments		24
ARTICLE XIV RIGHT OF FIRST REFUSAL			24
Section 46.	Right of First Refusal		24
ARTICLE XV LOANS TO OFFICERS			26
Section 47.	Loans to Officers		26
ARTICLE XVI MISCELLANEOUS			27
Section 48.	Annual Report		27

iv.

BYLAWS

OF

DEMANDTEC, INC.
(A DELAWARE CORPORATION)

ARTICLE I

Offices

     Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle. (Del. Code Ann., tit. 8, § 131)

     Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require. (Del. Code Ann., tit. 8, § 122(8))

ARTICLE II

Corporate Seal

     Section 3. Corporate Seal. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, “Corporate Seal-Delaware.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. (Del. Code Ann., tit. 8, § 122(3))

ARTICLE III

Stockholders’ Meetings

     Section 4. Place of Meetings. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the principal office of the corporation required to be maintained pursuant to Section 2 hereof. (Del. Code Ann., tit. 8, § 211(a))

     Section 5. Annual Meeting.

          (a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held

1.

on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation’s notice of meeting of stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 5. (Del. Code Ann., tit. 8, § 211(b)).

          (b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the stockholder must have given timely notice thereof in writing to the Secretary of the corporation, (ii) such other business must be a proper matter for stockholder action under the General Corporation Law of Delaware, (iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice (as defined in this Section 5(b)), such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation’s voting shares reasonably believed by such stockholder or beneficial owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 5. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90^th) day nor earlier than the close of business on the one hundred twentieth (120^th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred twentieth (120^th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90^th) day prior to such annual meeting or the tenth (10^th) day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth: (A) as to each person whom the stockholder proposed to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring before the meeting, a brief

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description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of the proposal, at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent, a “Solicitation Notice”).

          (c) Notwithstanding anything in the second sentence of Section 5(b) of these Bylaws to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 5 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10^th) day following the day on which such public announcement is first made by the corporation.

          (d) Only such persons who are nominated in accordance with the procedures set forth in this Section 5 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 5. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.

          (e) Notwithstanding the foregoing provisions of this Section 5, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation proxy statement pursuant to Rule 14a-8 under the 1934 Act.

          (f) For purposes of this Section 5, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.

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     Section 6. Special Meetings.

          (a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption) or (iv) by the holders of shares entitled to cast not less than ten percent (10%) of the votes at the meeting, and shall be held at such place, on such date, and at such time as the Board of Directors shall fix. At any time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law (“CGCL”), stockholders holding five percent (5%) or more of the outstanding shares shall have the right to call a special meeting of stockholders as set forth in Section 18(c) herein.

          (b) If a special meeting is properly called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall determine the time and place of such special meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120) days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. If the notice is not given within sixty (60) days after the receipt of the request, the person or persons properly requesting the meeting may set the time and place of the meeting and give the notice. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.

     Section 7. Notice of Meetings. Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. (Del. Code Ann., tit. 8, §§ 222,229)

     Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of

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stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of shares present in person or represented by proxy duly authorized at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy duly authorized at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except where otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of the outstanding shares of such class or classes or series present in person or represented by proxy duly authorized at the meeting shall be the act of such class or classes or series. (Del. Code Ann., tit. 8, § 216)

     Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares casting votes. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (Del. Code Ann., tit. 8, § 222(c))

     Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote or execute consents shall have the right to do so either in person or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period. (Del. Code Ann, tit. 8, §§ 211(e), 212 (b))

     Section 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2)

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or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the Delaware General Corporation Law, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest. (Del. Code Ann., tit. 8, § 217(b)).

     Section 12. List of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof and may be inspected by any stockholder who is present. (Del. Code Ann., tit. 8, § 219(a))

     Section 13. Action Without Meeting.

          (a) Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

          (b) Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation in the manner herein required, written consents signed by a sufficient number of stockholders to take action are delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. (Del. Code Ann., tit. 8, § 228)

          (c) Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the Delaware General Corporation Law if such action had been

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voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the Delaware General Corporation Law.

     Section 14. Organization.

          (a) At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.

          (b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

ARTICLE IV

Directors

     Section 15. Number and Term of Office.

          The authorized number of directors of the corporation shall be fixed by the Board of Directors from time to time. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient. (Del. Code Ann., tit. 8, §§ 141(b), 211(b), (c))

     Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation. (Del. Code Ann., tit. 8, § 141(a))

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     Section 17. Term of Directors.

          (a) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, directors shall be elected at each annual meeting of stockholders for a term of one year. Each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

          (b) No person entitled to vote at an election for directors may cumulate votes to which such person is entitled, unless, at the time of such election, the corporation is subject to Section 2115(b) of the CGCL. During such time or times that the corporation is subject to Section 2115(b) of the CGCL, every stockholder entitled to vote at an election for directors may cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder’s shares are otherwise entitled, or distribute the stockholder’s votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, shall be entitled to so cumulate such stockholder’s votes unless (a) the names of such candidate or candidates have been placed in nomination prior to the voting and (b) the stockholder has given notice at the meeting, prior to the voting, of such stockholder’s intention to cumulate such stockholder’s votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

     Section 18. Vacancies.

          (a) Unless otherwise provided in the Certificate of Incorporation, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director. (Del. Code Ann., tit. 8, § 223(a), (b)).

          (b) If at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in offices as aforesaid, which election shall be governed by Section 211 of the Delaware General Corporation Law (Del. Code Ann. tit. 8, §223(c)).

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          (c) At any time or times that the corporation is subject to §2115(b) of the CGCL, if, after the filling of any vacancy, the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then

               (i) any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or

               (ii) the Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily, order a special meeting of the stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL, the term of office of any director shall terminate upon that election of a successor. (CGCL §305(c).]

     Section 19. Resignation. Any director may resign at any time by delivering his written resignation to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be vacated and until his successor shall have been duly elected and qualified. (Del. Code Ann., tit. 8, §§ 141(b), 223(d))

     Section 20. Removal.

          (a) Subject to any limitations imposed by applicable law (and assuming the corporation is not subject to Section 2115 of the CGCL), the Board of Directors or any director may be removed from office at any time (i) with cause by the affirmative vote of the holders of a majority of the voting power of all then-outstanding shares of voting stock of the corporation entitled to vote at an election of directors or (ii) without cause by the affirmative vote of the holders of a majority of the voting power of all then-outstanding shares of voting stock of the corporation, entitled to vote at an election of directors.

          (b) During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such director’s removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director’s most recent election were then being elected.

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     Section 21. Meetings

          (a) Annual Meetings. The annual meeting of the Board of Directors shall be held immediately before or after the annual meeting of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it.

          (b) Regular Meetings. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board of Directors and publicized among all directors. No formal notice shall be required for a regular meeting of the Board of Directors. (Del. Code Ann., tit. 8, § 141(g))

          (c) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board, the President or any two of the directors. (Del. Code Ann., tit. 8, § 141(g))

          (d) Telephone Meetings. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. (Del. Code Ann., tit. 8, § 141(i))

          (e) Notice of Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, postage prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (Del. Code Ann., tit. 8, § 229)

          (f) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting. (Del. Code Ann., tit. 8, § 229)

     Section 22. Quorum and Voting.

          (a) Unless the Certificate of Incorporation requires a greater number and except with respect to indemnification questions arising under Section 43 hereof, for which a

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quorum shall be one-third of the exact number of directors fixed from time to time, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of Incorporation; provided, however, at any meeting, whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. (Del. Code Ann, tit. 8, § 141(b))

          (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws. (Del. Code Ann, tit. 8, § 141(b))

     Section 23. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. (Del. Code Ann, tit. 8, § 141(f))

     Section 24. Fees and Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. (Del. Code Ann, tit. 8, § 141(h))

     Section 25. Committees.

          (a) Executive Committee. The Board of Directors may appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any bylaw of the corporation. (Del. Code Ann, tit. 8, § 141(c))

          (b) Other Committees. The Board of Directors may, from time to time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Bylaws. (Del. Code Ann, tit. 8, § 141(c))

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          (c) Term. Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such member’s term on the Board of Directors. The Board of Directors, subject to any requirements of any outstanding series of Preferred Stock, the provisions of subsections (a) or (b) of this Bylaw may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (Del. Code Ann., tit. 8, § 141(c))

          (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. (Del. Code Ann., tit. 8, §§ 141(c), 229)

     Section 26. Organization. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or if the President is absent, the most senior Vice President (if a director) or, in the absence of any such person, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, any Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.

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ARTICLE V

Officers

     Section 27. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the Controller, all of whom shall be elected at the organizational meeting of the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of Directors. (Del. Code Ann., tit. 8, §§ 122(5), 142(a), (b))

     Section 28. Tenure and Duties of Officers.

          (a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. (Del. Code Ann., tit. 8, § 141(b), (e))

          (b) Duties of Chairman of the Board of Directors. The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. If there is no Chief Executive Officer or President, then the Chairman of the Board of Directors shall also serve as the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in paragraph (c) of this Section 28. (Del. Code Ann., tit. 8, § 142(a))

          (c) Duties of Chief Executive Officer. The Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. The Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The Chief Executive Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

          (d) Duties of President. If there is no Chief Executive Officer, the President shall be the Chief Executive Officer and shall perform the duties as indicated in subsection (c) above. If there is a Chief Executive Officer, the President shall perform such duties and have such powers as the Board of Directors shall designate from time to time.

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          (e) Duties of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

          (f) Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties given him in these Bylaws and other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

          (g) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

     Section 29. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

     Section 30. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer. (Del. Code Ann., tit. 8, § 142(b))

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     Section 31. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors.

ARTICLE VI

Execution Of Corporate Instruments And Voting
Of Securities Owned By The Corporation

     Section 32. Execution of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation. (Del. Code Ann., tit. 8, §§ 103(a), 142(a), 158)

     All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do.

     Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. (Del. Code Ann., tit. 8, §§ 103(a), 142(a), 158).

     Section 33. Voting of Securities Owned by the Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President. (Del. Code Ann. tit. 8, § 123)

ARTICLE VII

Shares Of Stock

     Section 34. Form and Execution of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall

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have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect to this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical. (Del. Code Ann., tit. 8, § 158)

     Section 35. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to agree to indemnify the corporation in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. (Del. Code Ann., tit. 8, § 167)

     Section 36. Transfers.

          (a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares. (Del. Code Ann., tit. 8, § 201, tit. 6, § 8- 401(1))

          (b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the Delaware General Corporation Law. (Del. Code Ann., tit. 8, § 160 (a))

     Section 37. Fixing Record Dates.

          (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of

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Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

          (b) In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

          (c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (Del. Code Ann., tit 8, § 213)

     Section 38. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive

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dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. (Del. Code Ann., tit. 8, §§ 213(a), 219)

ARTICLE VIII

Other Securities Of The Corporation

     Section 39. Execution of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 34), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation.

ARTICLE IX

Dividends

     Section 40. Declaration of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law. (Del. Code Ann., tit. 8, §§ 170, 173)

     Section 41. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property

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of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. (Del. Code Ann., tit. 8, § 171)

ARTICLE X

Fiscal Year

     Section 42. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

ARTICLE XI

Indemnification

     Section 43. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents.

          (a) Directors and Executive Officers. The corporation shall indemnify its directors and executive officers (for the purposes of this Article XI, “executive officers” shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent not prohibited by the Delaware General Corporation Law or any other applicable law; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and, provided, further, that the corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the Delaware General Corporation Law or any other applicable law or (iv) such indemnification is required to be made under subsection (d).

          (b) Other Officers, Employees and Other Agents. The corporation shall have power to indemnify its other officers, employees and other agents as set forth in the Delaware General Corporation Law or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification shall be given to any such person to such officers or other persons as the Board of Directors shall determine.

          (c) Expenses. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person

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to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under this Bylaw or otherwise.

     Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Bylaw, no advance shall be made by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of the corporation, in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

          (d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted by this Bylaw to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the Delaware General Corporation Law or any other applicable law for the corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law or any other applicable law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this Article XI or otherwise shall be on the corporation.

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          (e) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the Delaware General Corporation Law or any other applicable law.

          (f) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

          (g) Insurance. To the fullest extent permitted by the Delaware General Corporation Law, or any other applicable law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Bylaw.

          (h) Amendments. Any repeal or modification of this Bylaw shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation.

          (i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this Bylaw that shall not have been invalidated, or by any other applicable law. If this Section 43 shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the corporation shall indemnify each director and executive officer to the full extent under applicable law.

          (j) Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply:

               (1) The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

               (2) The term “expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.

               (3) The term the “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have

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had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Bylaw with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

               (4) References to a “director,” “executive officer,” “officer,” “employee,” or “agent” of the corporation shall include, without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

               (5) References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Bylaw.

ARTICLE XII

Notices

     Section 44. Notices.

          (a) Notice to Stockholders. Whenever, under any provisions of these Bylaws, notice is required to be given to any stockholder, it shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the corporation or its transfer agent. (Del. Code Ann., tit. 8, §222)

          (b) Notice to Directors. Any notice required to be given to any director may be given by the method stated in subsection (a), or by overnight delivery service, facsimile, telex or telegram, except that such notice other than one which is delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director.

          (c) Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or

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notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained. (Del. Code Ann., tit. 8, § 222)

          (d) Time Notices Deemed Given. All notices given by mail or by overnight delivery service, as above provided, shall be deemed to have been given as at the time of mailing, and all notices given by facsimile, telex or telegram shall be deemed to have been given as of the sending time recorded at time of transmission.

          (e) Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others.

          (f) Failure to Receive Notice. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him in the manner above provided, shall not be affected or extended in any manner by the failure of such stockholder or such director to receive such notice.

          (g) Notice to Person with Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

          (h) Notice to Person with Undeliverable Address. Whenever notice is required to be given, under any provision of law or the Certificate of Incorporation or Bylaws of the corporation, to any stockholder to whom (i) notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelvemonth period, have been mailed addressed to such person at his address as shown on the records of the corporation and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the corporation a written notice setting forth his then current address, the requirement that notice be given to such person shall be reinstated. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to this paragraph. (Del. Code Ann, tit. 8, § 230)

23.

ARTICLE XIII

Amendments

     Section 45. Amendments. Subject to paragraph (h) of Section 43 of the Bylaws, these Bylaws may be amended or repealed and new Bylaws adopted by the stockholders entitled to vote. The Board of Directors shall also have the power, if such power is conferred upon the Board of Directors by the Certificate of Incorporation, to adopt, amend, or repeal Bylaws (including, without limitation, the amendment of any Bylaw setting forth the number of Directors who shall constitute the whole Board of Directors). (Del. Code Ann., tit. 8, §§ 109(a), 122(6)).

ARTICLE XIV

Right Of First Refusal

     Section 46. Right of First Refusal. No stockholder shall sell, assign, pledge, or in any manner transfer any of the shares of stock of the corporation or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the requirements hereinafter set forth in this bylaw:

          (a) If the stockholder desires to sell or otherwise transfer any of his shares of stock, then the stockholder shall first give written notice thereof to the corporation. The notice shall name the proposed transferee and state the number of shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer.

          (b) For thirty (30) days following receipt of such notice, the corporation shall have the option to purchase all (but not less than all) of the shares specified in the notice at the price and upon the terms set forth in such notice; provided, however, that, with the consent of the stockholder, the corporation shall have the option to purchase a lesser portion of the shares specified in said notice at the price and upon the terms set forth therein. In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying the full price for the shares, and that is not otherwise exempted from the provisions of this Section 46, the price shall be deemed to be the fair market value of the stock at such time as determined in good faith by the Board of Directors. In the event the corporation elects to purchase all of the shares or, with consent of the stockholder, a lesser portion of the shares, it shall give written notice to the transferring stockholder of its election and settlement for said shares shall be made as provided below in paragraph (d).

          (c) The corporation may assign its rights hereunder.

          (d) In the event the corporation and/or its assignee(s) elect to acquire any of the shares of the transferring stockholder as specified in said transferring stockholder’s notice, the Secretary of the corporation shall so notify the transferring stockholder and settlement thereof shall be made in cash within thirty (30) days after the Secretary of the corporation receives said transferring stockholder’s notice; provided that if the terms of payment set forth in said transferring stockholder’s notice were other than cash against delivery, the corporation

24.

and/or its assignee(s) shall pay for said shares on the same terms and conditions set forth in said transferring stockholder’s notice.

          (e) In the event the corporation and/or its assignees(s) do not elect to acquire all of the shares specified in the transferring stockholder’s notice, said transferring stockholder may, within the sixty-day period following the expiration of the option rights granted to the corporation and/or its assignees(s) herein, transfer the shares specified in said transferring stockholder’s notice which were not acquired by the corporation and/or its assignees(s) as specified in said transferring stockholder’s notice. All shares so sold by said transferring stockholder shall continue to be subject to the provisions of this bylaw in the same manner as before said transfer.

          (f) Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from the provisions of this bylaw:

               (1) A stockholder’s transfer of any or all shares held either during such stockholder’s lifetime or on death by will or intestacy to such stockholder’s immediate family or to any custodian or trustee for the account of such stockholder or such stockholder’s immediate family or to any limited partnership of which the stockholder, members of such stockholder’s immediate family or any trust for the account of such stockholder or such stockholder’s immediate family will be the general of limited partner(s) of such partnership. “Immediate family” as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the stockholder making such transfer.

               (2) A stockholder’s bona fide pledge or mortgage of any shares with a commercial lending institution, provided that any subsequent transfer of said shares by said institution shall be conducted in the manner set forth in this bylaw.

               (3) A stockholder’s transfer of any or all of such stockholder’s shares to the corporation or to any other stockholder of the corporation.

               (4) A stockholder’s transfer of any or all of such stockholder’s shares to a person who, at the time of such transfer, is an officer or director of the corporation.

               (5) A corporate stockholder’s transfer of any or all of its shares pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate stockholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate stockholder.

               (6) A corporate stockholder’s transfer of any or all of its shares to any or all of its stockholders.

               (7) A transfer by a stockholder which is a limited or general partnership to any or all of its partners or former partners.

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     In any such case, the transferee, assignee, or other recipient shall receive and hold such stock subject to the provisions of this bylaw, and there shall be no further transfer of such stock except in accord with this bylaw.

          (g) The provisions of this bylaw may be waived with respect to any transfer either by the corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation (excluding the votes represented by those shares to be transferred by the transferring stockholder). This bylaw may be amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation.

          (h) Any sale or transfer, or purported sale or transfer, of securities of the corporation shall be null and void unless the terms, conditions, and provisions of this bylaw are strictly observed and followed.

          (i) The foregoing right of first refusal shall terminate on either of the following dates, whichever shall first occur:

               (1) On September 30, 2009; or

               (2) Upon the date securities of the corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.

          (j) The certificates representing shares of stock of the corporation shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION.”

ARTICLE XV

Loans To Officers

     Section 47. Loans to Officers. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. (Del. Code Ann., tit. 8, §143)

26.

ARTICLE XVI

Miscellaneous

     Section 48. Annual Report.

          Subject to the provisions of paragraph (b) of this Bylaw, the Board of Directors shall cause an annual report to be sent to each stockholder of the corporation not later than one hundred twenty (120) days after the close of the corporation’s fiscal year. Such report shall include a balance sheet as of the end of such fiscal year and an income statement and statement of changes in financial position for such fiscal year, accompanied by any report thereon of independent accounts or, if there is no such report, the certificate of an authorized officer of the corporation that such statements were prepared without audit from the books and records of the corporation. When there are more than 100 stockholders of record of the corporation’s shares, as determined by Section 605 of the CGCL, additional information as required by Section 1501(b) of the CGCL shall also be contained in such report, provided that if the corporation has a class of securities registered under Section 12 of the 1934 Act, that Act shall take precedence. Such report shall be sent to stockholders at least fifteen (15) days prior to the next annual meeting of stockholders after the end of the fiscal year to which it relates.

          (a) If and so long as there are fewer than 100 holders of record of the corporation’s shares, the requirement of sending of an annual report to the stockholders of the corporation is hereby expressly waived.

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CERTIFICATE OF SECRETARY

     I hereby certify that:

     I am the duly elected and acting Secretary of DemandTec, Inc., a Delaware corporation (the “Company”); and

     Attached hereto is a complete and accurate copy of the Bylaws of the Company as duly adopted by the Board of Directors by Unanimous Written Consent dated November 1, 1999 and said Bylaws are presently in effect.

     In Witness Whereof, I have hereunto subscribed my name and affixed the seal of the Company this 1^st day of November, 1999.

/s/ Scott Molinaroli  

Scott Molinaroli 

Secretary 

EX-3.4

Exhibit 3.4

AMENDED AND RESTATED

BYLAWS OF

DEMANDTEC, INC.

A DELAWARE CORPORATION

TABLE OF CONTENTS

			Page
ARTICLE I OFFICES AND RECORDS				1
	Section 1.1	Delaware Office		1
	Section 1.2	Other Offices		1
	Section 1.3	Books and Records		1
ARTICLE II STOCKHOLDERS				1
	Section 2.1	Annual Meeting		1
	Section 2.2	Special Meeting		1
	Section 2.3	Place of Meeting		1
	Section 2.4	Notice of Meeting		1
	Section 2.5	Quorum and Adjournment		2
	Section 2.6	Proxies		2
	Section 2.7	Notice of Stockholder Business and Nominations		2
	Section 2.8	Procedure for Election of Directors		4
	Section 2.9	Inspectors of Elections		5
	Section 2.10	Conduct of Meetings		5
	Section 2.11	No Consent of Stockholders in Lieu of Meeting		6
ARTICLE III BOARD OF DIRECTORS				6
	Section 3.1	General Powers		6
	Section 3.2	Number, Tenure and Qualifications		6
	Section 3.3	Regular Meetings		6
	Section 3.4	Special Meetings		6
	Section 3.5	Action by Unanimous Consent of Directors		7
	Section 3.6	Notice		7
	Section 3.7	Conference Telephone Meetings		7
	Section 3.8	Quorum		7
	Section 3.9	Vacancies		7
	Section 3.10	Committees		8
	Section 3.11	Removal		8
ARTICLE IV OFFICERS				8
	Section 4.1	Elected Officers		8
	Section 4.2	Election and Term of Office		8
	Section 4.3	Chairman of the Board		9
	Section 4.4	Chief Executive Officer		9
	Section 4.5	President		9
	Section 4.6	Secretary		9
	Section 4.7	Treasurer		9
	Section 4.8	Removal		9
	Section 4.9	Vacancies		10

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			Page
ARTICLE V STOCK CERTIFICATES AND TRANSFERS				10
	Section 5.1	Stock Certificates and Transfers		10
ARTICLE VI INDEMNIFICATION				10
	Section 6.1	Right to Indemnification		10
	Section 6.2	Right to Advancement of Expenses		11
	Section 6.3	Right of Indemnitee to Bring Suit		11
	Section 6.4	Non-Exclusivity of Rights		12
	Section 6.5	Insurance		12
	Section 6.6	Amendment of Rights		12
	Section 6.7	Indemnification of Employees and Agents of the Corporation		12
ARTICLE VII MISCELLANEOUS PROVISIONS				12
	Section 7.1	Fiscal Year		12
	Section 7.2	Dividends		12
	Section 7.3	Seal		13
	Section 7.4	Waiver of Notice		13
	Section 7.5	Audits		13
	Section 7.6	Resignations		13
	Section 7.7	Contracts		13
	Section 7.8	Proxies		13
ARTICLE VIII AMENDMENTS				14
	Section 8.1	Amendments		14

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ARTICLE I

OFFICES AND RECORDS

          Section 1.1 Delaware Office. The registered office of the Corporation in the State of Delaware shall be located in the City of Dover, County of Kent.

          Section 1.2 Other Offices. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

          Section 1.3 Books and Records. The books and records of the Corporation may be kept at the Corporation’s headquarters in Santa Clara, California or at such other locations inside or outside the State of Delaware as may from time to time be designated by the Board of Directors.

ARTICLE II

STOCKHOLDERS

          Section 2.1 Annual Meeting. The annual meeting of the stockholders of the Corporation shall be held at such date, place and/or time as may be fixed by resolution of the Board of Directors.

          Section 2.2 Special Meeting. Special meetings of stockholders of the Corporation may be called only by the Chairman of the Board or the Chief Executive Officer or by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board. For purposes of these Amended and Restated Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

          Section 2.3 Place of Meeting. The Board of Directors may designate the place of meeting for any meeting of the stockholders or the means of remote communications by which any meeting shall be held. If no designation is made by the Board of Directors, the place of meeting shall be the principal office of the Corporation.

          Section 2.4 Notice of Meeting. Except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Corporation), notice stating the place, if any, date and hour of the meeting and the means of remote communications, if any, by which stockholders and proxy holder may be deemed to be present in person and vote at such meeting, shall be given by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally, by mail, or in the case of stockholders who have consented to such delivery, by electronic transmission (as such term is defined in the Delaware General Corporation Law), to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed given when deposited in the U.S. mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. Notice

given by electronic transmission shall be deemed given (A) if by facsimile, when faxed to a number where the stockholder has consented to receive notice; (B) if by electronic mail, when mailed electronically to an electronic mail address at which the stockholder has consented to receive such notice; (C) if by posting on an electronic network together with a separate notice of such posting, upon the later to occur of (1) the posting or (2) the giving of separate notice of the posting; or (D) if by other form of electronic transmission, when directed to the stockholder in the manner consented to by the stockholder.

          Section 2.5 Quorum and Adjournment. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series voting separately as a class or series, the holders of a majority of the voting power of the shares of such class or series shall constitute a quorum for the transaction of such business for the purposes of taking action on such business. If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date or time. No notice of the adjourned meeting need be given if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided such adjournment is for not more than thirty (30) days and no new record date is fixed for the adjourned meeting.

          Section 2.6 Proxies. At all meetings of stockholders, a stockholder may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting.

          Section 2.7 Notice of Stockholder Business and Nominations.

               A. Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders may be made at an annual meeting of stockholders (1) pursuant to the Corporation’s notice with respect to such meeting, (2) by or at the direction of the Board of Directors or (3) by any stockholder of record of the Corporation who was a stockholder of record at the time of the giving of the notice provided for in the following paragraph, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 2.7.

               B. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to paragraph (A)(3) of this Section 2.7, (1) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, (2) such business must be a proper matter for stockholder action under the Delaware General Corporation Law, (3) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the Corporation with a Solicitation Notice, as that term is defined in subclause (c)(iii) of this paragraph, such stockholder or beneficial owner must, in the case of a proposal, have delivered prior to the meeting a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have

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delivered prior to the meeting a proxy statement and form of proxy to holders of a percentage of the Corporation’s voting shares reasonably believed by such stockholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice and (4) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this section. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than forty-five (45) or more than seventy-five (75) days prior to the first anniversary (the “Anniversary”) of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that if no proxy materials were mailed by the Corporation in connection with the preceding year’s annual meeting, or if the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (x) the 90th day prior to such annual meeting or (y) the 10th day following the day on which public announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such person’s written consent to serve as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent, a “Solicitation Notice”).

               C. Notwithstanding anything in the second sentence of paragraph (B) of this Section 2.7 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board made by the Corporation at least fifty-five (55) days prior to the Anniversary, a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

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               D. Only persons nominated in accordance with the procedures set forth in this Section 2.7 shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.7. The chair of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defectively proposed business or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.

               E. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) by any stockholder of record of the Corporation who is a stockholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.7. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice required by paragraph (B) of this Section 2.7 shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.

               F. For purposes of this Section 2.7, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

               G. Notwithstanding the foregoing provisions of this Section 2.7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

          Section 2.8 Procedure for Election of Directors. Election of directors at all meetings of the stockholders at which directors are to be elected shall be by written ballot, and, except as otherwise set forth in the Certificate of Incorporation with respect to the right of the holders of any series of Preferred Stock or any other series or class of stock to elect additional directors under specified circumstances, a plurality of the votes cast thereat shall elect directors. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, all matters other than the election of directors submitted to the stockholders at any meeting shall be decided by a majority of the votes cast affirmatively or negatively.

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          Section 2.9 Inspectors of Elections.

               A. The Board of Directors by resolution may, and to the extent required by law, shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act, or if all inspectors or alternates who have been appointed are unable to act, at a meeting of stockholders, the chairman of the meeting may, and to the extent required by law, shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by the Delaware General Corporation Law.

          Section 2.10 Conduct of Meetings.

               A. Such person as the Board of Directors designates or, in the absence of such a person, the Chief Executive Officer shall preside at all meetings of the stockholders. In the absence of the Chief Executive Officer, the Chairman of the Board shall preside at a meeting of the stockholders. In the absence of the Chief Executive Officer or the Chairman of the Board, the President shall preside at a meeting of the stockholders. In the absence of each of the Chief Executive Officer, the Chairman of the Board and the President, the Secretary shall preside at a meeting of the stockholders. In the anticipated absence of all officers designated to preside over the meetings of stockholders, the holders of a majority of the voting power of the Voting Stock may designate an individual to preside over a meeting of the stockholders.

               B. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting. The chairman shall have power to adjourn the meeting to another place, if any, date and time.

               C. The Board of Directors may, to the extent not prohibited by law, adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may to the extent not prohibited by law include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof and (v) limitations on the time allotted to questions or comments by participants. Unless, and to the extent, determined by the Board of Directors or the chairman of

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the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

          Section 2.11 No Consent of Stockholders in Lieu of Meeting. Subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

ARTICLE III

BOARD OF DIRECTORS

          Section 3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by the Certificate of Incorporation or by these Bylaws, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

          Section 3.2 Number, Tenure and Qualifications. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. The Board of Directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided into three classes: Class I, Class II and Class III. Each director shall serve for a term ending on the third annual meeting of stockholders following the annual meeting of stockholders at which such director was elected; provided, however, that the directors first elected, assigned or appointed to Class I shall serve for a term ending on the Corporation’s first annual meeting of stockholders following the effectiveness of the Certificate of Incorporation classifying the Board of Directors, the directors first elected, assigned or appointed to Class II shall serve for a term ending on the Corporation’s second annual meeting of stockholders following the effectiveness of the Certificate of Incorporation classifying the Board of Directors and the directors first elected, assigned or appointed to Class III shall serve for a term ending on the Corporation’s third annual meeting of stockholders following the effectiveness of the Certificate of Incorporation classifying the Board of Directors. The foregoing notwithstanding, each director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s prior death, resignation, retirement, disqualification or other removal. The Board of Directors is authorized to assign members of the Board already in office to such classes as it may determine at the time the classification of the Board of Directors becomes effective.

          Section 3.3 Regular Meetings. The Board of Directors may, by resolution, provide the time and place for the holding of regular meetings of the Board of Directors. A notice of each regular meeting shall not be required.

          Section 3.4 Special Meetings. Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the Chief Executive Officer or a majority

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of the number of directors necessary to constitute a quorum. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.

          Section 3.5 Action by Unanimous Consent of Directors. The Board of Directors may take action without the necessity of a meeting by unanimous consent of directors. Such consent may be in writing or given by electronic transmission, as such term is defined in the Delaware General Corporation Law, and the writing or transmission shall be filed with the minutes of proceedings of the Board of Directors.

          Section 3.6 Notice. Notice of any special meeting shall be given to each director in writing, or by telegram, facsimile transmission, telephone communication or electronic transmission. If mailed, such notice shall be deemed given when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, such notice shall be deemed given when the telegram is delivered to the telegraph company at least twenty-four (24) hours before such meeting. If by facsimile transmission or other electronic transmission, such notice shall be transmitted at least twenty-four (24) hours before such meeting. If by telephone, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting.

          Section 3.7 Conference Telephone Meetings. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

          Section 3.8 Quorum. A number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

          Section 3.9 Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been chosen expires or until such director’s successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

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          Section 3.10 Committees.

               A. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no committee shall have power or authority in reference to the following matters: (1) approving, adopting or recommending to stockholders any action or matter required by law to be submitted to stockholders for approval or (2) adopting, amending or repealing any Bylaw.

               B. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to these Bylaws.

          Section 3.11 Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of a majority of the voting power of the Voting Stock.

ARTICLE IV

OFFICERS

          Section 4.1 Elected Officers. The elected officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary, a Treasurer and such other officers as the Board of Directors from time to time may deem proper. The Chairman of the Board shall be chosen from the directors. All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

          Section 4.2 Election and Term of Office. The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Subject to Section 4.8 of these Bylaws, each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign.

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          Section 4.3 Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board.

          Section 4.4 Chief Executive Officer. The Chief Executive Officer shall be the general manager of the Corporation, subject to the control of the Board of Directors, and as such shall, subject to Section 2.10(A) hereof, preside at all meetings of stockholders, shall have general supervision of the affairs of the Corporation, shall sign or countersign or authorize another officer to sign all certificates, contracts and other instruments of the Corporation as authorized by the Board of Directors, shall make reports to the Board of Directors and stockholders, and shall perform all such other duties as are incident to such office or are properly required by the Board of Directors.

          Section 4.5 President. The President shall be the chief operating officer of the corporation and shall be subject to the general supervision, direction and control of the Chief Executive Officer unless the Board of Directors provides otherwise.

          Section 4.6 Secretary. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors and all other notices required by law or by these Bylaws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman of the Board, the Chief Executive Officer, the President or by the Board of Directors, upon whose request the meeting is called as provided in these Bylaws. The Secretary shall record all the proceedings of the meetings of the Board of Directors, any committees thereof and the stockholders of the Corporation in a book to be kept for that purpose, and shall perform such other duties as may be assigned to the Secretary by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. The Secretary shall have custody of the seal of the Corporation and shall affix the same to all instruments requiring it, when authorized by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President, and attest to the same.

          Section 4.7 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate receipts and disbursements in books belonging to the Corporation. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors the Chairman of the Board, the Chief Executive Officer or the President, taking proper vouchers for such disbursements. The Treasurer shall render to the Chairman of the Board, the Chief Executive Officer, the President and the Board of Directors, whenever requested, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board of Directors shall prescribe.

          Section 4.8 Removal. Any officer elected by the Board of Directors may be removed by the Board of Directors at any time, with or without cause. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal,

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whichever event shall first occur, except as otherwise provided in an employment contract or an employee plan.

          Section 4.9 Vacancies. A newly created office and a vacancy in any office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors.

ARTICLE V

STOCK CERTIFICATES AND TRANSFERS

          Section 5.1 Stock Certificates and Transfers.

               A. Unless the Board of Directors has determined that some or all of any or all classes or series of stock shall be uncertificated shares, the interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.

               B. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation representing the number of shares registered in certificate form. Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

ARTICLE VI

INDEMNIFICATION

          Section 6.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, trustee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, trustee or agent or in any other capacity while serving as a director, officer, employee, trustee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or

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may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee, trustee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 6.3 hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

          Section 6.2 Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 6.1, an indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

          Section 6.3 Right of Indemnitee to Bring Suit. The rights to indemnification and to the advancement of expenses conferred in Section 6.1 and Section 6.2, respectively, shall be contract rights. If a claim under Section 6.1 or Section 6.2 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (A) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (B) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a

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committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section 6.3 or otherwise shall be on the Corporation.

          Section 6.4 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation, these Amended and Restated Bylaws, or any statute, agreement, vote of stockholders or directors or otherwise.

          Section 6.5 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

          Section 6.6 Amendment of Rights. Any amendment, alteration or repeal of this Article VI that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

          Section 6.7 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and to the advancement of expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

ARTICLE VII

MISCELLANEOUS PROVISIONS

          Section 7.1 Fiscal Year. The fiscal year of the Corporation shall begin on the first day of March and end on the 28th day of February of each year, except for leap year where the fiscal year shall end on the 29^th day of the year, unless otherwise fixed by the Board of Directors.

          Section 7.2 Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Certificate of Incorporation.

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          Section 7.3 Seal. The corporate seal shall have inscribed the name of the Corporation thereon and shall be in such form as may be approved from time to time by the Board of Directors.

          Section 7.4 Waiver of Notice. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the Delaware General Corporation Law, the Certificate of Incorporation or the Bylaws, a waiver of any notice, signed by the person or persons entitled to such notice, or a waiver by electronic transmission, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors need be specified in any waiver of notice of such meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

          Section 7.5 Audits. The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be made annually.

          Section 7.6 Resignations. Any director or any officer, whether elected or appointed, may resign at any time by written notice of such resignation to the Corporation, or by submitting such resignation by electronic transmission to the Corporation (as such term is defined in the Delaware General Corporation Law). No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

          Section 7.7 Contracts. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the Chief Executive Officer, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the Chief Executive Officer, the President or any Vice President of the Corporation may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

          Section 7.8 Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or any Vice President may from time to time appoint any attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock and other securities of such other corporation

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or other entity, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises.

ARTICLE VIII

AMENDMENTS

          Section 8.1 Amendments. Subject to the provisions of the Certificate of Incorporation (including the rights of the holders of any series of Preferred Stock then outstanding), these Bylaws may be adopted, amended or repealed (a) by a resolution adopted by a majority of the Whole Board or (b) by the stockholders as prescribed by law; provided, however, that, in addition to any vote of the stockholders prescribed by law, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of these Bylaws.

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CERTIFICATE OF SECRETARY OF

DEMANDTEC, INC.

          The undersigned, Michael J. McAdam, hereby certifies that he is the duly elected and acting Secretary of DemandTec, Inc., a Delaware corporation (the “Corporation”), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by the Board of Directors on May 22, 2007.

          IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this 23^rd day of May, 2007.

/s/ Michael J. McAdam  

Michael J. McAdam, 

Secretary 

EX-4.3

Exhibit 4.3

DEMANDTEC, INC.

AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT

September 20, 2002

TABLE OF CONTENTS

	Page
1. Registration Rights		1
1.1 Definitions		1
1.2 Request for Registration		2
1.3 Company Registration		4
1.4 Form S-3 Registration		5
1.5 Obligations of the Company		6
1.6 Information from Holder		7
1.7 Expenses of Registration		7
1.8 Delay of Registration		8
1.9 Indemnification		8
1.10 Reports Under Securities Exchange Act of 1934		10
1.11 Assignment of Registration Rights		11
1.12 Limitations on Subsequent Registration Rights		11
1.13 “Market Stand-Off” Agreement		11
1.14 Termination of Registration Rights		12
2. Covenants of the Company		12
2.1 Delivery of Financial Statements		12
2.2 Inspection		13
2.3 Termination of Information and Inspection Covenants		13
2.4 Right of First Offer		13
2.5 Proprietary Information and Inventions Agreement		15
2.6 Employee Agreements		15
2.7 Termination of Certain Covenants		15
3. Miscellaneous		16
3.1 Successors and Assigns		16
3.2 Governing Law		16
3.3 Counterparts		16
3.4 Titles and Subtitles		16
3.5 Notices		16
3.6 Expenses		16
3.7 Entire Agreement: Amendments and Waivers		16
3.8 Severability		17
3.9 Aggregation of Stock		17
3.10 Silicon Valley Bank		17

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AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

          THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT is made as of the 20th day of September, 2002, by and among DemandTec, Inc., a Delaware corporation (the “Company”), and the investors listed on Schedule A hereto (each of which is herein referred to as an “Investor” and collectively the “Investors”).

RECITALS

          WHEREAS, certain of the Investors (the “Existing Investors”) possess registration rights, information rights, rights of first offer, and other rights pursuant to that certain Amended and Restated Investors’ Rights Agreement dated as of November 16, 2001, as amended from time to time, among the Company and such Existing Investors (the “Prior Agreement”); and

          WHEREAS, the Existing Investors are holders of at least a majority of the “Registrable Securities” of the Company (as defined in the Prior Agreement), and desire to terminate the Prior Agreement and to accept the rights created pursuant hereto in lieu of the rights granted to them under the Prior Agreement; and

          WHEREAS, certain Investors are parties to the Supplemental Series C Preferred Stock Purchase Agreement of even date herewith among the Company and certain of the Investors (the “Series C Agreement”), which provides that as a condition to the closing of the sale of the Series C Preferred Stock, this Agreement must be executed and delivered by such Investors, Existing Investors holding at least a majority of the “Registrable Securities” of the Company (as defined in the Prior Agreement) and the Company.

          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Existing Investors hereby agree that the Prior Agreement shall be superseded and replaced in its entirety by this Agreement, and the parties hereto further agree as follows:

          1. Registration Rights. The Company covenants and agrees as follows:

               1.1 Definitions. For purposes of this Section 1:

                    (a) The term “Act” means the Securities Act of 1933, as amended.

                    (b) The term “Form S-3” means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

                    (c) The term “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.11 hereof.

                    (d) The term “Initial Public Offering” means the Company’s first firm commitment underwritten public offering of its Common Stock filed on Form S-1 or Form SB-2 under the Act.

                    (e) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

                    (f) The term “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

                    (g) The term “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under this Section 1 are not assigned.

                    (h) The number of shares of “Registrable Securities then outstanding” shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities.

                    (i) The term “SEC” shall mean the Securities and Exchange Commission.

               1.2 Request for Registration.

                    (a) Subject to the conditions of this Section 1.2, if the Company shall receive at any time after the earlier of (i) November 16, 2004 or (ii) six (6) months after the effective date of the Initial Public Offering, a written request from the Holders of thirty percent (30%) or more of the Registrable Securities then outstanding (the “Initiating Holders”) that the Company file a registration statement under the Act covering the registration of Registrable Securities with an anticipated aggregate offering price of at least $5,000,000, then the Company shall, within twenty (20) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 1.2, use all reasonable efforts to effect, as soon as practicable, the registration under the Act of all Registrable Securities that the Holders request to be registered in a written request received by the Company within twenty (20) days of the mailing of the Company’s notice pursuant to this Section 1.2(a).

                    (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 1.2 and the Company shall include such information in the written notice referred to in Section 1.2(a). In such event the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s

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Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company that marketing factors require a limitation of the number of securities underwritten (including Registrable Securities), then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). In no event shall any Registrable Securities be excluded from such underwriting unless all other securities are first excluded. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

                    (c) The Company shall not be required to effect a registration pursuant to this Section 1.2:

                         (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Act; or

                         (ii) after the Company has effected two (2) registrations pursuant to this Section 1.2, and such registrations have been declared or ordered effective; or

                         (iii) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred eighty (180) days following the effective date of, a Company-initiated registration subject to Section 1.3 below, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; or

                         (iv) if the Initiating Holders propose to dispose of Registrable Securities that may be registered on Form S-3 pursuant to Section 1.4 hereof; or

                         (v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by the Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders, provided that such right to delay a request shall be exercised by the Company not more than once in any twelve (12)-month period.

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               1.3 Company Registration.

                    (a) Company Registration. If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such securities (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration relating to a corporate reorganization or a transaction under Rule 145 of the Act, a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 3.5, the Company shall, subject to the provisions of Section 1.3(c), use all reasonable efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered.

                    (b) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.7 hereof.

                    (c) Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 1.3 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such underwriter or underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling Holders according to the total amount of securities entitled to be included therein owned by each selling Holder or in such other proportions as shall mutually be agreed to by such selling Holders), but (i) in no event shall the amount of securities of the selling Holders included in the offering be reduced below thirty percent (30%) of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company’s securities, in which case the selling Holders may be excluded if the underwriters make the determination described above and no other stockholder’s securities are included, or (ii) notwithstanding (i) above, in no event shall the selling Holders be excluded from any registration unless all other stockholders’ shares are first excluded from such offering. For

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purposes of the preceding parenthetical concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities and that is a venture capital fund, partnership or corporation, the affiliated venture capital funds, partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals.

               1.4 Form S-3 Registration. In case the Company shall receive from the Holders of at least thirty percent (30%) of the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company shall:

                    (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and

                    (b) use all reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company, provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this section 1.4:

                         (i) if Form S-3 is not available for such offering by the Holders;

                         (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters’ discounts or commissions) of less than $1,000,000;

                         (iii) if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer or Chairman of the Board of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 1.4; provided, however, that the Company shall not utilize this right more than once in any twelve month period;

                         (iv) if the Company has, within the six (6) month period preceding the date of such request, already effected one registration on Form S-3 for the Holders pursuant to this Section 1.4; or

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                         (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

                    (c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Section 1.4 shall not be counted as requests for registration effected pursuant to Sections 1.2.

               1.5 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

                    (a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the Registration Statement has been completed;

                    (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;

                    (c) furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

                    (d) use all reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

                    (e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;

                    (f) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

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                    (g) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; and

                    (h) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

     Notwithstanding the provisions of this Section 1, the Company shall be entitled to postpone or suspend, for a reasonable period of time, the filing, effectiveness or use of, or trading under, any registration statement if the Company shall determine that any such filing or the sale of any securities pursuant to such registration statement would:

                         (i) in the good faith judgment of the Board of Directors of the Company, materially impede, delay or interfere with any material pending or proposed financing, acquisition, corporate reorganization or other similar transaction involving the Company for which the Board of Directors of the Company has authorized negotiations;

                         (ii) in the good faith judgment of the Board of Directors of the Company, materially adversely impair the consummation of any pending or proposed material offering or sale of any class of securities by the Company; or

                         (iii) in the good faith judgment of the Board of Directors of the Company, require disclosure of material nonpublic information that, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; provided, however, that during any such period all executive officers and directors of the Company are also prohibited from selling securities of the Company (or any security of any of the Company’s subsidiaries or affiliates).

          In the event of the suspension of effectiveness of any registration statement pursuant to this Section 1.5, the applicable time period during which such registration statement is to remain effective shall be extended by that number of days equal to the number of days during which the effectiveness of such registration statement was suspended.

               1.6 Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Securities. In connection therewith, each selling Holder shall be required to represent to the Company that all such information that is given by such selling Holder is, to the best of its knowledge, without any independent investigation, both complete and accurate in all material respects when made.

               1.7 Expenses of Registration. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4, including (without limitation) all registration, filing and

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qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the selling Holders retained in connection with any such registrations shall be borne by the Company. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.2 or Section 1.4 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless, in the case of a registration requested under Section 1.2, the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 1.2, provided, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 1.2 or 1.4.

               1.8 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

               1.9 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:

                    (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners or officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any state securities laws; and the Company will reimburse each such Holder, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection l.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in

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reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person; provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Holder or underwriter, or any person controlling such Holder or underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Holder or underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

                    (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this subsection l.9(b), for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection l.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld), provided that in no event shall any indemnity under this subsection l.9(b) exceed the net proceeds from the offering received by such Holder.

                    (c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any

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liability to the indemnified party under this Section 1.9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.9.

                    (d) If the indemnification provided for in this Section 1.9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder under this Section 1.9(d), together with the amount of any indemnity by such Holder under Section 1.9(b), exceed the net proceeds from the offering received by such Holder.

                    (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

                    (f) The obligations of the Company and Holders under this Section 1.9 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.

               1.10 Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

                    (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the Initial Public Offering;

                    (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and

                    (c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company), the Act and the

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1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.

               1.11 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities that (i) is a subsidiary, parent, partner, limited partner, retired partner or stockholder of a Holder, (ii) is a Holder’s family member or trust for the benefit of an individual Holder, or (iii) after such assignment or transfer, holds at least 500,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations), provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 1.13 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. In addition to the foregoing, such Holder shall not transfer any Registrable Securities to any transferee or assignee that is, in the good faith judgment of the Board of Directors, deemed to be a direct competitor of the Company.

               1.12 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1.2, Section 1.3 or Section 1.4 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included or (b) to demand registration of their securities.

               1.13 “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (l80) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common

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Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 1.13 shall apply only to the Company’s initial public offering of equity securities, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Holders if all officers and directors and greater than one percent (1%) stockholders of the Company enter into similar agreements. The underwriters in connection with the Company’s initial public offering are intended third party beneficiaries of this Section 1.13 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in the Company’s initial public offering that are consistent with this Section 1.13 or that are necessary to give further effect thereto.

          In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

               1.14 Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Section 1 after five (5) years following the consummation of the Initial Public Offering or, as to any Holder, such earlier time after the Initial Public Offering at which such Holder owns one percent (1%) or less of the Company’s outstanding Common Stock and at which all Registrable Securities held by such Holder (and any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three (3)-month period without registration in compliance with Rule 144 of the Act.

          2. Covenants of the Company.

               2.1 Delivery of Financial Statements. The Company shall deliver to each Investor (or transferee of an Investor) that holds at least 2,000,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations) (a “Major Investor”):

                    (a) as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, an income statement for such fiscal year, a balance sheet of the Company and statement of stockholder’s equity as of the end of such year, and a statement of cash flows for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles (“GAAP”), and audited and certified by independent public accountants of nationally recognized standing selected by the Company;

                    (b) as soon as practicable, but in any event within thirty (30) days after the end of each of the first three (3) quarters of each fiscal year of the Company, an unaudited income statement, statement of cash flows for such fiscal quarter (actual and estimated for the coming six month period), an unaudited balance sheet as of the end of such fiscal quarter and a detailed capitalization table;

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                    (c) within thirty (30) days of the end of each of the first three (3) quarters of the fiscal year of the Company and upon reasonable request by such Investor, a detailed narrative of the financials described in Section 2.1(b) above;

                    (d) within thirty (30) days of the end of each fiscal month of the Company, an unaudited income statement, statement of cash flows for such fiscal month and an unaudited balance sheet as of the end of such fiscal month;

                    (e) as soon as practicable, but in any event at least thirty (30) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a quarterly basis, including balance sheets, income statements and statements of cash flows for such quarters and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

                    (f) with respect to the financial statements called for in subsection (b) of this Section 2.1, an instrument executed by the Chief Financial Officer or President of the Company certifying that such financials were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP) and fairly present the financial condition of the Company and its results of operation for the period specified, subject to year-end audit adjustment; and

                    (g) such other information relating to the financial condition, business or corporate affairs of the Company as the Major Investor may from time to time request, provided, however, that the Company shall not be obligated under this subsection (f) or any other subsection of Section 2.1 to provide information that it deems in good faith to be a trade secret or similar confidential information.

               2.2 Inspection. The Company shall permit each Major Investor at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Investor; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any information that it reasonably considers to be a trade secret or similar confidential information.

               2.3 Termination of Information and Inspection Covenants. The covenants set forth in Sections 2.1 and 2.2 shall terminate and be of no further force or effect upon the earlier of (i) the issuance by the Company of securities pursuant to a bona fide, firmly underwritten public offering of shares of Common Stock, registered on Form S-1 or Form SB-2 under the Act, resulting in proceeds to the Company of at least $30,000,000 in the aggregate (before deducting underwriting discounts, commissions or expenses) or (ii) when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act.

               2.4 Right of First Offer. Subject to the terms and conditions specified in this Section 2.4, the Company hereby grants to each Major Investor a right of first offer with respect to future sales by the Company of its Shares (as hereinafter defined). For purposes of

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this Section 2.4, the term Major Investor includes any general partners and affiliates of a Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners and affiliates in such proportions as it deems appropriate.

          Each time the Company proposes to offer any shares of, or securities convertible into or exchangeable or exercisable for any shares of, any class of its capital stock (“Shares”), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions.

                    (a) The Company shall deliver a notice in accordance with Section 3.5 (“Notice”) to the Major Investors stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms upon which it proposes to offer such Shares.

                    (b) By written notification received by the Company, within twenty (20) calendar days after receipt of the Notice, each Major Investor may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Shares that equals the proportion that the number of shares of Registrable Securities issued and held by such Major Investor bears to the total number of shares of Common Stock of the Company then outstanding (assuming full conversion and exercise of all convertible and exercisable securities then outstanding). The Company shall promptly, in writing, inform each Major Investor that elects to purchase all the shares available to it (a “Fully-Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after such information is given, each Fully-Exercising Investor may elect to purchase up to that portion of the Shares for which Major Investors were entitled to subscribe but which were not subscribed for by the Major Investors that is equal to the proportion that the number of shares of Registrable Securities issued and held by such Fully-Exercising Investor bears to the total number of shares of Registrable Securities issued and held by all Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.

                    (c) If all Shares that Major Investors are entitled to obtain pursuant to subsection 2.4(b) are not elected to be obtained as provided in subsection 2.4(b) hereof, the Company may, during the ninety (90) day period following the expiration of the period provided in subsection 2.4(b) hereof, offer the remaining unsubscribed portion of such Shares to any person or persons at a price not less than that, and upon terms no more favorable to the offeree than those specified in the Notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within ninety (90) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith.

                    (d) The right of first offer in this Section 2.4 shall not be applicable to (i) the issuance or sale of shares of Common Stock (or options therefor) to employees, directors, consultants or other service providers for the primary purpose of soliciting or retaining their services directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors; (ii) the issuance of securities pursuant to a bona fide, firmly underwritten public offering of shares of Common Stock, registered under the Act, resulting in

14

proceeds to the Company of at least $30,000,000 in the aggregate (before deducting underwriting discounts, commission or expenses), (iii) the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities, (iv) the issuance of securities in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, provided that such issuance is approved by the Board of Directors, (v) the issuance of stock, warrants or other securities or rights to persons or entities with which the Company has business relationships, provided that such issuance is for other than primarily equity financing purposes and provided that such issuance is approved by the Board of Directors (including the directors appointed by the holders of Series B Preferred Stock and Series C Preferred Stock) (vi) the issuance of stock, warrants or other securities or rights to financial institutions or lessors in connection with credit or equipment financing arrangements, provided that such issuance is approved by the Board of Directors (including the directors appointed by the holders of Series B Preferred Stock and Series C Preferred Stock) or (vii) the issuance of shares of Series C Preferred Stock pursuant to the Series C Agreement. In addition to the foregoing, the right of first offer in this Section 2.4 shall not be applicable with respect to any Major Investor and any subsequent offering of Shares if (x) (i) at the time of such offering, the Major Investor is not an “accredited investor,” as the term is then defined in Rule 501(a) of the Act and (ii) such offering of Shares is otherwise being offered only to accredited investors or (y) such Major Investor is, in the good faith judgment of the Board of Directors, deemed to be a competitor of the Company.

                    (e) The rights provided in this Section 2.4 may not be assigned or transferred by a Major Investor; provided, however, that a Major Investor that is a venture capital fund may assign or transfer such rights to an affiliated venture capital fund.

               2.5 Proprietary Information and Inventions Agreements. The Company shall require all employees and consultants with access to confidential information to execute and deliver a Proprietary Information and Inventions Agreement in substantially the form approved by the Company’s Board of Directors.

               2.6 Employee Agreements. Unless approved by the Board of Directors of the Company, all future employees of the Company who shall purchase , or receive options to purchase, shares of the Company’s Common Stock following the date hereof shall be required to execute stock purchase or option agreements providing for vesting of shares over a four-year period with the first 12.5% of such shares vesting following six (6) months of continued employment or services, and the remaining shares vesting in equal monthly installments over the following 42 months thereafter. The Company shall retain a right of first refusal on transfers until the Company’s initial public offering and the right to repurchase unvested shares at cost.

               2.7 Termination of Certain Covenants. The covenants set forth in Sections 2.4, 2.5 and 2.6 shall terminate and be of no further force or effect upon the consummation of the sale of securities pursuant to a bona fide, firmly underwritten public offering of shares of Common Stock, registered under the Act, resulting in proceeds to the Company of at least $30,000,000 in the aggregate (before deducting underwriting discounts, commissions or expenses).

15

          3. Miscellaneous.

               3.1 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

               3.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

               3.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

               3.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

               3.5 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon delivery by confirmed facsimile transmission, nationally recognized overnight courier service, or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days’ advance written notice to the other parties.

               3.6 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

               3.7 Entire Agreement: Amendments and Waivers. This Agreement (including the Exhibits hereto, if any) constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Any term of this Agreement (other than Section 2.1, Section 2.2, Section 2.3, Section 2.4 and Section 2.5) may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding. The provisions of Section 2.1, Section 2.2, Section 2.3, Section 2.4 and Section 2.5 may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of two-thirds of the then-outstanding Registrable Securities that are held by Major Investors. Any amendment or waiver

16

effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities, each future holder of all such Registrable Securities, and the Company.

               3.8 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

               3.9 Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities (including affiliated venture capital funds) or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

               3.10 Silicon Valley Bank. Notwithstanding any other term of this Agreement, Silicon Valley Bank (i) shall be an “Investor” (as defined herein) only for purposes of Section 1 of this Agreement, and (ii) specifically shall not be an “Investor” for purposes of Section 2 of this Agreement.

[Signature Page Next]

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          IN WITNESS WHEREOF, the undersigned parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first above written.

DEMANDTEC, INC.
By:	/s/ Dan Fishback
	Dan Fishback, President and Chief
	Executive Officer

Address:	One Circle Star Way, Suite 200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	CROSSPOINT VENTURE PARTNERS 2000, L.P.
	By:	Crosspoint Associates 2000, L.L.C.
	Its:	General Partner
	By:	/s/ James Dorrian
Address:	2925 Woodside Road
	Woodside, California 94062
	CROSSPOINT VENTURE PARTNERS 2000 (Q), L.P.
	By:	Crosspoint Associates 2000, L.L.C.
	Its:	General Partner
	By:	/s/ James Dorrian
Address:	2925 Woodside Road
	Woodside, California 94062

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	CARGILL, INCORPORATED
	By:	/s/ James Sayre
		President, Cargill Ventures
Address:	1500 Fashion Island Blvd, Suite 209
	San Mateo, Ca 94404

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	ALTOS VENTURES
	By:	/s/ Han J. Kim
		General Partner
Address:	2882 Sand Hill Road, Suite 100
	Menlo Park, California 94025

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	ATHENA VENTURE FUND LP
	By:	/s/ Steven Lee
		Principal
Address:	310 University Avenue, Suite 202
	Palo Alto, California 94301

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Homer and Marcia Dunn
	/s/ Homer Dunn
Address:	1190 Sacramento Street
	San Francisco, CA 94108

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Moldaw Variable Fund
	By:	/s/ Stuart G. Moldaw
		General Partner
Address:	c/o Gymboree
	Attn: Stuart Moldaw
	700 Airport Blvd., Suite# 200
	Burlingame, CA 94010

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	GC&H Investments
	By:	/s/ Andrei M. Manoliu
		Executive Partner
Address:	c/o Cooley Godward
	5 Palo Alto Square
	3000 El Camino Real
	Palo Alto, CA 94306

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	WS Investments Co 99B
	By:	/s/ Aaron Alter
Address:	c/o Wilson Sonsini Goodrich & Rosati
	650 Page Mill Road
	Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Storm Duncan
	/s/ Storm Duncan
Address:	21 Mallorca Way
	San Francisco, CA 94123

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Howard Park
	/s/ Howard Park
Address:	289 29th Avenue
	San Francisco, CA 94121

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Gerard Cunningham
	/s/ Gerard Cunningham
Address:	208 Third Street
	Sausalito, CA 94965

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Richard Arnold
	/s/ Richard S. Arnold, Jr.
Address:	c/o Wilson Sonsini Goodrich & Rosati
	650 Page Mill Road
	Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Aaron Alter
	/s/ Aaron Alter
Address:	c/o Wilson Sonsini Goodrich & Rosati
	650 Page Mill Road
	Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Jamie Stewart
	/s/ Jamie Stewart
Address:	c/o Wilson Sonsini Goodrich & Rosati
	650 Page Mill Road
	Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Larry Lowry
	/s/ Larry Lowry
Address:	137 Stockbridge Avenue
	Atherton, CA 94027

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Hartwig Huemer
	/s/ Hartwig Huemer
Address:	7945 Almor Drive
	Verona, WI 53593

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Gary Davis
	/s/ Gary Davis
Address:	263 29th Avenue
	San Francisco, CA 94121

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	G&H Partners
	By:	/s/ Jonathan Gleason
Address:	c/o Gunderson Dettmer
	155 Constitution Drive
	Menlo Park, CA 94025

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Dan Fishback
	/s/ Dan Fishback
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Andy Moss
	/s/ Andy Moss
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	John Shap
	/s/ John Shap
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Mark A. Culhane and Michele L. Culhane
	Trustees UTA dtd, 12/16/99
	By:	/s/ Mark A. Culhane
		Trustee
	USB Piper Jaffray as custodian FBO
	Mark Culhane IRA 120 224946
	By:	/s/ Mark A. Culhane
		Trustee
	Maxwell A.R. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark A. Culhane
		Trustee
	Monica G. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark A. Culhane
		Trustee
	Michael D. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark A. Culhane
		Trustee
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Brad Klaus
	/s/ Brad Klaus
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	Phil Mahoney
	/s/ Phil Mahoney
Address:	12100 Foothill Lane
	Los Altos Hills, CA 94022

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

	INVESTOR:
	AN “INVESTOR” ONLY FOR PURPOSES OF SECTION 1 OF THIS AGREEMENT, AND SPECIFICALLY NOT FOR SECTION 2 OF THIS AGREEMENT:
	SILICON VALLEY BANK
	By:	/s/ Kim Crosslin
		Relationship Manager
Address:	3003 Tasman Drive
	Santa Clara, CA 95054

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

INVESTOR:
GOLD HILL VENTURE LENDING 03, LP By: Gold Hill Venture Lending Partners 03, LLC, General Partner
By:	/s/ Sean Lynden
	Partner, Gold Hill Capital

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

INVESTOR:
Eleven Rings, LLC
By:	/s/ Harris Barton
	Managing Member

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT

SCHEDULE A

LIST OF INVESTORS

Aaron J. Alter
Altos Ventures
Altos Ventures II, LP
Andy Moss
Athena Technology Ventures
Athena Venture Fund, L.P.
Cargill, Incorporated
Crosspoint Venture Partners 2000 (Q), L.P.
Crosspoint Venture Partners 2000, L.P.
Dan Fishback
Eleven Rings, LLC
G&H Partners
Gary S. Davis
GC&H Investments
Gerard Cunningham
Hartwig Huemer
Homer and Marcia Dunn
Howard C. Park
John Shap
Jamie Stewart
Larry Lowry
Moldaw Variable Fund
Mark A. Culhane and Michele L. Culhane, Trustees UTA dated 12/16/99
USB Piper Jaffray as custodian FBO Mark Culhane IRA 120 224946
Maxwell A. R. Culhane 1999 Irrevocable Trust
Monica G. Culhane 1999 Irrevocable Trust
Michael D. Culhane 1999 Irrevocable Trust
Phil Mahoney
Richard S. Arnold, Jr.
Silicon Valley Bank (An “Investor” only for purposes of Section 1 of this Agreement, and
specifically not for Section 2 of this Agreement)
Storm Duncan
WS Investment Company 99B
Brad Klaus
Gold Hill Venture Lending 03 LP

S-1

EX-10.2

Exhibit 10.2

DemandTec, Inc.

1999 Equity Incentive Plan

Adopted December 1, 1999
Approved By Stockholders December 1, 1999
Amended November 3, 2000, March 29, 2001,
May 11, 2001, July 13, 2001, August 10, 2001,
September 7, 2001, December 14, 2001
March 15, 2002, March 21, 2003, December 12, 2003
March 19, 2004, November 5, 2004
February 11, 2005, December 2, 2005,
March 24, 2006, September 19, 2006, December 20, 2006,
March 20, 2007 and May 10, 2007
Termination Date: December 1, 2009

1. Purposes.

     (a) Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are the Employees, Directors and Consultants of the Company and its Affiliates.

     (b) Available Stock Awards. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

     (c) General Purpose. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

2. Definitions.

     (a) “Affiliate” means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

     (b) “Board” means the Board of Directors of the Company.

     (c) “Code” means the Internal Revenue Code of 1986, as amended.

     (d) “Committee” means a committee of one or more members of the Board appointed by the Board in accordance with subsection 3(c).

     (e) “Common Stock” means the common stock of the Company.

1

     (f) “Company” means DemandTec, Inc., a Delaware corporation.

     (g) “Consultant” means any person, including an advisor, (i) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the Board of Directors of an Affiliate. However, the term “Consultant” shall not include either Directors who are not compensated by the Company for their services as Directors or Directors who are merely paid a director’s fee by the Company for their services as Directors.

     (h) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave.

     (i) “Covered Employee” means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

     (j) “Director” means a member of the Board of Directors of the Company.

     (k) “Disability” means (i) before the Listing Date, the inability of a person, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of that person’s position with the Company or an Affiliate of the Company because of the sickness or injury of the person and (ii) after the Listing Date, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

     (l) “Employee” means any person employed by the Company or an Affiliate. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.

     (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (n) “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no

2

sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.

          (ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

          (iii) Prior to the Listing Date, the value of the Common Stock shall be determined in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations.

     (o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (p) “Listing Date” means the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968.

     (q) “Non-Employee Director” means a Director who either (i) is not a current Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

     (r) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

     (s) “Officer” means (i) before the Listing Date, any person designated by the Company as an officer and (ii) on and after the Listing Date, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

     (t) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

3

     (u) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

     (v) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

     (w) “Outside Director” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an “affiliated corporation” at any time and is not currently receiving direct or indirect remuneration from the Company or an “affiliated corporation” for services in any capacity other than as a Director or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

     (x) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

     (y) “Plan” means this DemandTec, Inc. 1999 Equity Incentive Plan.

     (z) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

     (aa) “Securities Act” means the Securities Act of 1933, as amended.

     (bb) “Stock Award” means any right granted under the Plan, including an Option, a stock bonus and a right to acquire restricted stock.

     (cc) “Stock Award Agreement” means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

     (dd) “Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.

3. Administration.

     (a) Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in subsection 3(c).

     (b) Powers of Board. The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

          (i) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what

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type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.

          (ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

          (iii) To amend the Plan or a Stock Award as provided in Section 12.

          (iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

     (c) Delegation to Committee.

          (i) General. The Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

          (ii) Committee Composition when Common Stock is Publicly Traded. At such time as the Common Stock is publicly traded, in the discretion of the Board, a Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such authority, the Board or the Committee may (1) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award or (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or) (2) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

     (d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

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4. Shares Subject to the Plan.

     (a) Share Reserve. Subject to the provisions of Section 11 relating to adjustments upon changes in Common Stock, the Common Stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate eighteen million four hundred thirty five thousand (18,435,000)¹ shares of Common Stock.

     (b) Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the shares of Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. If any shares of Common Stock issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal, such shares shall again be available for issuance under the Plan. However, the aggregate number of shares of Common Stock issued upon the exercise of Incentive Stock Options (including shares of Common Stock reacquired by the Company) shall in no even exceed 200% of the number specified in subsection (a) above. In the event that an outstanding Stock Award or other right for any reason expires or is canceled, the shares of Common Stock allocable to the unexercised portion of such Stock Award or other right shall not reduce the number of shares of Common Stock available for issuance under the Plan.

     (c) Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

     (d) Share Reserve Limitation. Prior to the Listing Date and to the extent then required by Section 260.140.45 of Title 10 of the California Code of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under any stock bonus or similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made.

¹ Reflects the initial 4,000,000 shares approved by both the Board and stockholders on November 3, 2000, a 1,000,000-share increase approved by the Board on March 29, 2001, a 400,000-share increase approved by the Board on July 13, 2001, a 400,000-share increase approved by the Board on August 10, 2001, a 1,200,000-share increase approved by the Board on September 7, 2001, a 685,000-share increase approved by the Board on December 14, 2001, a 2,000,000-share increase approved by the Board on March 15, 2002, a 1,000,000-share increase approved by the Board on March 21, 2003, a 750,000-share increase approved by the Board on December 12, 2003, a 2,000,000-share increase approved by the Board on March 19, 2004, a 1,000,000-share increase approved by the Board on November 5, 2004, a 2,000,000-share increase approved by the Board on February 11, 2005, a 500,000-share increase approved by the Board on December 2, 2005, a 500,000-share increase approved by the Board on March 24, 2006, a 1,000,000 share increase approved by the Board on September 19, 2006, a 2,000,000 share increase approved by the Board on December 20, 2006, a 500,000 share increase approved by the Board on March 20, 2007 and an 850,000 share increase approved by the Board on May 10, 2007.

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5. Eligibility.

     (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.

     (b) Ten Percent Stockholders.

          (i) A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

          (ii) Prior to the Listing Date, a Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the exercise price of such Option is at least (i) one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option.

          (iii) Prior to the Listing Date, a Ten Percent Stockholder shall not be granted a restricted stock award unless the purchase price of the restricted stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option.

     (c) Section 162(m) Limitation. Subject to the provisions of Section 11 relating to adjustments upon changes in the shares of Common Stock, no Employee shall be eligible to be granted Options covering more than one million (1,000,000) shares of Common Stock during any calendar year. This subsection 5(c) shall not apply prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall not apply until (i) the earliest of: (1) the first material modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 4); (2) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or (4) the first meeting of stockholders at which Directors are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.

     (d) Consultants.

          (i) Prior to the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or the sale of the Company’s securities to such Consultant is not exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature of the services that the Consultant is providing to the Company, or because the Consultant

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is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.

          (ii) From and after the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.

          (iii) Rule 701 and Form S-8 generally are available to consultants and advisors only if (i) they are natural persons; (ii) they provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent; and (iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer’s securities.

6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

     (a) Term. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, no Option granted prior to the Listing Date shall be exercisable after the expiration of ten (10) years from the date it was granted, and no Incentive Stock Option granted on or after the Listing Date shall be exercisable after the expiration of ten (10) years from the date it was granted.

     (b) Exercise Price of an Incentive Stock Option. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

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     (c) Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of each Nonstatutory Stock Option granted prior to the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option granted on or after the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

     (d) Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder or (3) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company is incorporated in Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

     In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

     (e) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

     (f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option granted prior to the Listing Date shall not be transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10 of the California Code of Regulations at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock Option granted on or after the Listing Date shall be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option

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does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

     (g) Vesting Generally. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

     (h) Minimum Vesting Prior to the Listing Date. Notwithstanding the foregoing subsection 6(g), to the extent that the following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then:

          (i) Options granted prior to the Listing Date to an Employee who is not an Officer, Director or Consultant shall provide for vesting of the total number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable conditions such as continued employment; and

          (ii) Options granted prior to the Listing Date to Officers, Directors or Consultants may be made fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company.

     (i) Termination of Continuous Service. In the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than thirty (30) days for Options granted prior to the Listing Date unless such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.

     (j) Extension of Termination Date. An Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier

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of (i) the expiration of the term of the Option set forth in subsection 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements.

     (k) Disability of Optionholder. In the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months for Options granted prior to the Listing Date) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate.

     (l) Death of Optionholder. In the event (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder’s death pursuant to subsection 6(e) or 6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months for Options granted prior to the Listing Date) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.

     (m) Early Exercise. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in subsection 10(h), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in subsection 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.

     (n) Right of Repurchase. Subject to the “Repurchase Limitation” in subsection 10(h), the Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option. Provided that the “Repurchase

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Limitation” in subsection 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.

     (o) Right of First Refusal. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option. Except as expressly provided in this subsection 6(o), such right of first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company.

     (p) Re-Load Options.

          (i) Without in any way limiting the authority of the Board to make or not to make grants of Options hereunder, the Board shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling the Optionholder to a further Option (a “Re-Load Option”) in the event the Optionholder exercises the Option evidenced by the Option Agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the Option Agreement. Unless otherwise specifically provided in the Option, the Optionholder shall not surrender shares of Common Stock acquired, directly or indirectly from the Company, unless such shares have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).

          (ii) Any such Re-Load Option shall (1) provide for a number of shares of Common Stock equal to the number of shares of Common Stock surrendered as part or all of the exercise price of such Option; (2) have an expiration date which is the same as the expiration date of the Option the exercise of which gave rise to such Re-Load Option; and (3) have an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Re-Load Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option shall be subject to the same exercise price and term provisions heretofore described for Options under the Plan.

          (iii) Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board may designate at the time of the grant of the original Option; provided, however, that the designation of any Re-Load Option as an Incentive Stock Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation on the exercisability of Incentive Stock Options described in subsection 10(d) and in Section 422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall be subject to the availability of sufficient shares of Common Stock under subsection 4(a) and the “Section 162(m) Limitation” on the grants of Options under subsection 5(c) and shall be subject to such other terms and conditions as the Board may determine which are not inconsistent with the express provisions of the Plan regarding the terms of Options.

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7. Provisions of Stock Awards other than Options.

     (a) Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical, but each stock bonus agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

          (i) Consideration. A stock bonus may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit.

          (ii) Vesting. Subject to the “Repurchase Limitation” in subsection 10(h), shares of Common Stock awarded under the stock bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iii) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation” in subsection 10(h), in the event a Participant’s Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the stock bonus agreement.

          (iv) Transferability. For a stock bonus award made before the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. For a stock bonus award made on or after the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the stock bonus agreement remains subject to the terms of the stock bonus agreement.

     (b) Restricted Stock Awards. Each restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time, and the terms and conditions of separate restricted stock purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

          (i) Purchase Price. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the purchase price under each restricted stock purchase agreement shall be such amount as the Board shall determine and designate in such restricted stock purchase agreement. For restricted stock awards made prior to the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock’s Fair Market Value

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on the date such award is made or at the time the purchase is consummated. For restricted stock awards made on or after the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock’s Fair Market Value on the date such award is made or at the time the purchase is consummated.

          (ii) Consideration. The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or (iii) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then payment of the Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

          (iii) Vesting. Subject to the “Repurchase Limitation” in subsection 10(h), shares of Common Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iv) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation” in subsection 10(h), in the event a Participant’s Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the restricted stock purchase agreement.

          (v) Transferability. For a restricted stock award made before the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. For a restricted stock award made on or after the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the restricted stock purchase agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the restricted stock purchase agreement remains subject to the terms of the restricted stock purchase agreement.

8. Covenants of the Company.

     (a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.

     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable

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to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

9. Use of Proceeds from Stock.

     Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

10. Miscellaneous.

     (a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

     (b) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

     (c) No Employment or other Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

     (d) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

     (e) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and

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risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

     (f) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock.

     (g) Information Obligation. Prior to the Listing Date, to the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This subsection 10(g) shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information.

     (h) Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock Award and may be either at Fair Market Value at the time of repurchase or at not less than the original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award granted prior to the Listing Date to a person who is not an Officer, Director or Consultant shall be upon the terms described below:

          (i) Fair Market Value. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of employment at not less than the Fair Market Value of the shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Stock Awards after such date of termination, within ninety (90) days after the date of

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the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified small business stock”) and (ii) the right terminates when the shares of Common Stock become publicly traded.

          (ii) Original Purchase Price. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Service at the original purchase price, then (i) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five (5) years from the date the Stock Award is granted (without respect to the date the Stock Award was exercised or became exercisable) and (ii) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified small business stock”).

11. Adjustments upon Changes in Stock.

     (a) Capitalization Adjustments. If any change is made in the Common Stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person pursuant to subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction “without receipt of consideration” by the Company.)

     (b) Change in Control—Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Stock Awards shall terminate immediately prior to such event.

     (c) Change in Control—Asset Sale, Merger, Consolidation or Reverse Merger. In the event of (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then any surviving corporation or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to acquire the same

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consideration paid to the stockholders in the transaction described in this subsection 11(c) for those outstanding under the Plan). In the event any surviving corporation or acquiring corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan, then with respect to Stock Awards held by Participants whose Continuous Service has not terminated, the vesting of such Stock Awards (and, if applicable, the time during which such Stock Awards may be exercised) shall be accelerated in full, and the Stock Awards shall terminate if not exercised (if applicable) at or prior to such event. With respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall terminate if not exercised (if applicable) prior to such event.

12. Amendment of the Plan and Stock Awards.

     (a) Amendment of Plan. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements.

     (b) Stockholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

     (c) Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

     (d) No Impairment of Rights. Rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

     (e) Amendment of Stock Awards. The Board at any time, and from time to time, may amend the terms of any one or more Stock Awards; provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

13. Termination or Suspension of the Plan.

     (a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

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     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the Participant.

14. Effective Date of Plan.

     The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

15. Choice of Law.

     The law of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

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DEMANDTEC, INC.
1999 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

     Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement, DemandTec, Inc. (the “Company”) has granted you an option under its 1999 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan have the same definitions as in the Plan.

     The details of your option are as follows:

     1. Vesting. Subject to the limitations contained herein, your option will vest as provided in your Grant Notice until the termination of your Continuous Service.

     2. Number of Shares and Exercise Price. The number of shares of Common Stock subject to your option and your exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments, as provided in Section 11 of the Plan.

     3. Exercise prior to Vesting (“Early Exercise”). If your option and option shares are not fully vested at grant (see your Grant Notice) and, in that case, if permitted by your Grant Notice (i.e., the “Exercise Schedule” indicates that “Early Exercise” of your option is permitted), then, subject to the other provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the non-vested portion of your option; provided, however, that:

          (a) a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;

          (b) any shares of Common Stock so purchased that have not vested as of the date of exercise shall be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;

          (c) you enter into that Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred, and

          (d) if your option is an incentive stock option, then, as provided in the Plan, to the extent that the total Fair Market Value (determined at the time of grant) of the shares of Common Stock with respect to which your option plus all other incentive stock options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed that

limit (according to the order in which they were granted) shall be treated as nonstatutory stock options.

     4. Method of Payment. Payment of the exercise price is due in full upon exercise of all or any part of your option. You may elect to make payment of the exercise price as follows:

          (a) In cash or cash equivalents.

          (b) Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.

          (c) Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either that you have held for the period required to avoid a charge to the Company’s reported earnings (generally six months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company.

     5. Whole Shares. You may exercise your option only for whole shares of Common Stock.

     6. Securities Law Compliance. Notwithstanding anything to the contrary contained herein, you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option must also comply with other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations.

     7. Term. You may not exercise your option before the commencement of its term or after its term expires. The term of your option commences on the Date of Grant and expires upon the earliest of the following:

          (a) three months after the termination of your Continuous Service for any reason other than your Disability or death, provided that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in the preceding section relating to “Securities Law Compliance,” your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three months after the termination of your Continuous Service;

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          (b) 12 months after the termination of your Continuous Service due to your Disability;

          (c) 18 months after your death if you die either during your Continuous Service or within three months after your Continuous Service terminates;

          (d) the Expiration Date indicated in your Grant Notice; or

          (e) the day before the tenth anniversary of the Date of Grant.

If your option is an incentive stock option, note that, to obtain the federal income tax advantages associated with an “incentive stock option,” the Code requires that at all times beginning on the date of grant of your option and ending on the day three months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an “incentive stock option” if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three months after the date your employment terminates.

     8. Exercise.

          (a) You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require.

          (b) By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such exercise.

          (c) If your option is an incentive stock option, by exercising your option you agree that you will notify the Company in writing within 15 days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two years after the date of your option grant or within one year after such shares of Common Stock are transferred upon exercise of your option.

          (d) By exercising your option you agree that the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by you, for a period of time specified by the underwriter(s) (not to exceed 180 days) following the effective date of the registration statement of the

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Company filed under the Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.

     9. Transferability. Your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option.

     10. Right of First Refusal. Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be described in the Plan or in the Company’s bylaws in effect at such time the Company elects to exercise its right. The Company’s right of first refusal shall expire on the Listing Date.

     11. Right of Repurchase. To the extent provided in the Plan or in Company’s bylaws as amended from time to time, the Company shall have the right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option.

     12. Option not a Service Contract. Your option is not an employment or service contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.

     13. Withholding Obligations.

          (a) At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “cashless exercise” pursuant to a program developed under Regulation T as adopted by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax or other withholding obligations of the Company or an Affiliate, if any, which arise in connection with your option, its exercise or your option shares.

          (b) Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable conditions or restrictions of law, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax or other withholding required to be withheld by law. If the date of determination of any withholding obligation is deferred to a date later than the date of exercise of your option, share

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withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the total number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.

          (c) You may not exercise your option unless the withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is otherwise exercisable, and the Company shall have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow.

     14. Notices. Any notices provided for in your option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.

     15. Governing Plan Document. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be adopted pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control.

DemandTec, Inc.	Optionholder
By:	Signature:
Name: Mark A. Culhane	Print Name:
Title: Executive Vice President and CFO
Date:	Date:

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DEMANDTEC, INC.
STOCK OPTION GRANT NOTICE
(1999 EQUITY INCENTIVE PLAN)

DemandTec, Inc. (the “Company”), pursuant to its 1999 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions set forth herein and in the Plan and the Notice of Exercise, both of which are attached to this Grant Notice, and the Stock Option Agreement that the Company and Optionholder are signing in connection with this option.

Optionholder:
Date of Grant:	, 200_____
Vesting Commencement Date:	, 200_____
Number of Shares Subject to Option:
Exercise Price (Per Share):	$0.
Total Exercise Price:	$
Expiration Date:	(Date of Grant + 10 Years), 20___

Type of Grant:	o  Incentive Stock Option1                      o   Nonstatutory Stock Option
Exercise Schedule:	o  Same as Vesting Schedule           o  Early Exercise Permitted
Vesting Schedule:	1/8th of the shares vest six months after the Vesting Commencement Date.
	1/48th of the shares vest monthly thereafter over the subsequent three and one-half years.
Payment:	By cash or check
	Pursuant to Regulation T program if the Shares are publicly traded
	By delivery of already-owned shares if the Shares are publicly traded

Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and understands and agrees to, this Grant Notice, the Plan and form of Notice of Exercise attached to this Grant Notice, and the Stock Option Agreement. Optionholder further acknowledges that as of the Date of Grant, those documents set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) any options previously granted and delivered to Optionholder under the Plan and (ii) the following agreements only:

Other Agreements:          None

DemandTec, Inc.	Optionholder:
By:
Name: Mark A. Culhane
Title: Executive Vice President and CFO
Dated as of                                         , 200__	Dated as of                                         , 200__

Attachments: 1999 Equity Incentive Plan and Notice of Exercise

¹ If this is an incentive stock option, it (plus your other outstanding incentive stock options) cannot be first exercisable for more than $100,000 in any calendar year. Any excess over $100,000 is a nonstatutory stock option.

EX-10.5

Exhibit 10.5

SECOND AMENDMENT TO SUBLEASE

     THIS SECOND AMENDMENT TO SUBLEASE (this “Amendment”) is entered into effective as of January 1, 2007 by and between Liberate Technologies, a Delaware corporation (“Sublandlord”), and DemandTec, Inc., a California corporation (“Subtenant”), with reference to the following facts:

     A. Sublandlord leases from Circle Star Center Associates, L.P. (“Master Landlord”) the building known as One Circle Star Way, San Carlos, California (the “Building”) pursuant to that certain Lease Agreement dated April 27, 1999, as amended by an undated letter agreement entitled “Confirmation of Addition of Second Building” (the “Master Lease”).

     B. Sublandlord and Subtenant entered into that certain Sublease dated December 7, 2001, as amended by that certain First Amendment to Sublease dated July 1, 2003 (collectively, the “Sublease”) for approximately 36,179 square feet of space (the “Subleased Premises”) consisting of all of the second floor and a portion of the first floor of the Building as more fully set forth in the Sublease. As used herein, “Sublease” means the Sublease as amended by this Amendment. All capitalized terms not defined in this Amendment are defined in the Sublease.

     C. The parties desire to amend the Sublease to, among other things, expand the Subleased Premises, extend the Term and modify the rent on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto do hereby agree as follows:

          1. Subleased Premises. The size of the Subleased Premises shall be increased to include an additional 4,267 square feet located on the first floor of the Building as depicted on Exhibit A attached hereto (the “First Floor Expansion Area”). Sublandlord also grants Subtenant a revocable license, at no cost to Subtenant, to use the food service area located on the first floor of the Building and identified on Exhibit A attached hereto (the “Food Service Area”) during the Term. Subtenant may use the Food Service Area for meetings and social gatherings; Subtenant may not use the Food Service for general office use. Sublandlord shall have the right, in the event Sublandlord desires to use the Food Service Area or sublease it to another entity, to terminate Subtenant’s license to use the Food Service Area at any time during the Term by giving Subtenant written notice.

          2. As Is, Where Is. Sublandlord shall deliver the First Floor Expansion Area and Food Service Area with all debris removed. Subject to this Paragraph 2, and notwithstanding anything to the contrary set forth in the Sublease, Sublandlord shall deliver the First Floor Expansion Area and Food Service Area to Subtenant “as is, where is” without any representation or warranty regarding the condition of the First Floor Expansion Area and Food Service Area. Subtenant acknowledges that the taking of possession of the First Floor Expansion Area and Food Service Area by Subtenant shall be conclusive evidence that the First Floor Expansion Area and Food Service Area are in good and satisfactory condition at the time such possession is so taken.

          3. Term. The term of this Sublease shall expire on February 28, 2010 (the “Expiration Date”) unless sooner terminated pursuant to any provision hereof.

          4. Rent. Section 3(a) is hereby deleted in its entirety and replaced with the following: “(a) Rent. Commencing on January 1, 2007, Subtenant shall pay Sublandlord rent as follows:

Months	Rent/Square Foot/Month		Monthly Rent
1-8	$	1.50	$	60,669.00
9-14	$	1.55	$	62,691.30
15-26	$	1.60	$	64,713.60
27-38	$	1.65	$	66,735.90

The rent payable hereunder is on a full service basis, and Subtenant shall not be responsible for the payment of any operating expenses.

          5. Personal Property. Provided Subtenant has not committed a default during the Term, which default has not been timely cured by Subtenant after its receipt of written notice thereof from Sublandlord, title to all of the furniture, cabling system, telephone system, printers, and all other items of personal property owned by Sublandlord and located within the Subleased Premises (the “Personal Property”) shall transfer to Subtenant one month prior to expiration of the Term. Subtenant shall be responsible for removing the Personal Property from the Subleased Premises and repair any damage to the Subleased Premises caused by such removal on or before the expiration of the Term. Sublandlord shall promptly execute and deliver to Subtenant the Bill of Sale attached hereto as Exhibit B following the parties’ receipt of the consent described in Section 8 below.

          6. Signage. Sublandlord shall attempt to secure for Subtenant from Master Landlord the right (the “Signage Rights”), at any time during the Term, to place external signs on the Building, with such Signage Rights to be substantially similar to the signage rights described in Paragraph 41 of the Master Lease. Notwithstanding the foregoing, the requirements of the penultimate sentence of Paragraph 41 (which would require Sublandlord to work with Subtenant to secure the governmental approvals necessary for exterior signage) shall not be applicable to Sublandlord in the Signage Rights; furthermore, Subtenant shall have no right to install any sign in or on the building known as Two Circle Star Way. Subtenant shall be solely responsible for any costs associated with securing, installing and removing any such signage. Under no circumstances shall Sublandlord be required to pay Master Landlord or any third party for the signage rights set forth in this Section.

          7. Brokers. The parties acknowledge that Studley, Inc. was the only broker involved in the negotiation of this Amendment and agree that Sublandlord shall be responsible for the payment of all brokerage commissions to Studley, Inc. Subtenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment, and Subtenant agrees to indemnify and hold Sublandlord harmless from any cost, expense or liability (including reasonable attorneys’ fees) for any compensation, commissions or charges claimed by any other real estate broker or agent employed or claiming to represent or to have been employed by subtenant in connection with the negotiation of this Amendment. The foregoing agreement shall survive the expiration or termination of this Sublease.

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          8. Master Landlord Consent. This Amendment is conditioned upon the receipt of Master Landlord’s fully executed written consent to this Sublease, which consent shall include the Signage Rights described in Paragraph 6 above (the “Consent”). If Sublandlord does not obtain the Consent by January 22, 2007, then Subtenant may terminate this Amendment, upon which this Amendment shall be deemed null and void and all sums paid by Subtenant to Sublandlord hereunder immediately shall be returned to Subtenant.

          9. Right of First Refusal. Sublandlord hereby grants to Subtenant a new ongoing right of first refusal (the “First-Refusal Right”), in replacement of the right of first refusal set forth in Paragraph 11 of the Sublease, to lease all or any portion of the currently unoccupied Master Lease Premises in the Building, and to lease all or any portion of the currently occupied Master Lease Premises in the Building at such time during the Term that such space becomes vacated (together, the “First-Refusal Space”), in each case subject to the consent of the Master Landlord. Upon receipt of a third-party offer to lease all or any portion of the First-Refusal Space, which offer Sublandlord desires to accept, Sublandlord shall provide Subtenant with written notice (the “First-Refusal Notice”) of such offer and all terms thereof, including rent, tenant improvement allowances or other concessions, lease term and landlord’s pre-delivery work obligations, if any. Sublandlord shall ensure that the First-Refusal Notice specifically describes the First-Refusal Space that will be available for lease (the “Specific First-Refusal Space”). If Subtenant wishes to exercise its First-Refusal Right with respect to the Specific First-Refusal Space, Subtenant, within five (5) business days after the delivery of the First-Refusal Notice to Subtenant, shall deliver written notice to Sublandlord of Subtenant’s intention to exercise its First-Refusal Right with respect to all the Specific First-Refusal Space. If Subtenant does not exercise its First-Refusal Right within the five-business-day period, the First-Refusal Right shall terminate for the Specific First-Refusal Space, and Sublandlord thereafter shall be free to lease the Specific First-Refusal Space to anyone on the terms set forth in the First-Refusal Notice. If Subtenant exercises its First-Refusal Right, Sublandlord and Subtenant shall promptly enter into a written sublease agreement on the same general terms and conditions as this Sublease except that Rent and all other economic terms for the Specific First-Refusal Space shall be as set forth in the First-Refusal Notice. The term of this Sublease as it pertains to the Specific First-Refusal Space shall be coterminous with the term of this Sublease as it pertains to the balance of the Subleased Premises.

          10. Defined Terms. All capitalized terms used in this Agreement shall have the meanings given to them in the Sublease, as amended hereby, unless otherwise defined herein.

          11. Ratification. Except as modified by this Amendment, the Sublease shall remain unchanged and shall continue in full force and effect and all terms, covenants, conditions and agreements thereof are hereby in all respects ratified, confirmed and approved. In the event of any conflict between the terms of this Amendment and the terms of the Sublease, the terms of this Amendment shall control. Sublandlord represents and warrants that, except as specifically set forth herein, the Master Lease in the form attached as Exhibit A to the original Sublease between the parties dated December 7, 2001 is unmodified and remains in full force and effect.

          12. Modifications. No modification, waiver or amendment of the Sublease or any of its conditions or provisions shall be binding on either party unless the same shall be in writing and be consented to by Sublandlord, which consent may be granted or withheld in Landlord’s sole discretion.

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          13. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute but one and the same instrument. The delivery of counterpart signatures by facsimile transmission shall have the same force and effect as delivery of a signed hard copy.

          IN WITNESS WHEREOF, the parties hereto have executed these presents the day and year first above written.

“SUBTENANT”		“SUBLANDLORD”
DemandTec, Inc.		Liberate Technologies
By:	/s/ Mark Culhane Name: Mark Culhane Its: EVP and CFO	By:	/s/ Greg Wood Name: Greg Wood Its: EVP and CFO

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EXHIBIT A

Diagram of First Floor Expansion Area and Food Service Area

[intentionally omitted]

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EXHIBIT B

Bill of Sale of Personal Property (Sold As-Is)

     LIBERATE TECHNOLOGIES, INC. (“Seller”), in consideration of the payment of the sum of Ten Dollars ($10.00), the receipt of which is hereby acknowledged, does hereby sell and transfer to DEMANDTEC, INC. ( “Buyer”), title to the following property (collectively, the “Property”):

     All of the furniture, cabling system, telephone system, printers, and all other items of personal property owned by Seller and located within the Subleased Premises (but specifically excluding the Food Service Area), as defined in that certain Sublease dated as of December 7, 2001 by and between Seller and Buyer, as amended by that certain First Amendment to Sublease dated July 1, 2003 and Second Amendment to Sublease effective as of January 1, 2006 (together, the “Sublease”).

     Seller warrants that he/she is the lawful owner in every respect of all of the Property and that it is free and clear of all liens, security agreements, encumbrances, claims, demands, and charges of every kind whatsoever.

     THE PROPERTY IS SOLD “AS-IS” WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE PROPERTY . BY ACCEPTING THIS BILL OF SALE, BUYER REPRESENTS THAT BUYER HAS PERSONALLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY “AS-IS”.

     This Bill of Sale shall be effective as to the transfer of the Property as of February 1, 2010 provided Buyer has not committed a default under the Sublease during the term thereof, which default has not been timely cured by Buyer after its receipt by Seller of written notice thereof from Seller.

     IN WITNESS WHEREOF, this Bill of Sale is executed on January ___, 2007.

/s/ Greg Wood

Seller’s Signature

Greg Wood

Seller’s Typed or Printed Name

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FIRST AMENDMENT TO SUBLEASE

     This First Amendment to Sublease (this “Amendment”) is made effective as of July 1, 2003, by and between Liberate Technologies, a Delaware corporation (“Liberate”), as sublessor, and DemandTec, Inc., a California corporation (“DemandTec”), as sublessee.

RECITALS:

     A. Liberate and DemandTec have entered into that certain Sublease (the “Existing Sublease”) dated as of December 7, 2001. Unless expressly defined herein, all capitalized terms used in this Amendment shall have the same meaning ascribed to them in the Existing Sublease. The Existing Sublease and this Amendment shall be collectively referred to herein as the “Sublease.” Liberate and DemandTec desire to amend the terms of the Existing Sublease to modify the rent, extend the term and expand the premises. The Existing Sublease currently applies to 25,179 square feet (the “Existing Premises”), constituting all of the second floor of the Building. Liberate and DemandTec desire to expand the Existing Premises to include a portion of the first floor of the Building, which is comprised of approximately 11,000 square feet (the “Additional Premises”), as shown on Exhibit A attached hereto and incorporated herein by this reference. Effective July 1, 2003, the Existing Premises and the Additional Premises shall constitute the “Subleased Premises” subject to the terms of this Sublease. The Additional Premises include the right to use the offices, cubicles and furniture currently located in the Additional Premises. Landlord shall also provide certain additional furniture and telephone equipment for use in the Additional Premises, as more particularly set forth below.

     B. In the event of any conflict between the terms and conditions of this Amendment and those of the Existing Sublease, the terms and conditions of this Amendment shall control.

AGREEMENT:

     NOW, THEREFORE, Liberate and DemandTec hereby agree as follows:

     1. Term. The term of this Sublease shall be extended to February 28, 2008, subject to earlier termination in accordance with the terms hereof.

     2. Premises. Effective July 1, 2003, the Additional Premises shall be added to the Subleased Premises for all purposes of this Sublease.

     3. Monthly Rent. The rent payable by DemandTec under the Existing Sublease shall continue in effect through June 30, 2003. Effective July 1, 2003, the

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Rent payable by DemandTec under this Sublease shall be the monthly amount set forth below:

Applicable Portion of Term	Monthly Rent
July 1, 2003 through June 30, 2004	$	50,538
July 1, 2004 through February 28, 2008	$	72,358

Such monthly payments shall be paid in advance on the first day of each calendar month, in lawful money of the United States, without prior demand or offset of any kind, except as expressly authorized herein, and shall be delivered to Liberate’s address set forth in Paragraph 10 of the Existing Sublease. The rent due hereunder is on a full service basis, and DemandTec shall not be responsible for the payment of any additional operating expenses.

     4. Security Deposit. Upon the full execution of this Amendment, DemandTec shall pay to Liberate Fifty Thousand Dollars ($50,000) as an additional Security Deposit under this Sublease. Such additional deposit shall be added to the existing Security Deposit of Two Hundred Fifty Thousand Dollars ($250,000), for a total Security Deposit under this Sublease of Three Hundred Thousand Dollars ($300,000). On the condition that no default by DemandTec has occurred, Liberate shall return One Hundred Thousand Dollars ($100,000) of the Security Deposit to DemandTec on July 1, 2004. The Security Deposit shall thereafter remain at Two Hundred Thousand Dollars ($200,000) for the balance of the term of this Sublease.

     5. Additional Premises and Personal Property Delivery.

     (a) Liberate shall deliver the Additional Premises with the Building operating systems, including HVAC, electrical and plumbing systems, in good working condition. Liberate shall have no further obligations regarding improvement to or modification of the Additional Premises under this Sublease, and DemandTec accepts the Additional Premises in its “AS-IS” condition.

     (b) Liberate shall deliver for DemandTec’s use during the term of the Sublease all furniture, equipment and cubicles currently located in the Additional Premises.

     (c) Liberate shall provide at each workstation one (1) telephone handset and one (1) chair. Liberate shall provide one (1) additional guest chair in each private office.

     (d) All of the furniture, equipment and personal property delivered to DemandTec by Liberate under this Amendment shall be referred to herein as the “Personal Property.” The Personal Property is delivered by Liberate and accepted by DenadTec in its “AS-IS” condition. DemandTec shall be responsible for all

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maintenance, repair and operation costs arising in connection with the Personal Property. DemandTec shall return the Personal Property to Liberate at the end of the term of the Sublease in the condition in which it was delivered, subject to reasonable wear and tear, and damage by casualty, if any.

     6. Building Signage. Subject to approval by Master Landlord under the Master Lease and governmental entities with applicable jurisdiction, Liberate shall permit DemandTec to install exterior Building signage at such time as DemandTec occupies more than sixty percent (60%) of the Building.

     7. Cafeteria Closure. Liberate hereby advises DemandTec that Liberate intends to close the cafeteria in the Building at a date to be determined by Liberate, in its sole discretion.

     8. Brokers. A commission for the transaction subject to this Amendment shall be paid to Cornish & Carey Commercial (“C&C”) by Liberate under a separate agreement between C&C and Liberate. Except for the foregoing, each party warrants and represents to the other that it has retained no broker or other party that is entitled to any fee or commission in connection with this Amendment, and each agrees to indemnify, defend and hold harmless the other party from any and all liabilities, claims or damages arising out of such party’s breach of the foregoing warranty and representation.

     9. Master Landlord’s Consent. This Amendment is conditioned upon Master Landlord’s written approval hereof. If Master Landlord’s consent to this Amendment is not obtained by July 31, 2003, then either Liberate or DemandTec may terminate this Amendment and all sums paid by DemandTec to Liberate hereunder shall promptly be returned to DemandTec, and thereafter this Amendment shall be null and void and of no further force or effect. In the event of such termination of this Amendment, the Existing Sublease shall remain in full force and effect in accordance with its terms.

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     10. No Further Modifications. Except as expressly modified by the terms of this Amendment, the terms and conditions of the Existing Sublease shall remain in full force and effect.

     IN WITNESS WHEREOF, Liberate and DemandTec have executed this Amendment effective as of the date first above written.

LIBERATE:
Liberate Technologies, a Delaware corporation
By:	/s/ Greg Wood
Its:	CFO
DEMANDTEC:
DemandTec, Inc., a California corporation
By:	/s/ Mark Culhane
Its:	EVP & CFO

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SUBLEASE

This Sublease (“Sublease”), is entered into by and between Liberate Technologies, a Delaware corporation (“Sublandlord”), and DemandTec, Inc., a California corporation (“Subtenant”), as of December 7, 2001.

Recitals

A. Sublandlord leases certain premises (the “Master Lease Premises”) located in that certain building (“Building”) located at One Circle Star Way, San Carlos, California, from Circle Star Center Associates, L.P., a California limited partnership (the “Master Landlord”), pursuant to that certain Lease dated April 27, 1999, as amended by an undated letter agreement entitled “Confirmation of Addition of Second Building,” complete copies of which are attached hereto as Exhibit A (collectively, the “Master Lease”). Capitalized terms used but not defined herein have the same meanings as they have in the Master Lease.

B. Sublandlord desires to sublease a portion of the Master Lease Premises to Subtenant, and Subtenant desires to sublease a portion of the Master Lease Premises from Sublandlord on the terms and provisions hereof.

Now, therefore, in consideration of the mutual covenants and conditions contained herein, Sublandlord and Subtenant covenant and agree as follows:

Agreement

1. Subleased Premises. On and subject to the terms and conditions below and subject to the terms of the Master Lease and Consent To Sublease, Sublandlord hereby leases to Subtenant, and Subtenant hereby leases from Sublandlord, approximately 25,179 square feet of space located and comprising all rentable space on the second floor of the Building, which space is shown on Exhibit B attached hereto (the “Subleased Premises”).

2. Term. This Sublease shall commence on December 10, 2001 (“Commencement Date”). The term shall expire on the last day of the thirty-sixth full month after the Commencement Date (the “Expiration Date”), unless sooner terminated pursuant to any provision hereof.

3. Rent & Deposit.

(a) Rent. Subtenant will pay Sublandlord rent as follows:

Months	Rental Schedule	Square Footage	Monthly Rent
0-6	Free	15,000 sq. ft.	$	0
7-12	$3.10 Fully Serviced	18,000 sq. ft.	$	55,800
12-18	$3.15 Fully Serviced	20,000 sq. ft.	$	63,000
19-24	$3.20 Fully Serviced	25,179 sq. ft.	$	80,572
25-36	$3.30 Fully Serviced	25,179 sq. ft.	$	83,091

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(b) Personal Property. During the entire term of this Sublease, Subtenant shall have the right to use the furniture, cabling system, telephone system, printers, and various other items of personal property located in the Subleased Space and described on Exhibit C, which will be provided by Sublandlord and agreed to by Subtenant within ten business days of the date of this agreement (collectively, the “Personal Property”) at no additional cost. Subtenant shall keep the Personal Property in good condition and repair and shall return the same to Sublandlord at the end of the Sublease term, subject to ordinary wear and tear. Sublandlord represents and warrants to the best of its knowledge that all Personal Property shall be in good working order and repair as of the Commencement Date.

(c) Sublandlord will provide $40,000 toward the purchase and installation of a PBX and voicemail system for use by Subtenant. Sublandlord will own and retain title to the PBX and voicemail system.

(d) Security Deposit. Upon execution of this Sublease, Subtenant shall pay to Sublandlord the sum of Three Hundred Fifty Thousand Dollars ($350,000) to secure the performance of Subtenant’s obligations hereunder (the “Security Deposit”). Provided that Subtenant is not in default, the Security Deposit shall be reduced to Two Hundred Fifty Thousand Dollars ($250,000) after the 18^th month of the term and to One Hundred Seventy-Five Thousand Dollars ($175,000) after the 24^th month of the term. The Security Deposit may be in the form of cash or an irrevocable letter of credit in a form reasonably acceptable to Sublandlord. The Security Deposit is not advance rental, nor a measure of Sublandlord’s damages. Sublandlord shall not be required to keep the Security Deposit separate from its general accounts. Upon the occurrence of any default by Subtenant, if the default shall continue after the expiration of any applicable notice and cure period, Sublandlord may, from time to time and without prejudice to any other remedy available to Sublandlord provided herein or by law, use the Security Deposit to the extent necessary to make good any arrears in Rent or other payments due hereunder, or other damage, injury, expense or liability caused by such default. Subtenant shall pay to Sublandlord, upon demand, the amount so applied to restore the Security Deposit to the amount immediately prior to such application. Any remaining balance shall be returned to Subtenant after Subtenant has surrendered the Subleased Premises in the condition required by this Sublease and all Subtenants’ other obligations under this Sublease have been fulfilled.

4. Acceptance of Subleased Premises. Sublandlord shall deliver the Subleased Premises to Subtenant professionally cleaned, including all carpeting, with any and all damage caused by Sublandlord’s occupancy of or move from the Subleased Premises repaired. Subject to this Section 4, Subtenant has inspected the Subleased Premises and accepts the same in its current condition “AS-IS” and waives the right to make any claim against Sublandlord for any matter directly or indirectly arising out of the condition of the Subleased Premises, appurtenances thereto, and the improvement thereof. Subtenant acknowledges that the taking of possession of the Subleased Premises by Subtenant shall be conclusive evidence that the Subleased Premises are in good and satisfactory condition at the time such possession was so taken. Subtenant has determined to its satisfaction that the Subleased Premises can be used for the purposes for which the same is leased. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SUBLANDLORD MAKES NO

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WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR HABITABILITY OF THE SUBLEASED PREMISES. Sublandlord represents and warrants to Subtenant that as of the Commencement Date, (a) the Subleased Premises are in good condition with all building systems, including but not limited to HVAC, electrical and plumbing in good working order and repair, (b) the Subleased Premises are not currently in violation of any laws, codes, ordinances and other governmental requirements then applicable to the Subleased Premises or the building in which the Subleased Premises are located, and (c) there are no material defects in the Subleased Premises or building which would unreasonably interfere with Sublessee’s use and enjoyment of the Subleased Premises.

5. Right of Early Entry. Sublandlord shall use reasonable efforts to give Subtenant access to the Subleased Premises by December 3, 2001 for the purposes of making the Subleased Premises ready for occupancy. Such early entry shall be subject to each and every provision of this Sublease except Subtenant’s obligation to pay Rent.

6. Use. Subtenant may use the Subleased Premises only for uses permitted by the Master Lease. Subtenant shall not use or permit the use of the Subleased Premises in a manner that will create waste or a nuisance, interfere with or disturb other tenants in the Building or violate the provisions of the Master Lease.

7. Incorporation of Sublease. All of the terms and provisions of the Master Lease, except as specifically excluded therefrom in this paragraph, are incorporated into and made a part of this Sublease and the rights and obligations of the parties under the Master Lease are hereby imposed upon the parties hereto with respect to the Subleased Premises, Sublandlord being substituted for the “Landlord” in the Master Lease (except in Sections 1, 7, 9, 10(f), 12, 16, 20, 21, 39(c), and the introductory paragraph of 39, in which references to “Landlord” shall continue to be deemed to refer to the Master Landlord, not Sublandlord) and Subtenant being substituted for the “Tenant” in the Master Lease. It is further understood that where reference is made in the Master Lease to the “Premises,” the same shall mean the Subleased Premises as defined herein; where reference is made to the “Commencement Date,” the same shall mean the Commencement Date as defined herein; and where reference is made to “this Lease,” the same shall mean this Sublease. Notwithstanding the foregoing, Sublandlord shall have no obligation to perform any of Master Landlord’s obligations under the Master Lease but upon request of Subtenant, Sublandlord shall use commercially reasonable efforts to cause Master Landlord to perform such obligations. The following Sections of the Master Lease are not incorporated herein: Basic Lease information, Sections 2, 3(a), 3(b), 3(c), 32, 34, 37, 42, 43, 44, 45, Exhibit B (Work Letter), Exhibit F (Form of Letter of Credit), and Exhibit G (Description of Second Building).

Sublandlord represents and warrants to Subtenant that (i) except as specifically set forth herein, the Master Lease is unmodified and in full force and effect, (ii) to the best of Sublandlord’s knowledge, Sublandlord is not in default under the Master Lease, nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Sublandlord under the Master Lease, (iii) to the best of Sublandlord’s knowledge, Master Landlord is not in default under the Master Lease,

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nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Master Landlord under the Master Lease, (iv) Sublandlord shall not exercise its termination rights, if any, under the Master Lease (except any such rights arising from a condemnation or casualty of the Master Lease Premises) or otherwise agree to an early termination of the Master Lease or surrender of the Subleased Premises unless Master Landlord accepts this Sublease as a direct lease between Master Landlord and Subtenant and (v) Sublandlord shall not amend or otherwise modify the terms of the Master Lease in a manner that would materially and adversely affect Subtenant’s use and enjoyment of the Subleased Premises as contemplated by this Sublease.

Section 6 of the Master Lease, which is incorporated herein, requires that Sublandlord notify Subtenant whether any Alterations will be required to be removed and the Subleased Premises restored to its condition upon delivery to Subtenant. Sublandlord hereby notifies Subtenant that at the expiration or earlier termination of this Sublease, any alterations or additions to the Subleased Premises performed by Subtenant must be removed and the Subleased Premises’ returned to the condition in which they were first delivered to Subtenant (damage by ordinary wear and tear excepted), all at Subtenant’s sole cost and expense.

8. Assignment and Subletting. Subtenant must obtain the consent of Master Landlord and Sublandlord, which will not be unreasonably withheld, and be in compliance with its obligations under this Sublease before it may assign, sublet, transfer, pledge, hypothecate or otherwise encumber the Subleased Premises (each, a “Transfer”), in whole or in part, or permit the use or occupancy of the Subleased Premises by anyone other than Subtenant. Regardless of Sublandlord’s and/or Master Landlord’s consent, no subletting or assignment shall release Subtenant from its obligations hereunder.

In the event of such a Transfer, Subtenant shall deliver to Sublandlord fifty percent (50%) of all sums received from the assignee, sublessee or other transferee in excess of the Rent and other sums due from Subtenant to Sublandlord under this Sublease; provided that Subtenant may first deduct from such excess its “Transfer Costs.” As used herein, “Transfer Costs” shall mean (i) any brokerage commissions paid by Subtenant in connection with the Transfer, (ii) any improvement allowance or other concessions or payments made by Subtenant to the transferee as an inducement to enter into the Transfer, (iii) the costs of any alterations, additions or improvements made by Subtenant to the Subleased Premises to make the same suitable for occupancy by the transferee, and (iv) reasonable attorneys’ fees in connection with the Transfer.

Notwithstanding anything to the contrary in this Section 8, Subtenant may, subject to the terms of the Consent To Sublease, assign this Sublease or sublet the Subleased Premises or any portion thereof, without first obtaining Sublandlord’s consent, to any partnership, corporation or other entity that controls, is controlled by or is under common control with Subtenant or Subtenant’s parent (control being defined for such purposes as ownership of at least 50% of the equity interests in, or the power to direct the management of, the relevant entity), or to any partnership, corporation or other entity resulting from a merger or consolidation with Subtenant or Subtenant’s parent, or to any person, partnership, corporation or other entity that acquires (whether by means of an asset purchase of all or

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substantially all of the assets of Subtenant or by means of a transfer of Subtenant capital stock) Subtenant as a going concern including as part of an initial public offering of Subtenant’s stock or other equity interests or as part of a re-incorporation of Subtenant in another jurisdiction) (collectively, an “Affiliate”), provided that (i) in the event of such assignment or subletting, the Affiliate assumes in writing all of Subtenant’s obligations under this Sublease pertaining to the portion of the Subleased Premises that is the subject of the assignment or sublease (but no such assumption shall relieve Subtenant from primary liability under this Sublease) and (ii) in the event of such assignment, the financial strength of the Affiliate is equal to or greater than the financial strength of Subtenant at the date of such assignment or subletting.

In no event shall any public offering of Subtenant’s capital stock or other equity interests, whether as part of an initial public offering or any secondary public offering, or any transfer of Subtenant’s capital stock or other equity interests through the “over the counter” market or any recognized national or international securities exchange, or issuances of stock for purposes of raising financing be deemed a Transfer hereunder.

Notwithstanding anything contained herein or the Master Lease to the contrary, Sublandlord shall have no right to recapture all or any portion of the Subleased Premises in the event of a sublease or assignment by Subtenant.

9. Parking. Subtenant shall have the right to use, in common with other occupants of the Building and the project of which the Building is a part, 3.3 unassigned parking spaces per thousand square feet of space it is then leasing, which as of the Commencement Date shall be 83 parking spaces.

10. Notices. The addresses specified in the Master Lease for receipt of notices to each of the parties are deleted and replaced with the following:

To Sublandlord:	Two Circle Star Way
	San Carlos, CA 94070
	Attn: General Counsel
To Subtenant:	One Circle Star Way
	San Carlos, CA 94070
	Attn: CFO

11. Right of First Refusal. Sublandlord hereby grants to Subtenant an ongoing right of first refusal (“First-Refusal Right”) to lease all or any portion of the remaining Master Lease Premises (the “First-Refusal Space”) in the Building, subject to the consent of the Master Landlord. Upon receipt of a third-party offer to lease all or any portion of the First-Refusal Space, which offer Sublandlord desires to accept, Sublandlord shall provide Subtenant with written notice (the “First-Refusal Notice”) of such offer and all terms thereof, including rent, tenant improvement allowances or other concessions, lease term and landlord’s pre-delivery work obligations, if any. Sublandlord shall ensure that the First-Refusal Notice specifically describes the First-Refusal Space that will be available for lease (the “Specific First- Refusal

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Space”). If Subtenant wishes to exercise its First-Refusal Right with respect to the Specific First-Refusal Space, Subtenant, within five (5) business days after the delivery of the First-Refusal Notice to Subtenant, shall deliver notice to Sublandlord of Subtenant’s intention to exercise its First-Refusal Right with respect to all the Specific First-Refusal Space. If Subtenant does not exercise its First-Refusal Right within the five-business-day period, the First-Refusal Right shall terminate for the Specific First-Refusal Space, and Sublandlord thereafter shall be free to lease the Specific First-Refusal Space to anyone on the terms set forth in the First Refusal Notice. If Subtenant exercises its First-Refusal Right, Sublandlord and Subtenant shall promptly enter into a written sublease agreement on the same general terms and conditions as this Sublease except that Rent and all other economic terms for the Specific First- Refusal Space shall be as set forth in the First Refusal Notice. The term of this Sublease as it pertains to the Specific First Refusal Space shall be co-terminus with the term of this Sublease as it pertains to the balance of the Subleased Premises.

12. Master Landlord’s Consent. This Sublease is conditioned upon Master Landlord’s written approval hereof as evidenced by Master Landlord’s execution of a consent to sublease substantially in the form attached hereto as Exhibit D (“Master Landlord’s Consent”). If Sublandlord and Subtenant shall not have obtained Master Landlord’s consent to this Sublease by December 7, 2001, then either Subtenant or Sublandlord may terminate this Sublease and all sums paid by Subtenant to Sublandlord hereunder immediately shall be returned to Subtenant.

13. Authority. Sublandlord hereby warrants and represents that it is a corporation, duly authorized and in good standing under the laws of the State of Delaware and has the power to execute and deliver this Sublease. The persons signing on behalf of the Sublandlord hereby represent and warrant that they are the duly authorized representatives of the Sublandlord and have the power and authority to bind the Sublandlord. Subtenant hereby warrants and represents that it is a corporation, duly authorized and in good standing under the laws of the State of California and has the power to execute and deliver this Sublease. The persons signing on behalf of the Subtenant hereby represent and warrant that they are the duly authorized representatives of the Subtenant and have the power and authority to bind the Subtenant.

14. No Animals. Subtenant shall not permit any animals to be brought into the Premises, the Building or the common areas of the project of which the Building is a part, except animals assisting disabled persons.

15. Counterparts. This Sublease may be executed in two (2) or more counterparts, each of which shall be deemed an original but when taken together shall constitute one and the same instrument.

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16. Sublandlord’s Obligations.

(a) Sublandlord’s Remaining Obligations. The obligations that Subtenant has agreed to perform hereunder are hereinafter referred to as the “Subtenants Obligations”, and all other obligations of the “Tenant” under the Master Lease are herein referred to as the “Sublandlord’s Remaining Obligations.” Sublandlord agrees to maintain the Master Lease in force during the entire Term of this Sublease and to pay rent to Master Landlord in accordance with the terms of the Master Lease, subject, however, to any earlier termination of the Master Lease without the fault of the Sublandlord and due to casualty or condemnation. Further, Sublandlord agrees to comply with and perform Sublandlord’s Remaining Obligations and to indemnify, defend with counsel reasonably acceptable to Subtenant and hold Subtenant free and harmless from and against all liability, judgments, costs, damages, claims or demands arising out of (i) any default by Sublandlord under this Sublease; (ii) any default by Sublandlord of Sublandlord’s Remaining Obligations under the Master Lease; (iii) any breach of any representation or warranty made by Sublandlord in this Sublease; or (iv) the negligence or willful misconduct of Sublandlord, its agents, employees, contractors or invitees.

(b) Sublandlord’s Additional Obligations. With respect to any obligation to be performed by Master Landlord under the Master Lease, Sublandlord shall be obligated, upon receipt of notice from Subtenant, to use good faith efforts to obtain Master Landlord’s performance of such obligation. If, after receipt of request from Subtenant, Sublandlord shall fail or refuse to take action to obtain Master Landlord’s performance or to enforce Sublandlord’s rights against Master Landlord with respect to the Subleased Premises (“Action”), Subtenant shall have the right to take such Action in its own name, and for that purpose and only to such extent, all of the rights of Sub landlord as “Tenant” under the Master Lease hereby are conferred upon and assigned to Subtenant, and Subtenant hereby is subrogated to such rights to the extent that the same shall apply to the Subleased Premises. If any such Action against Master Landlord in Subtenant’s name shall be barred by reason of lack of privity, nonassignability or otherwise, Subtenant may take such Action in Sublandlord’s name; provided that Subtenant shall indemnify, protect, defend by counsel reasonably satisfactory to Sublandlord and hold Sublandlord harmless from and against any and all liability, loss claims, demands, suits, penalties or damage (including reasonable attorneys’ and experts fees) which Sublandlord may incur or suffer by reason of such Action except to the extent any such liability, loss, claims, demands, suits, penalties or damage arises out of Sublandlord’s negligence or willful misconduct.

(c) Notices. Sublandlord promptly shall deliver to Subtenant copies of all notices, demands and requests that Sublandlord may receive from Master Landlord under the Master Lease affecting the Subleased Premises.

17. Indemnification.

(a) Subtenant’s Indemnification. In addition to the indemnification set forth in Section lO(c) of the Master Lease, Subtenant shall indemnify, protect, defend with counsel reasonably acceptable to Sublandlord and hold harmless Sublandlord from and against any and all claims, liabilities, judgments, causes of action, damages, costs and expenses (including

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reasonable attorneys’ and experts’ fees), caused by or arising in connection with: (i) a breach of Subtenant’s obligations under this Sublease; (ii) a breach of Subtenant’s obligations under the Master Lease to the extent incorporated into this Sublease.

(b) Sublandlord’s Indemnification. In addition to the indemnification set forth in Section l0(a) of the Master Lease, Sublandlord shall indemnify, protect, defend with counsel reasonably acceptable to Subtenant and hold Subtenant harmless from and against any and all claims, liabilities, judgments, causes of action, damages, costs, and expenses (including reasonable attorneys’ and experts’ fees) caused by or arising in connection with: (i) a breach of Sublandlord’s obligations under this Sublease; or (ii) a breach of Sublandlord’s Remaining Obligations under the Master Lease; or (iii) a termination of the Master Lease or this Sublease arising out of or in any way connected with Sublandlord’s default and/or any resulting termination of this Sublease.

The foregoing indemnifications, together with the indemnifications set forth in Section 10 of the Master Lease, shall survive the expiration or earlier termination of this Sublease.

18. No Voluntary Termination. Sublandlord shall not voluntarily terminate the Master Lease during the Term unless and until Master Landlord has agreed in writing to continue this Sublease in full force and effect as a direct lease between Master Landlord and Subtenant upon and subject to all of the terms, covenants and conditions of this Sublease for the balance of the Term hereof. If Master Landlord so consents, Subtenant shall attorn to Master Landlord in connection with any such voluntary termination and shall execute an attornment agreement in such form as may reasonably be requested by Master Landlord; provided, however, that the attornment agreement does not materially adversely affect the use by Subtenant of the Subleased Premises in accordance with the terms of this Sublease, materially increase Subtenant’s obligations under this Sublease or materially decrease Subtenant’s rights under this Sublease. The prohibition against voluntary termination set forth in this Paragraph shall apply to the “Tenant’s” termination rights as set forth in Section 2 of the Master Lease.

19. Signage. At Subtenant’s cost, Subtenant shall have their pro-rata share of monument signage in addition to lobby directory and floor signage.

20. Amendment or Modification. Sublandlord and Master Landlord shall not amend or modify the Master Lease in any way so as to materially or adversely affect Subtenant or its interest hereunder, materially increase Subtenant’s obligations hereunder or materially restrict Subtenant’s rights hereunder, without the prior written consent of Subtenant, which may be withheld in Subtenant’s sole but reasonable discretion.

21. Surrender. Notwithstanding anything to the contrary contained in this Sublease or the Master Lease, Subtenant’s obligation to surrender the Subleased Premises shall be fulfilled if Subtenant surrenders possession of the Subleased Premises in the condition existing at the Commencement Date, excepting ordinary wear and tear, acts of God, casualties, condemnation, alterations or improvements which Master Landlord and Sublandlord state in writing may be surrendered at the termination of this Sublease and any additions, alterations or improvements made to the Subleased Premises by Sublandlord or Master Landlord prior to the Commencement Date.

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22. Sublandlord’s Representations and Warranties. As an inducement to Subtenant to enter this Sublease, to the best of Sublandlord’ s knowledge, Sublandlord represents and warrants with respect to the Subleased Premises that:

(a) The Master Lease is in full force and effect, the copy attached hereto is a true and correct copy thereof, and there exists under the Master Lease no default or event of default, nor has there occurred any event which, with the giving of notice or passage of time or both, could constitute such a default or event of default.

(b) There are no pending or threatened actions, suits or proceedings before any court or administrative agency against Sublandlord or against Master Landlord or third parties which could, in the aggregate, adversely affect the Subleased Premises or any part thereof or the ability of Master Landlord to perform its obligations under the Master Lease or of Sublandlord to perform its obligations under this Sublease, and Sublandlord is not aware of any facts which might result in any such actions, suits or proceedings.

(c) Sublandlord has not received any notice from any insurance company of any defects or inadequacies in the Subleased Premises or any part thereof which could adversely affect the insurability of the Subleased Premises or the premiums for the insurance thereof.

23. Quiet Enjoyment; Right to Cure. Subtenant shall peacefully have, hold and enjoy the Subleased Premises, subject to the terms and conditions of this Sublease, provided that Subtenant pays all Rent and performs all of Subtenant’s covenants and agreements contained herein. If Sublandlord defaults in the performance or observance of any of Sublandlord’s Remaining Obligations or fails to perform Sublandlord’s stated obligations under this Sublease to enforce, for Subtenant’s benefit, Master Landlord’s obligations under the Master Lease, then Subtenant shall give Sublandlord notice specifying in what manner Sub landlord has defaulted, and if such default shall not be cured by Sublandlord within thirty (30) days thereafter (except that if such default cannot be cured within said 30-day period, this period shall be extended for an additional reasonable time, provided that Sublandlord commences to cure such default within such 30-day period and proceeds diligently thereafter to effect such cure as quickly as possible except where there is imminent danger of injury to person or property (“Imminent Injury”, Sublandlord shall cure such default promptly), then in addition, Subtenant shall be entitled, at Subtenant’s option, to cure such default and promptly collect from Sublandlord Subtenant’s reasonable expenses in so doing. Subtenant shall not be required, however, to wait the entire cure period described herein if earlier action is required to comply with the Master Lease or with any applicable governmental law, regulation or order, or in the case of Imminent Injury if Sublandlord does not promptly cure such default.

24. Authorization to Direct Sublease Payments. Sublandlord hereby acknowledges that Sublandlord’ s failure to pay the Rent and other sums owing by Sublandlord to Master Landlord under the Master Lease will cause Subtenant to incur damages, costs and expenses not contemplated by this Sublease, especially in those cases where Subtenant has paid sums to Sublandlord hereunder which correspond in whole or in part to the amounts owing by Sublandlord to Master Landlord under the Master Lease. Accordingly, Subtenant shall have

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the right to pay all Rent and other sums owing by Subtenant to Sublandlord hereunder for those items which also are owed by Sublandlord to Master Landlord under the Master Lease directly to Master Landlord. If Subtenant reasonably believes that Sublandlord has failed to make any payment required to be made by Sublandlord to Master Landlord under the Master Lease and Sublandlord fails to provide adequate proof of payment within ten (10) business days after Subtenant’s written demand requesting such proof. If Subtenant makes such payments, Subtenant shall not prepay any amounts owing by Subtenant without the consent of Sublandlord, and shall provide to Sublandlord concurrently with any payment to Master Landlord reasonable evidence of such payment. If Sublandlord notifies Subtenant that it disputes any amount demanded by Master Landlord, Subtenant shall not make any such payment to Master Landlord unless Master Landlord has provided a three-day notice to pay such amount or forfeit the Master Lease.

Any sums paid directly by Subtenant to Master Landlord in accordance with this Paragraph shall be credited toward the amounts payable by Subtenant to Sublandlord under this Sublease. In the event Subtenant tenders payment directly to Master Landlord in accordance with this Paragraph and Master Landlord refuses to accept such payment, Subtenant shall have the right to deposit such funds in an account with a national bank for the benefit of Master Landlord and Sublandlord, and the deposit of said funds in such account shall discharge Subtenant’s obligation under this Sublease to make the payment in question.

25. Insurance Deductibles. Notwithstanding anything contained herein or the Master Lease to the contrary, Subtenant shall not be responsible for the payment of any insurance deductibles under the Master Lease unless the loss is due to Subtenant’s gross negligence or willful misconduct.

26. Structural Repairs. Notwithstanding anything contained herein of the Master Lease to the contrary, Subtenant shall have no requirement to make structural repairs or maintenance unless necessitated by Subtenant’s gross negligence or willful misconduct.

27. Damage and Destruction. Notwithstanding anything contained herein of the Master Lease to the contrary, if the repairs referenced in Section 20 of the Master Lease will take longer than six (6) months to complete, Subtenant may terminate this Sublease.

27. Condemnation. Notwithstanding anything contained herein of the Master Lease to the contrary, for any temporary taking for longer than six (6) months, Subtenant may terminate this Sublease.

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first written above.

SUBLANDLORD:
Liberate Technologies
By:	Mitchell Kertzman
Its:	Chief Executive Officer
/s/ Mitchell Kertzman
SUBTENANT:
DemandTec, Inc.
By:	Mark Culhane
Its:	EVP & CFO
/s/ Mark Culhane

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Exhibit A

Master Lease

1 of 137

CIRCLE STAR LEASE AGREEMENT

by and between

CIRCLE STAR CENTER ASSOCIATES, L.P.

(“Landlord”)

and

NETWORK COMPUTER, INC.

(“Tenant”)

TABLE OF CONTENTS

PARAGRAPH	DESCRIPTION	PAGE
BASIC LEASE INFORMATION			V
1.	Occupancy and Use		1
2.	Terms and Possession		1
3.	Rent; Rent Adjustments; Additional Charges for Expenses and Taxes		2
	(A) Monthly Base Rent		2
	(B) Adjustments in Base Rent		2
	(C) Additional Charges for Expenses and Taxes		2
	(1) Definitions of Additional Charges:		2
	(A) “Tax Year”		2
	(B) “Tenant’s Share”		2
	(C) “Real Estate Taxes”		2
	(D) “Expenses”		3
	(E) “Expense Year”		4
	(2) Payment of Real Estate Taxes:		4
	(3) Payment of Expenses:		4
	(4) Other:		4
	(5) Audit:		4
	(D) Late Charges		5
4.	Restrictions on Use		5
5.	Compliance with Laws		5
6.	Additional Alterations		6
7.	Repair and Maintenance		6
8.	Liens		7
9.	Assignment and Subletting		7
10.	Insurance and Indemnification		9
11.	Waiver of Subrogation		10
12.	Services and Utilities		10
13.	Tenant’s Certificates		11
14.	Holding over		11
15.	Subordination		12
16.	Rules and Regulations		12

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PARAGRAPH	DESCRIPTION	PAGE
17.	Re-entry by Landlord		12
18.	Insolvency or Bankruptcy		13
19.	Default		13
20.	Damage by Fire, Etc		14
21.	Eminent Domain		14
22.	Sale by Landlord		15
23.	Right of Landlord to Perform		15
24.	Surrender of Premises		15
25.	Waiver		15
26.	Notices		15
27.	Taxes Payable by Tenant		16
28.	Abandonment		16
29.	Successors and Assigns		16
30.	Attorney’s Fees		16
31.	Light and Air		16
32.	Security Deposit		16
33.	Corporate Authority; Financial Information		17
34.	Parking		18
35.	Miscellaneous		18
36.	Tenant’s Remedies		18
37.	Real Estate Brokers		18
38.	Lease Effective Date		18
39.	Hazardous Substance Liability		18
40.	Arbitration of Disputes		19
41.	Signage		19
42.	Option to Renew		19

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PARAGRAPH	DESCRIPTION	PAGE
43.	Rent During Extension Term		19
44.	Second Building		20

Exhibit “A”	Premises
Exhibit “B”	Work Letter
Exhibit “B-1”	Landlord’s Plans
Exhibit “B-2”	Minimum Information Required
Exhibit “C”	Rules and Regulations
Exhibit “D”	Form of Tenant Estoppel Certificate
Exhibit “E”	Encumbrances
Exhibit “F”	Form of Letter of Credit
Exhibit “G”	Second Building

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BASIC LEASE INFORMATION

Lease Date:	April 27 1999
LANDLORD:	CIRCLE STAR CENTER ASSOCIATES, L.P. a California Limited partnership
Managing Agent:	THE MOZART DEVELOPMENT COMPANY
Landlord’s and Managing Agent’s Address:	c/o THE MOZART DEVELOPMENT COMPANY 1068 East Meadow Circle Palo Alto, CA 94303
TENANT:	NETWORK COMPUTER, INC. a Delaware Corporation
Tenant’s Address:	Prior to Occupancy:                  After Commencement Date:
	1000 Bridge Parkway                at the Premises Redwood Shores, CA 94065    Attn: Chief Financial Officer
Building:	Two Circle Star Way, San Carlos, California
Suite:	100, 300, and 400
Rentable Area of the Premises:	First Floor: 24,696; Third Floor: 26,561; Fourth Floor: 26,561; Total: 77,818
Rentable Area of the Building:	102,997 square feet
Tenant’s Use of the Premises:	General Office and Administration, research and development; hardware and software labs, and incidental uses including demonstration rooms and multipurpose rooms.
Lease Term:	Ten (10) years
Option to Terminate:	See paragraph 2(e)
Scheduled Commencement Date:	August 1, 1999
Scheduled Expiration Date:	July 31, 2009
Tenant Allowance:	$1,945,450 ($25 psf x 77,818 sf).
Additional Allowance:	$389,090 ($5 psf x 77,818 sf).
Tenant’s Plan Delivery Date:	April 21, 1999
Outside Delivery Date:	December 31, 1999
Monthly Base Rent:	$2.60 per Rentable Square Foot of the Rentable Area of the Premises, provided, however, the Monthly Base Rent for the first month (in respect of the Initial Premises) shall be waived. The term “Initial Premises” shall mean the premises described on Exhibit “A” prior to the effect of any increase in the Premises that results from an election of Tenant to lease any First Right

iv

	Space pursuant to Paragraph 45.
Base Rent Adjustment:	On each anniversary of the Commencement Date the Monthly Base Rent shall increase by three percent (3%) over the Monthly Base Rent applicable to the month immediately prior to the applicable anniversary. (Note: there is also an initial adjustment to Monthly Base Rent required by Paragraph 3(b)(i)).
Tenant’s Share of Expenses and Taxes (“Additional Charges”): 75.55%
Security Deposit:	See Paragraph 32.
Guarantor of Lease:	Oracle Corporation, a Delaware corporation
Broker:	Cornish & Carey Commercial (Landlord & Tenant)
Broker’s Fee or Commission, If Any, Paid By:	Landlord
The foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information hereinabove set forth and shall be construed to incorporate all of the terms provided under the particular paragraph pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the latter shall control.

v

LANDLORD: CIRCLE STAR CENTER ASSOCIATES, L.P. a California limited partnership
By:	M-D Ventures, Inc.
Its:	General Partner
By:	/s/ Steve Dostart
	Steve Dostart
	Its: Vice President
TENANT: NETWORK COMPUTER, INC. a Delaware corporation
By:	/s/ Mitchell Kertzman
	Mitchell Kertzman
	Its: CEO & President
By:	/s/ Nancy J. Hilker
	Nancy J. Hilker
	Its: Vice President & Chief Financial Officer
Approved NCI LEGAL
By:	/s/ Illegible

vi

LEASE AGREEMENT

     THIS LEASE AGREEMENT is made and entered into as of April 27, 1999, by and between CIRCLE STAR CENTER ASSOCIATES, L.P., a California limited partnership, (herein called “Landlord”), and NETWORK COMPUTER, INC. , a Delaware corporation, (herein called “Tenant”).

     Upon and subject to the terms, covenants and conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord those premises (the “Premises”) comprising the area substantially as crosshatched on the attached Exhibit “A”, in the building (hereinafter referred to as the “Building”) specified in the Basic Lease Information attached hereto. The number of square feet designated as Rentable Area of the Premises on the Basic Lease Information may include portions of the Building Common Area attributed to the Premises and not located within the area outlined on Exhibit A. Tenant acknowledges that the number of square feet of Rentable Area of the Premises and the Building has been determined according to the measurement standard described in the letter of Kenneth Rodriguez Associates dated September 18, 1998. The Building is located on land on which Landlord intends to develop two buildings as an integrated project (the “Project”). The term “Common Area” shall mean all areas and facilities within the Project that are not designated by Landlord for the exclusive use of Tenant or any other tenant or other occupant of the Project, including the parking areas, access and perimeter roads, pedestrian sidewalks, landscaped areas, trash enclosures, recreation areas and the like.

     1. OCCUPANCY AND USE. Tenant may use and occupy the Premises for the purpose specified in the Basic Lease Information and for no other use or purpose without the prior written consent of Landlord. Landlord shall have the right to grant or withhold consent to a proposed change of use in its sole discretion. Tenant shall be entitled to the benefit on a nonexclusive basis of (i) the Building Common Areas with other occupants of the Building, and (ii) to the extent and for so long as Landlord continues to own the Project, the Project Common Areas with other occupants of the Project in accordance with the Rules and Regulations established by Landlord from time to time. Provided, however, that if Landlord sells a portion of the Project, Landlord shall assure to Tenant that Tenant’s rights to access and parking are assured through a Reciprocal Easement Agreement or other like mechanism. Notwithstanding the above, Tenant understands and agrees that (a) a Declaration of Covenants, Conditions and Restrictions made as of June 24, 1997 by and between Mozad, L.P., a California limited partnership and Homestead Village Inc., a Maryland corporation (“CC&R’s”), (b) the Lease between Mozad, L.P. as Lessor and Circle Star Center Associates, L.P. as Lessee dated as of October 15, 1997 (“Ground Lease”) and (c) a Conditional Use Permit, Office Complex, 1717 Industrial Road, San Carlos, CA 94070, effective date June 12, 1997, may encumber the Land and Project and that Tenant’s Occupancy and Use of the Premises may be restricted by such encumbrances. If necessary, Tenant shall execute such documents as are reasonably necessary to cause this Lease to become subordinate to such encumbrances (see the attached Exhibit “E”, Encumbrances).

     2. TERM AND POSSESSION; OPTION TO TERMINATE.

          (a) The term of this Lease (the “Term”) shall be for the period specified in the Basic Lease Information (or until sooner terminated as herein provided), subject extension pursuant to Paragraph 42 and/or Paragraph 45(c)(3)(E). Subject to Tenant’s termination right set forth below in this Paragraph, if Landlord, for any reason whatsoever, cannot deliver possession of the Premises in the condition required under this Lease (including the Substantial Completion of the Tenant Improvements), with all governmental permits required for the occupancy of the Premises, to Tenant on the date specified in the Basic Lease Information for the commencement of the Term, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. In that event, however, the Term of the Lease shall not commence until such commencement date as is determined pursuant to Exhibit B. In such event, the scheduled commencement date and scheduled expiration date shall be adjusted accordingly. Payment of Rent and Additional Charges by Tenant due to delay in delivery of the Premises caused by Tenant shall also be governed by Exhibit B hereof. Notwithstanding the provisions above and of Exhibit B, if the delivery of the Premises is delayed beyond Outside Delivery Date, as set forth in the Basic Lease Information, Tenant shall have the right to terminate this Lease by notifying Landlord in writing of its intent to do so no later than ten (10) business days after the Outside Delivery Date. The Outside Delivery Date shall be extended one day for each day of

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delay caused by (i) Tenant Delays as more particularly set forth in Exhibit B hereof and (ii) acts of God or the elements, acts of the Government, labor disturbances of any character, a shortage of material or labor, or other causes beyond the reasonable control of Landlord for a period up to sixty (60) days (any of the foregoing, “Force Majeure”). The dates upon which the Term shall actually commence and terminate pursuant to this Paragraph 2(a) are herein called the “Commencement Date” and the “Expiration Date,” respectively.

          (b) Completion of the improvements to the Premises and Building shall be governed by the terms and conditions of the separate work letter (“Work Letter”), attached hereto as Exhibit “B”.

          (c) The Premises shall be deemed “delivered” and the Term shall commence as defined in Exhibit B.

          (d) Tenant shall, no later than thirty (30) days after Substantial Completion of the Tenant Improvements, occupy a portion of the Premises or deliver a letter to Landlord confirming that possession of the Premises has been tendered to and accepted by Tenant and that Tenant, by virtue of such acceptance, is in occupancy of the Premises. Time is of essence. This subparagraph 2(d) shall not be construed as an obligation of Tenant to continuously occupy the Premises.

          (e) Tenant shall have the option to terminate this Lease with respect to not less than all of the Initial Premises effective upon the end of the eighth anniversary of the Commencement Date (subject to the extension of this period pursuant to Paragraph 45(c)(3)(C)) if, and only if, Tenant provides written notice to Landlord no less than twenty (20) months prior to the effective date of such termination. This option to terminate shall not be exercisable from and after Tenant’s exercise of its option to renew pursuant to Paragraph 42 below. As a condition to Tenant’s termination of this Lease pursuant to this subparagraph (e), Tenant shall pay the unamortized portion of the Additional Allowance applicable to the Initial Premises as of the date of such termination based upon amortization over the period commencing on the first day of the second month of the Term and ending on the Expiration Date, with the return of nine percent (9%) per annum. In the event Tenant exercises its option to terminate pursuant to this paragraph, effective upon such termination all of its rights to occupy the Initial Premises and the portions of the Project associated therewith shall terminate including but not limited to its right to building signage pursuant to the second sentence of Paragraph 41 and its right to use the roof top for an Antenna pursuant to Paragraph 44.

     3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

          (a) Monthly Base Rent.

               (i) Payment of Base Rent. Commencing on the Commencement Date (but subject to the waiver in clause (ii) below), Tenant shall pay to Landlord throughout the Term an amount equal to the Monthly Base Rent rate specified in the Basic Lease Information as adjusted pursuant to Paragraph 3(b), multiplied by the Rentable Area of the Premises, as specified in the Basic Lease Information (“Base Rent”), which sum shall be payable by Tenant in equal monthly installments on, or, at Tenant’s election, before, the first day of each month, in advance, in lawful money of the United States (without any prior demand therefor and without deduction or offset whatsoever, except as expressly provided for in Paragraphs 20 & 21) to Landlord or its managing agent at the address specified in the Basic Lease Information or to such other firm or to such other place as Landlord or its Managing Agent may from time to time designate in writing. Tenant shall pay to Landlord all charges and other amounts whatsoever as provided in this Lease (“Additional Charges”) at the place where the Base Rent is payable, and Landlord shall have the same remedies for a default in the payment of Additional Charges as for a default in the payment of Base Rent. As used herein, the term “Rent” shall include all Base Rent and Additional Charges (including, without limitation, Additional Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c) below, and Additional Charges pursuant to Paragraphs 7(b), 8, 10(d) and 23). If the Commencement Date should occur on a day other than the first day of a calendar month, or the Expiration Date should occur on a day other than the last day of a calendar month, then the Rent and Additional Charges for such fractional month shall be prorated on a daily basis.

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               (ii) Partial Waiver of Monthly Base Rent. Landlord shall waive the Monthly Base Rent for the first month (in respect of the Initial Premises) of the Term.

          (b) Adjustments in Monthly Base Rent.

               (i) Adjustment for Additional Allowance. Effective as of the first day of the second month of the Term, the initial Monthly Base Rent shall be increased by $12.73 per $1,000 of the Additional Allowance drawn by Tenant pursuant to the Work Letter.

               (ii) Annual Adjustment. The Monthly Base Rent under Paragraph 3(a) (excluding the amount payable pursuant to Paragraph 3(b)(i)), shall be adjusted as provided in the Basic Lease Information under the “Base Rent Adjustment”.

          (c) Additional Charges for Expenses and Taxes.

               (1) Definitions of Additional Charges: For purposes of this Paragraph 3 (c), the following terms shall have the meanings hereinafter set forth:

                (A) “Tax Year” shall mean each twelve (12) consecutive month period commencing January 1st of the calendar year during which the Commencement Date of this Lease occurs, provided that Landlord, upon notice to Tenant, may change the Tax Year from time to time to any other twelve (12) consecutive month period and, in the event of any such change, Tenant’s Share of Real Estate Taxes (as hereinafter defined) shall be equitably adjusted for the Tax Years involved in any such change.

                (B) “Tenant’s Share” shall mean the percentage figure so specified in the Basic Lease Information.

                (C) “Real Estate Taxes” shall mean all taxes, assessments and charges levied upon or with respect to the Project or any personal property of Landlord used in the operation of thereof, or Landlord’s interest in the Project or such personal property. Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments, charges, fees or assessments for transit, housing, police, fire or other governmental services or purported benefits to the Building (provided, however, that any refunds of Real Estate Taxes paid by Tenant (as part of Tenant’s Share of Real Estate Taxes) shall be credited against Tenant’s further obligation to pay Real Estate Taxes during the Term, or paid to Tenant if received after expiration of the Term), service payments in lieu of taxes, and any tax, fee or excise on the act of entering into this Lease, or any other lease of space in the Building, or on the use or occupancy of the Building or any part thereof, or on the rent payable under any lease or in connection with the business of renting space in the Building, that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California, or any political subdivision, public corporation, district or any other political or public entity, and shall also include any other tax, fee or other excise, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease. Real Estate Taxes shall not include franchise, transfer, inheritance or capital stock taxes, gift or estate taxes, any assessments in excess of the amount which would be payable if such tax or assessment expense were paid in installments over the longest permitted term, any increases in taxes due to the improvement of the Project for the sole use of other occupants, or income taxes measured by the net income of Landlord from all sources unless, due to a change in the method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for, in whole or in part, any other tax that would otherwise constitute a Real Estate Tax. Additionally, Real Estate Taxes shall not include any assessments or like charges to pay for any remediation of contamination from any Hazardous Substance (which are not the liability of Tenant pursuant to Paragraph 39 hereof). Real Estate Taxes shall also include reasonable legal fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes; provided that such fees, costs and disbursements do not

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exceed the actual savings in Real Estate Taxes obtained by Tenant over the Term of the Lease. If any assessments are levied on the Project, Tenant shall have no obligation to pay more than that amount of annual installments of principal and interest that would become due during the Lease Term had Landlord elected to pay the assessment in installment payments, even if Landlord pays the assessment in full. From and after commencement of construction of the Second Building (as defined in Paragraph 45 below) Real Estate Taxes shall be adjusted so as to exclude any taxes attributable to the construction of such Second Building during the period of construction thereof. Upon completion of construction of the Second Building, Real Estate Taxes shall include only the Building’s Share (as defined below) thereof.

                (D) “Expenses” shall mean the total costs and expenses reasonably paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Building, including, without limitation (i) the cost of air conditioning, electricity, steam, heating, mechanical, ventilating, elevator systems and all other utilities and the cost of supplies and equipment and maintenance and service contracts in connection therewith; (ii) the cost of repairs and general maintenance and cleaning; (iii) the cost of fire, extended coverage, boiler, sprinkler, public liability, property damage, rent, earthquake (if Landlord determines that it is available at commercially reasonable rates) and other insurance obtained by Landlord in connection with the Project, all including, without limitation, insurance premiums and any deductible amounts paid by Landlord; (iv) fees, charges and other costs, including management fees, consulting fees, legal fees (which are allowed elsewhere in the Lease) and accounting fees of all independent contractors engaged by Landlord directly related to the operation of the Building or reasonably charged by Landlord if Landlord performs management services in connection with the Building, (though the management fee shall not exceed the cap noted in the following paragraph); (v) the cost of any capital improvements made to the Building after the Commencement Date (a) as a labor saving device or to effect other economies in the operation or maintenance of the Building (from which a reasonable person would anticipate that savings would actually result), (b) to repair or replace capital items which are no longer capable of providing the services required of them, or (c) that are made to the Building after the date of this Lease and are required under any Laws (as defined in Paragraph 5), where such capital improvements were not required under any such Laws to be completed with respect to the Building prior to the date the Lease was executed, and the cost of any such capital improvements incurred during any calendar year, shall be amortized over the useful life (but not more than ten years) of the capital item in question as determined in accordance with generally accepted accounting principles (“GAAP”), together with interest on the unamortized balance at (x) the rate paid by Landlord on funds borrowed for the purpose of constructing such capital improvements; or (y) if paid from Landlord’s own funds, 10% per annum; provided, however, the first $.24 per square foot of the Rentable Area of the Premises of such cost of capital improvements may be included in Expenses even if such amount exceeds the foregoing amortization and any remaining balance of the cost of such capital improvements shall be amortized in accordance with the foregoing (such amortization to commence in the year following the year in which the $.24 was taken as an expense item); and (vi) any other reasonable expenses of any other kind whatsoever reasonably incurred in managing, operating, maintaining and repairing the Building, including, but not limited to, costs incurred pursuant to the Encumbrances identified in Exhibit “E” and the Building’s Share of Project Common Expenses. “Project Common Expenses” shall mean any expenses reasonably paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Project Common Areas in the Project and any other Expenses reasonably paid or incurred by Landlord for the benefit of the Project as a whole, including, but not limited to, the cost of maintaining the parking lot and facilities and landscaping. “Building’s Share” shall mean the pro rata portion of all Project Common Expenses based on the amount of gross floor area of the Building as a portion of the gross floor area of all applicable buildings in the Project, all as reasonably determined by Landlord, Any “deductible” amounts relating to capital improvements required to be paid by Tenant hereunder in connection with any casualty policy carried by Landlord shall be amortized over the useful life of the restoration work in accordance with GAAP; provided, however, such amounts shall no longer constitute Expenses from and after the date upon which Monthly Base Rent is adjusted to fair market rental pursuant to the terms and conditions of this Lease.

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Notwithstanding anything to the contrary herein contained, Expenses shall not include, and in no event shall Tenant have any obligation to pay for pursuant to this Paragraph 3 or Paragraph 7(b), (aa) the initial construction cost of the Project or real property on which the Building is located; (bb) the cost of providing tenant improvements, renovations, painting or redecorating (other than in Common Areas) to Tenant or any other tenant; (cc) any Base Monthly Rental or Percentage Rental payable pursuant to the Ground Lease and/or debt service (including, but without limitation, interest, principal and any impound payments) required to be made on any mortgage or deed of trust recorded with respect to the Building and/or the real property on which the Building is located other than debt service and financing charges imposed pursuant to Paragraph 3(c)(l)(D)(v) above; (dd) the cost of special services, goods or materials provided to any tenant; (ee) depreciation; (ff) the portion of a management fee paid to Landlord or affiliate in excess of three percent (3%) of Base Rent and Additional Charges (excluding the management fee); (gg) the portion of a management fee paid in excess of two percent (2%) of Base Rent and Additional Charges (excluding the management fee) if Tenant, manages all services (eg. janitorial, HVAC, security, etc.) in respect of its Premises; (hh) costs occasioned by Landlord’s fraud or willful misconduct under applicable laws; (ii) costs for which Landlord has a right of reimbursement from others; (jj) costs to correct any construction or design defects in the original construction of the Premises, the Building or the Project; (kk) costs arising from a disproportionate use of any utility or service supplied by Landlord to any other occupant of the Building; (ll) repairs, replacement and upgrades to the structural elements of the Building (including foundation, floor slabs, exterior walls and roof structure); (mm) environmental pollution remediation related costs in connection with the remediation of the Project including costs for which Landlord has indemnified Tenant pursuant to Paragraph 39, except any such costs incurred as the result of Tenant’s use of the Premises; (nn) advertising or promotional costs; (oo) leasing commissions; (pp) except as provided in Paragraph 20, costs occasioned by casualties or by the exercise of the power of eminent domain (other than deductible amounts under insurance policies which shall be included as an Expense); and (qq) legal costs incurred in connection with negotiations or disputes with any other occupant (or prospective occupant) of the Project. In the event that the Building or the Project is not at least ninety-five percent (95%) occupied during any fiscal year of the Term as determined by Landlord, an adjustment shall be made in computing the Expenses and/or the Project Common Expenses, as applicable, for such year so that, Expenses and/or Project Common Expenses, as applicable, which vary with occupancy shall be computed as though the Building or Project, as applicable, had been ninety-five percent (95%) occupied; provided, however, that in no event shall Landlord be entitled to collect in excess of one hundred percent (100%) of the total Expenses from all of the tenants in the Building including Tenant. All costs and expenses shall be determined in accordance with generally accepted accounting principles which shall be consistently applied (with accruals appropriate to Landlord’s business). Expenses shall not include specific costs incurred for the account of, separately billed to specific tenants.

               (E) “Expense Year” shall mean each twelve (12) consecutive month period commencing January 1 of the calendar year during which the Commencement Date of the Lease occurs, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive month period, and, in the event of any such change, Tenant’s Share of Expenses shall be equitably adjusted for the Expense Years involved in any such change.

               (2) Payment of Real Estate Taxes: Commencing on the Commencement Date, unless otherwise provided for in Paragraph 3 (a), Tenant shall pay to Landlord as Additional Charges one-twelfth (l/12th) of Tenant’s Share of Real Estate Taxes fairly allocable to the Building as reasonably determined by Landlord for each Tax Year on or before the first day of each month during such Tax Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness after Landlord has received the tax bills for any Tax Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Tax Statement”) setting forth the amount of Real Estate Taxes for such Tax Year, and Tenant’s Share thereof. If the actual Tenant’s Share of Real Estate Taxes for such Tax Year exceed the estimated Real Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Real Estate Taxes within twenty (20) days after the receipt of Landlord’s Tax Statement, and if the total amount paid by Tenant for any such Tax Year shall exceed

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the actual Tenant’s Share of Real Estate Taxes for such Tax Year, such excess shall be credited against the next installment of Real Estate Taxes due from Tenant to Landlord hereunder. If it has been determined that Tenant has overpaid Real Estate Taxes during the last year of the Lease Term, then Landlord shall reimburse Tenant for such overage on or before the twentieth (20th) day following the Expiration Date. Upon Tenant’s written request, Landlord will provide an explanation of any allocation of taxes made by Landlord among different parts of the Project.

               (3) Payment of Expenses: Commencing on the Commencement Date, unless otherwise provided for in Paragraph 3(a), Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of Tenant’s Share of the Expenses for each Expense Year on or before the first day of each month of such Expense Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness after the expiration of each Expense Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Expense Statement”), setting forth in reasonable detail the Expenses for such Expense Year and Tenant’s Share thereof. If the actual Expenses for such Expense Year exceed the estimated Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Tenant’s Share of Expenses within twenty (20) days after the receipt of Landlord’s Expense Statement, and if the total amount paid by Tenant for any such Expense Year shall exceed the actual Tenant’s Share of Expenses for such Expense Year, such excess shall be credited against the next installment of the estimated Expenses due from Tenant to Landlord hereunder or if the Term has ended it shall be returned to Tenant within twenty (20) days. Any utility rebates for the Project which Landlord receives for payments made by Tenant (as part of Tenant’s Share of Expenses) shall be forwarded to Tenant so long as such rebate is received within one year following the Expiration Date or sooner termination of the Lease. If it has been determined that Tenant has overpaid Expenses during the last year of the Lease Term (including rebates of utilities applicable to Tenant), then Landlord shall reimburse Tenant for such overage on or before the twentieth (20th) day following the Expiration Date, Upon Tenant’s written request, Landlord will explain any “gross-up” of expenses and the allocation of any particular item of expense among different parts of the Project.

               (4) Other: To the extent any item of Real Estate Taxes or Expenses is payable by Landlord in advance of the period to which it is applicable (e.g. insurance and tax escrows required by Landlord’s Lender), or to the extent that prepayment is customary for the service or matter, Landlord may (i) include such items in Landlord’s estimate for periods prior to the date such item is to be paid by Landlord and (ii) to the extent Landlord has not collected the full amount of such item prior to the date such item is to be paid by Landlord, Landlord may include the balance of such full amount in a revised monthly estimate for Additional Charges. If the Commencement Date or Expiration Date shall occur on a date other than the first day of a Tax Year and/or Expense Year, Tenant’s share of Real Estate Taxes and Expenses, for the Tax Year and/or Expense Year in which the Commencement Date occurs shall be prorated.

               (5) Audit: Within twelve (12) months after receipt of any Expense Statement or Tax Statement from Landlord, Tenant shall have the right to examine Landlord’s books and records, copies of which shall be maintained in the San Francisco, Bay Area, relating to such Expense Statements and Tax Statements, or cause an independent audit thereof to be conducted by an accounting firm to be selected by Tenant and subject to the reasonable approval of Landlord. If the audit conclusively proves that Tenant has overpaid either Expenses or Real Estate Taxes, then Landlord shall promptly reimburse Tenant for such overage, and if such overage exceeds five percent (5%) of the actual amount of Expenses or Real Estate Taxes paid by Landlord for the Tax or Expense Year covered by such audit, then Landlord shall bear the reasonable cost of such audit, up to a maximum cost of $10,000. If Tenant fails to object to any such Expense Statement or Tax Statement or request an independent audit thereof within such twelve (12) month period, such Expense Statement and/or Tax Statement shall be final and shall not be subject to any audit, challenge or adjustment.

          (d) Late Charges. Tenant recognizes that late payment of any Base Rent or Additional Charges will result in administrative expenses to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if any Base Rent or Additional Charges remain unpaid three (3) days after such amount is due, the amount of such unpaid Base Rent or

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Additional Charges shall be increased by a late charge to be paid to Landlord by Tenant in an amount equal to four percent (4%) of the amount of the delinquent Base Rent or Additional Charges. Tenant shall be excused once each twelve (12) month period of the Term from the application of a late fee to any Base Rent or Additional Charge which became delinquent without a prior written invoice or other notice of Landlord of such delinquency; provided, however, the late fee shall nevertheless be payable if Tenant does not cure the delinquency within ten (10) days after written notice from Landlord. In addition,, any outstanding Base Rent, Additional Charges, late charges and other outstanding amounts shall accrue interest at an annualized rate of the lesser of (i) the greater of, 10% or The Federal Reserve Discount Rate plus 5%, or (ii) the maximum rate permitted by law (the “Default Rate”), until paid to Landlord. Tenant agrees that such amount is a reasonable estimate of the loss and expense to be suffered by Landlord as a result of such late payment by Tenant and may be charged by Landlord to defray such loss and expense. The provisions of this Paragraph 3(d) in no way relieve Tenant of the obligation to pay Rent or Additional Charges on or before the date on which they are due, nor do the terms of this Paragraph 3(d) in any way affect Landlord’s remedies pursuant to Paragraph 19 in the event any Base Rent or Additional Charges are unpaid after the date due.

     4. RESTRICTIONS ON USE. Tenant shall not do or permit anything to be done in or about the Premises which will unreasonably obstruct or interfere with the rights of other tenants or occupants of the Building or the Project or injure or annoy them, nor use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises.

     5. COMPLIANCE WITH LAWS.

          (a) Tenant’s Compliance Obligations. Tenant shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any present and future laws, statutes ordinances, resolutions, regulations, proclamations, orders or decrees of any municipal, county, state or federal government or other governmental or regulatory authority with jurisdiction over the Project, or any portion thereof, whether currently in effect or adopted in the future and whether or not in the contemplation of the parties hereto (collectively, “Laws”), and Tenant shall promptly, at its sole expense, maintain the Premises, any Alterations (as defined in Paragraph 6 below) permitted hereunder and Tenant’s use and operations thereon in strict compliance at all times with all Laws. “Laws” shall include, without limitation, all Laws relating to health and safety (including, without limitation, the California Occupational Safety and Health Act of 1973 an the California Safe Drinking Water and Toxic Enforcement Act of 1986, including posting and delivery of notices required by such Laws with respect to the Premises) and disabled accessibility (including, without limitation, the Americans with Disabilities Act, 42 U.S.C. Paragraph 12101 et seq.), Hazardous Substances, and all present and future life safety, fire, sprinkler, seismic retrofit, building code and municipal code requirements; provided however, that Tenant’s obligation to comply with Laws relating to Hazardous Substances is subject to the terms and conditions of Paragraph 39, and Tenant shall not be responsible for compliance with clean-up provisions of any Laws with respect to Hazardous Substances except to the extent of any release caused by the Tenant Parties or otherwise included in Tenant’s indemnity contained in Paragraph 39. Notwithstanding the foregoing, Landlord, and not Tenant, shall be responsible for correcting any condition at the Premises which is in violation of applicable Laws on or prior to the Commencement Date, except to the extent such condition is caused by the acts or omissions of the Tenant Parties or such violation results from Tenant’s use of the Premises in a manner other than as permitted under this Lease. Notwithstanding the first sentence of this Paragraph 5(a), Tenant shall not be required to make any alterations to the Premises in order to comply with Laws unless the requirement that such alterations be made is triggered by any of the following (or, if such requirement results from the cumulative effect of any of the following when added to other acts, omissions, negligence or events, to the extent such alterations are required by any of the following): (i) the installation, use or operation of any Alterations, or any of Tenant’s trade fixtures or personal property; (ii) the acts, omissions or negligence of Tenant, or any of its servants, employees, contractors, agents or licensees; or (iii) the particular use or particular occupancy or manner of use or occupancy of the Premises by Tenant, or any of its servants, employees, contractors, agents or licensees (as opposed to the use of the Premises for general office use). Any alterations that are Tenant’s responsibility pursuant to this Paragraph 5 shall be made in accordance with Paragraph 6 below. The parties acknowledge and agree that Tenant’s obligation to comply with all Laws as provided in this paragraph (subject to the limitations contained herein) is a material part of the bargained-for

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consideration under this Lease. Tenant’s obligations under this Paragraph and under Paragraph 7(c) below shall include, without limitation, the responsibility of Tenant to make substantial or structural repairs and alterations to the Premises to the extent provided above, regardless of, among other factors, the relationship of the cost of curative action to the Rent under this Lease, the length of the then remaining Term hereof, the relative benefit of the repairs to Tenant or Landlord, the degree to which the curative action may interfere with Tenant’s use or enjoyment of the Premises, and the likelihood that the parties contemplated the particular Law involved.

          (b) Insurance Requirements. Tenant shall not do or permit anything to be done in or about the Premises or bring or keep anything therein which will in any way increase the rate of any insurance upon the Project or any of its contents (unless Tenant agrees to pay for such increase) or cause a cancellation of any insurance on the Project or otherwise violate any requirements, guidelines, conditions, rules or orders with respect to such insurance. Tenant shall at its sole cost and expense promptly comply with the requirements of the ISO, board of fire underwriters, or other similar body now or hereafter constituted relating to or affecting Tenant’s use or occupancy of the Project (other than in situations where compliance involves repair, maintenance or replacement of items that Landlord is expressly required to repair, maintain or replace under this Lease).

          (c) No Limitation on Obligations. The provisions of this Paragraph 5 shall in no way limit Tenant’s maintenance, repair and replacement obligations under Paragraph 7 or Tenant’s obligation to pay Expenses under Paragraph 3(c). The judgment of any court of competent jurisdiction or the admission of Tenant in an action against Tenant, whether Landlord is a party thereto or not, that Tenant has so violated any such Law shall be conclusive of such violation as between Landlord and Tenant.

     6. ADDITIONAL ALTERATIONS. Tenant shall not make of suffer to be made any additional alterations, additions or improvements (“Alterations”) in, on or to the Premises or any part thereof without the prior written consent of Landlord, Landlord shall not unreasonably delay its processing of Tenant’s written request for such request. Tenant’s written request for consent shall contain the following Language in bold print: “This request is made pursuant to Paragraph 6 of the Lease and requires a response within a reasonable time”. Any alterations in, on or to the Premises, except for Tenant’s movable furniture and equipment (including the telephone system, security system, demountable partitions, secretarial stations, cubicles, cabinets or shelving systems and kitchen equipment, except to the extent paid for with the Tenant Improvement Allowance or Additional Allowance), shall be the property of Tenant during the Term and shall become Landlord’s property at the end of the Term without compensation to Tenant. Landlord shall not unreasonably withhold its consent to Alterations that (i) do not materially affect the structure of the Building or its electrical, plumbing, HVAC, security or other systems, (ii) are not visible from the exterior of the Premises, (iii) are consistent with Tenant’s permitted use hereunder, and (iv) do not adversely affect the value or marketability of Landlord’s reversionary interest upon termination or expiration of this Lease. In the event Landlord consents to the making of any Alterations by Tenant, the same shall be made by Tenant, at Tenant’s sole cost and expense, in accordance with plans and specifications reasonably approved by Landlord, and any contractor or person selected by Tenant to make the same must first be reasonably approved in writing by Landlord. Upon the expiration or sooner termination of the Term, Tenant shall upon demand by Landlord, at Landlord’s election either (x) at Tenant’s sole cost and expense, forthwith and with all due diligence remove any Alterations made by or for the account of Tenant, designated by Landlord to be removed (provided, however, that upon the written request of Tenant prior to installation of such Alterations, Landlord shall advise Tenant at that time whether or not such Alterations must be removed upon the expiration or sooner termination of this Lease), and restore the Premises to its original condition as of the Commencement Date, subject to normal wear and tear and the rights and obligations of Tenant concerning casualty damage pursuant to Paragraph 20 or (y) pay Landlord the reasonable estimated cost thereof; provided, however, if Tenant wishes to proceed pursuant to clause (x) it may do so if it completes all such work prior to the expiration or termination of the Term.

Notwithstanding the foregoing Tenant shall be permitted to make Alterations without Landlord’s prior written consent if all of the following conditions are met:

(A) The Alterations meet the conditions specified in clauses (i)-(iii) above;

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(B) Tenant provides Landlord at least twenty (20) days prior written notice of the commencement of construction of such Alterations together with the plans and specifications for such Alterations;

(C) Such Alterations are constructed by Devcon Construction;

(D) Such Alterations are consistent with the floor plan of the floor of the Premises being altered; and

(E) The total cost of such Alterations when taken together with all Alterations constructed by Tenant in reliance upon this provision (allowing construction without Landlord’s prior written approval) over the prior 24 months, does not exceed $50,000.

     7. REPAIR AND MAINTENANCE.

          (a) Landlord shall be responsible for the following repair, replacement and maintenance obligations: (i) maintenance and repair of the exterior of the Building, roof (including roof membrane) and structural portions of the Building, (ii) repairs, replacement, and maintenance of the Building systems, including, without limitation, electrical, mechanical, HVAC and plumbing and all controls appurtenant thereto, (iii) repairs, replacement and maintenance of any elevators in the Building, (iv) repair, replacement and maintenance of Common Areas, (v) alterations to the Premises required under applicable Laws to the extent not the responsibility of Tenant pursuant to Paragraph 5 or 6 hereof, (vi) any repair, maintenance or improvements which could be treated as a “capital expenditure” under generally accepted accounting principles, (vii) any repair, maintenance or improvements which are a result of casualty or the exercise of the power of eminent domain which are Landlord’s responsibility under Paragraph 20 or 21, (viii) repairs and replacements of lighting equipment (including light bulbs), (ix) any repair, maintenance or improvements which are required as a consequence of construction defects, in Landlord’s work or the Tenant Improvements, (x) any repair, maintenance or improvements for which Landlord has a right of reimbursement from others. As part of Landlord’s maintenance of the building systems, Landlord shall implement and carry out throughout the term of this Lease an ongoing program of regular and preventative maintenance of all building systems (such program to include the periodic replacement of HVAC filters in accordance with manufacturers’ specifications and the monitoring of HVAC systems settings (i.e., percentage of outside air to ensure compliance with the specifications of the equipment manufacturers and the design of the HVAC system)) and shall in any event cause the Building HVAC system and indoor air quality of the Common Areas within the Building and the Premises to meet for the entire term of this Lease the standards set forth in Standard 62-1989 (“Ventilation for Acceptable Indoor Air Quality”), including both the requirements of the Ventilation Rate Procedure and Indoor Air Quality Procedure and the maintenance requirements, recommendations and guidelines contained therein, promulgated by the American Society of Heating, Refrigerating and Air Conditioning Engineers (“ASHRAE”), and any applicable laws, ordinances, rules air regulations now in effect or thereafter promulgated by any governmental authority having jurisdiction over the Building or persons occupying or working in the Building relating to office building indoor air quality (collectively, the “Indoor, air Quality Standard”). Landlord shall make available to Tenant Landlord’s records evidencing such maintenance efforts by Landlord, and Landlord shall cooperate with Tenant’s efforts to monitor and to maintain the Indoor Air Quality Standard in the Premises. Tenant shall have the right, from time to time, to test the air quality within the Premises; if at any time air within the Premises or a portion thereof is determined to contain carbon dioxide in excess of 1,000 parts per million (PPM) (or such lesser amount as may then violate the applicable Indoor Air Quality Standard), at Tenant’s request. Landlord will promptly make such adjustments or alterations to the ventilation system serving the Premises as are reasonably necessary to be performed which will increase ventilation in the Premises such that carbon dioxide levels in the Premises are in compliance with the Indoor Air Quality Standard. Notwithstanding the foregoing, Tenant shall be responsible for Tenant’s Share of the costs described in this paragraph to the extent such costs are properly included in Expenses.

          (b) Tenant shall maintain and repair the interior portion of the Premises and any Alterations installed by or on behalf of Tenant within the Premises, however, excluding any portions thereof which are structural in nature or which are the obligation of Landlord under Paragraph 7(a) (subject to Paragraphs 5 and

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7(c)). Tenant shall be responsible for the expense of installation, operation, and maintenance of its telephone and other communications cabling from the point of entry into the Building to the Premises and throughout the Premises; though Landlord shall have the right to perform such work on behalf of Tenant in Common Areas. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under Paragraphs 1941 and 1942 of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect. In addition, Tenant hereby waives and releases its right to terminate this Lease under Paragraph 1932(1) of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect. If Tenant fails after thirty (30) days’ written notice by Landlord to proceed with due diligence to make repairs required to be made by Tenant, the same may be made by Landlord at the expense of Tenant and the expenses thereof incurred by Landlord shall be reimbursed (with interest at the Default Rate from the date Landlord incurs such cost) as Additional Charges within thirty (30) days after submission of a bill or statement therefor.

          (c) The purpose of Paragraph 7(a) and 7(b) is to define the obligations of Landlord and Tenant to perform various repair and maintenance functions; the allocation of the costs therefor are covered under this Paragraph 7(c) and Paragraph 3. Tenant shall bear the full cost of repairs or maintenance interior or exterior, structural or otherwise, to preserve the Premises and the Building in good working order and condition, arising out of (i) the existence, installation, use or operation of any Alterations, or any of Tenant’s trade fixtures or personal property; (ii) the moving of Tenant’s property or fixtures in or out of the Building or Project or in and about the Premises; or (iii) except to the extent any claims arising from any of the foregoing are reimbursed by insurance carried by Landlord, are covered by the waiver of subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, the acts, omissions or negligence of Tenant, or any of its servants, employees, contractors, agents, visitors, or licensees, or the particular use or particular occupancy or manner of use or occupancy of the Premises by Tenant or any such person (as opposed to general office use). Any Alterations required with respect to Tenant’s responsibilities pursuant to this Paragraph 7(c) shall be made in accordance with Paragraph 6.

          (d) Except to the extent any claims arising from any of the foregoing are reimbursed by rental abatement insurance carried by Landlord, are covered by the waiver of subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, there shall be no abatement of Rent with respect to, and except for Landlord’s active negligence or willful misconduct, Landlord shall not be liable for any injury to or interference with Tenant’s business arising from, any repairs, maintenance, alteration or improvement in or to any portion of the Building, including the Premises, or in or to the fixtures, appurtenances and equipment therein.

     8. LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed, material furnished or obligations incurred by Tenant. In the event that Tenant shall not, within thirty (30) days after Tenant receives actual notice of the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be considered Additional Charges and shall be payable to it by Tenant on demand with interest at the Default Rate. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Building and any other party having an interest therein, from mechanics’ and material men’s liens, and Tenant shall give notice to Landlord at least five (5) business days’ prior notice of commencement of any construction on the Premises.

     9. ASSIGNMENT AND SUBLETTING.

          (a) Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant’s leasehold estate hereunder (collectively, “Assignment”), or permit the Premises to be occupied by anyone other than Tenant or sublet the Premises or any portion thereof (collectively, “Sublease”), without Landlord’s prior written consent in each instance, which consent shall not be unreasonably withheld or delayed by Landlord. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Sublease or Assignment, if Landlord withholds its consent where either (i) the creditworthiness of the proposed Sublessee or

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Assignee (given to financial obligations of the proposed Sublease or Assignment) is not reasonably acceptable to Landlord or, (ii) the proposed Sublessee’s or Assignee’s use of the Premises is not in compliance with the allowed Tenant’s Use of the Premises as described in the Basic Lease Information, such, withholding of consent shall be presumptively reasonable. If Landlord consents to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease or Assignment upon the terms and condition set forth in this Paragraph 9.

Notwithstanding anything to the contrary herein, unless and until the Guaranty of this Lease by Oracle Corporation terminates pursuant to Paragraph 22(a) thereof, Landlord shall have no obligation to consent to any Sublease or Assignment or to respond to any request by Tenant for approval thereto, unless and until Landlord receives written approval by Oracle Corporation of the proposed Sublease or Assignment executed by an Authorized Officer of Oracle Corporation which includes the identity of the proposed sublessee or assignee, in substantially the following form:

Oracle Corporation, as Guarantor of the obligations of the tenant under that certain Lease dated April ___, 1999 by and between Circle Star Center Associates, L.P. as Landlord, and Network Computer, Inc. as Tenant, for the benefit of Landlord hereby approves the proposed [sublease or assignment] of [describe the portion of Premises subleased and term of sublease or the entire Premises and entire term if an assignment] to [identify proposed sublessee or assignee]. Oracle Corporation hereby confirms to Landlord and its successors and assigns that the Guaranty by Oracle Corporation of the obligations under the above mentioned Lease shall remain in full force and effect notwithstanding the proposed [sublease or assignment].

Oracle Corporation


 

By:  

Its: 

The term “Authorized Officer” shall have the meaning given in Paragraph 45 below. The above referenced approval of Oracle Corporation shall be accompanied by an incumbency certificate signed by the Secretary or Assistant Secretary of Oracle Corporation certifying that the person signing the above referenced approval on behalf of Oracle Corporation is a corporate officer of Oracle Corporation holding one of the offices constituting an Authorized Officer.

          (b) If Tenant desires at any time to enter into an Assignment of this Lease or a Sublease of the Premises or any portion thereof, it shall first give written notice to Landlord of its desire to do so, which notice shall contain (i) the name of the proposed assignee, subtenant or occupant; (ii) the name of the proposed assignee’s, subtenant, or occupant’s business to be carried on in the Premises; (iii) the terms and provisions of the proposed Assignment or Sublease; (iv) such financial information as Landlord may reasonably request concerning the proposed assignee, subtenant or occupant; and (v) the following language in bold print: “This request is made pursuant to Paragraph 9{b) of the Lease and requires a response within fifteen (15) days from the date of this notice”.

          (c) At any time within fifteen (15) days after Landlord’s receipt of the notice specified in Paragraph 9(b), Landlord may by written notice to Tenant elect to (i) consent to the Sublease or Assignment or (ii) disapprove the Sublease or Assignment.

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          If Landlord consents to the Sublease or Assignment within said fifteen (15) day period, Tenant may thereafter within one hundred twenty (120) days after Landlord’s consent, but not later than the expiration of said one hundred twenty (120) days, enter into such Assignment or Sublease of the Premises or portion thereof upon the terms and conditions set forth in the notice furnished by Tenant to Landlord pursuant to Paragraph 9(b): However, during any period of time in which Tenant directly occupies less than seventy-five percent (75%) of the Premises (regardless of whether such occupancy threshold is not met at the time the Sublease is entered into or at any time during the term of such Sublease), fifty percent (50%) of any rent or other consideration realized by Tenant under any such Sublease in excess of the Base Rent and Additional Charges payable hereunder (or the amount thereof proportionate to the portion of the Premises subject to such Sublease) shall be paid to Landlord (“Bonus Rent”), after first deducting from such excess the unamortized costs of any portion, of the Tenant Improvements paid for by Tenant (and not from the Tenant Improvement Allowance or Additional Allowance) or costs reasonably incurred for tenant improvements installed by Tenant to obtain the Sublease in question, each of which are installed in that portion of the Premises which is the subject of the Sublease and which unamortized costs shall be amortized on a straight line basis (without interest) over the term of the Sublease in equal installments, and after deducting there from any customary brokers’ commissions that Tenant has incurred in connection with such Sublease amortized on a straight line basis (without interest) over the term of the Sublease.

          (d) No consent by Landlord to any Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether arising before or after the Assignment or Sublease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant from the obligation to obtain Landlord’s express written consent to any other Assignment or Sublease. Any Assignment or Sublease that is not in compliance with this Paragraph 9 shall be void and, at the option of Landlord, shall constitute a material default by Tenant under this Lease. The acceptance of Base Rent or Additional Charges by Landlord from a proposed assignee or sublessee shall not constitute the consent to .such Assignment or Sublease by Landlord.

          (e) The following shall be deemed a voluntary assignment of Tenant’s interest in this Lease: (i) any dissolution, merger, consolidation, or other reorganization of Tenant; and (ii) if the capital stock of Tenant is not publicly traded, the sale or transfer to one person or entity stock possessing more than fifty percent (50%) of the total combined voting power of all classes of Tenant’s stock issued, outstanding and entitled to vote for the election of directors. Notwithstanding anything to the contrary contained in this Paragraph 9, Tenant may enter into any of the following transfers (a “Permitted Transfer”) without Landlord’s prior written consent: (1) Tenant may assign its interest in the Lease to a corporation which results from a merger, consolidation or other reorganization, so long as the surviving corporation has a net worth immediately following such transaction that is equal to or greater than the net worth of Tenant as of the date immediately prior to such transaction; and (2) Tenant may assign this Lease to a corporation which purchases or otherwise acquires all or substantially all of the assets of Tenant, so long as such acquiring corporation has a net worth immediately following such transaction that is equal to or greater than the net worth of Tenant as of the date immediately prior to such transaction.

          (f) No Assignment shall be binding on Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart of the Assignment in form that contains a covenant of assumption by the assignee satisfactory in substance and form to Landlord, consistent with the requirements of this Paragraph 9(f), but the failure or refusal of the assignee to execute such instrument of assumption shall not release or discharge the assignee from its liability hereunder. No Sublease shall be binding on Landlord unless Landlord shall agree in writing following termination of this Lease to recognize such Sublessee and such Sublessee agrees in writing to attorn to Landlord on the terms and conditions of the sublease (including the obligations under this Lease to the extent that they relate to the portion of the Premises subleased).

          (g) Tenant shall have the right, without Landlord’s consent but with written notice to Landlord at least ten (10) days prior thereto, to enter into an Assignment of Tenant’s interest in the Lease or a Sublease of all or any portion of the Premises to an Affiliate (as defined below) of Tenant, provided that in connection with an Assignment that is not a sublease, (i) the Affiliate delivers to Landlord concurrent with such Assignment a written notice of the Assignment and an assumption agreement whereby the Affiliate assumes and agrees to

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perform, observe and abide by the terms, conditions, obligations, and provisions of this Lease; and (ii) the entity remains an Affiliate throughout the term of this Lease (and the assumption agreement shall contain provisions consistent with the provisions of this subparagraph allowing Landlord to terminate this Lease at such time as the entity is no longer an Affiliate of the original Tenant). If this Lease is assigned to an Affiliate and thereafter any circumstance occurs which causes such assignee to no longer be an Affiliate of the original Tenant, Tenant shall give written notice thereof to Landlord, which notice, to become effective, shall refer to Landlord’s right to terminate this Lease pursuant to this subparagraph (“Affiliation Termination Notice”). Following occurrence of the circumstance giving rise to the discontinuation of such assignee being an Affiliate (“Affiliate Termination”) of the original Tenant, Landlord shall be entitled to terminate this Lease unless Landlord has given its prior written consent to such circumstance, which consent shall not be unreasonably withheld by Landlord so long as such assignee (after giving effect to such circumstance) has financial strength, (as demonstrated by audited financial statements) equal to or greater than the original Tenant (including its net worth) as of the date of execution of this Lease, or the original Tenant executes a guaranty in usual form reasonably acceptable to Landlord (however, this does not imply that Tenant would be released without such guaranty). No Sublease or Assignment by Tenant made pursuant to this Paragraph shall relieve Tenant of Tenant’s obligations under this Lease. As used in this paragraph, the term “Affiliate” shall mean and collectively refer to a corporation or other entity which controls, is controlled by or is under common control with Tenant, by means of an ownership of either (aa) more than fifty percent (50%) of the outstanding voting shares of stock or partnership or other ownership interests, or (bb) stock, or partnership or other ownership interests, which provide the right to control the operations, transactions and activities of the applicable entity.

          (h) Notwithstanding anything to the contrary herein (x) Guarantor is hereby ‘approved in respect of an Assignment or Sublease by Tenant to Guarantor regardless of whether Guarantor is an Affiliate of Tenant at the time and (y) in connection with an Assignment to Guarantor, Guarantor shall assume all of Tenant’s obligations under this Lease. Upon such assumption by Guarantor any security held by Landlord in respect to the portion of the Premises which is the subject of the Assignment or Sublease assumed by Guarantor, shall be released by Landlord.

     10. INSURANCE AND INDEMNIFICATION.

          (a) Except to the extent caused by the negligence or willful misconduct of Tenant Parties (as defined in Paragraph 10(c) below) or Tenant’s breach of this Lease, Landlord shall indemnify and hold Tenant harmless from and defend Tenant against any and all claims or liability for any injury or damage to any person or property including any reasonable attorney’s fees (but excluding any consequential damages or loss of business) occurring in, on, or about the Project to the extent such injury or damage is caused by the negligence or willful misconduct of Landlord, its agents, servants, contractors, employees (collectively, including Landlord, “Landlord Parties”) or Landlord’s breach of this Lease.

          (b) Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord Parties for any injury or damage to any person or property in or about the Premises by or from any cause whatsoever (other than the negligence or willful misconduct of Landlord Parties, including Landlord’s negligence or willful misconduct as related to construction or property management), and without limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, basement, or other portion of the Premises or the Building, or caused by gas, fire, oil, electricity, or any cause whatsoever, in, on, or about the Premises, the Building or any part thereof (other than that caused by the negligence or willful misconduct of Landlord Parties). Tenant acknowledges that any casualty insurance carried by Landlord will not cover loss of income to Tenant or damage to the alterations in the Premises installed by Tenant or Tenant’s personal property located within the Premises. Tenant shall be required to maintain the insurance described in Subparagraph 10(d) below during the Term.

          (c) Except to the extent caused by the negligence or willful misconduct of Landlord Parties or Landlord’s breach of this Lease, Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims or liability for any injury or damage to any person or property whatsoever: (i) occurring in or on the Premises; or (ii) occurring in, on, or about any other portion of the Project to the extent such injury or damage shall be caused by the negligence or willful misconduct by Tenant, its agents, servants,

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employees, or invitees (collectively, including Tenant, “Tenant Parties”). Tenant further agrees to indemnify and hold Landlord harmless from, and defend Landlord against, any and all claims, losses, or liabilities (including damage to Landlord’s property) arising from (x) any breach of this Lease by Tenant and/or (y) the conduct of any work or business of Tenant Parties in or about the Project and/or (z) any matter referred to in Paragraph 10(g). This Paragraph 10 does not govern, liability for Hazardous Substances, which subject is governed by Paragraph 39 of the Lease concerning Hazardous Substance liability.

          (d) Tenant shall procure at its cost and expense and keep in effect during the Term the following insurance: (i) commercial general liability insurance including contractual liability with a minimum combined single limit of liability of Three Million Dollars ($3,000,000). Such insurance shall name Landlord as an additional insured, shall specifically include the liability assumed hereunder by Tenant, and shall provide that it is primary insurance, and not excess over or contributory with any other valid, existing, and applicable insurance in force for or on behalf of Landlord, and shall provide that Landlord shall receive thirty (30) days’ written notice from the insurer prior to any cancellation or change of coverage; (ii).“all: risk” property insurance (including, without limitation, boiler and machinery (if applicable); sprinkler damage, vandalism and malicious mischief) on all leasehold improvements installed in the Premises by Tenant at its expense (if any), and on all Tenant’s personal property. Such insurance shall be an amount equal to full replacement cost of the aggregate of the foregoing and shall provide coverage comparable to the coverage in the standard ISO All Risk form, when such form is supplemented with the coverage’s required above; (iii) worker’s compensation insurance; and (iv) such other insurance as may be required by the law. Tenant shall deliver policies of such insurance or certificates thereof to Landlord on or before the Commencement Date, and thereafter at least thirty (30) days before the expiration dates of expiring policies; and, in the event Tenant shall fail to procure such insurance, or to deliver such policies or certificates, Landlord may, at its option, procure same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Charges within five (5) days after delivery to Tenant of bills therefor.

          (e) The provisions of this paragraph 10 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination.

          (f) Landlord shall maintain insurance on the Project against fire and risks covered by “all risk” (excluding earthquake and flood, though Landlord, at its option, may include this coverage) on a 100% of “replacement cost” basis (though reasonable deductibles may be included under such coverage). Landlord’s insurance shall also cover the improvements installed by Landlord prior to the commencement of the Term, shall have a building ordinance provision, and shall provide for rental interruption insurance covering a period of twelve (12) full months. In no event shall Landlord be deemed a co-insurer under such policy. Landlord shall also maintain contractual liability coverage (or with contractual liability endorsement) on an occurrence basis in amounts not less than Three Million Dollars ($3,000,000) per occurrence with respect to bodily injury or death and property damage. Notwithstanding the foregoing obligations of Landlord to carry insurance, Landlord may modify the foregoing coverages if and to the extent it is commercially reasonable to do so.

          (g) Tenant acknowledges that even if Landlord installs and operated security cameras or other security equipment and/or provides any other services that could be construed as being intended to enhance security, Landlord shall have no obligation to Tenant or to any of Tenant’s employees, customers or invitees for any damage, claim, loss or liability related to any claim that Landlord had a duty to provide security or that the equipment or services provided by Landlord were inadequate, inoperative or otherwise failed to provide adequate security. Any such claim made against Landlord by any employee, customer or invitee of Tenant shall be included within Tenant’s obligation of indemnity and defense set forth in subparagraph (c) above.

     11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in this Lease, the parties hereto release each other and their respective agents, employees, successors, assignees and subtenants from all liability for injury to any person or damage to any property that is caused by or results from a risk (i) which is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event, such release shall not be so limited), (ii) which is required to be insured against under this Lease, or (iii) which would normally be covered

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by the standard form of “all risk-extended coverage” casualty insurance, without regard to the negligence or willful misconduct of the entity so released. Landlord and Tenant shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party, and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable attorneys’ fees, resulting from the failure to obtain such waiver.

     12. SERVICES AND UTILITIES.

          (a) Landlord shall provide the maintenance and repairs described in paragraph 7(a), except for damage occasioned by the act of Tenant, in which case, but in any event subject to the terms of Paragraph 11 above, such damage shall be repaired by Landlord at Tenant’s expense.

          (b) Subject to the provisions elsewhere herein contained and to the rules and regulations of the Building, Landlord agrees to furnish to the premises during ordinary business hours of generally recognized business days, to be determined by Landlord (but exclusive, in any event, of Saturdays, Sundays and legal holidays), hot and cold water and electricity suitable for the intended use of the Premises, heat and air conditioning required in Landlord’s judgment for the comfortable use and occupation of the Premises, janitorial services during the times and in the manner that such services are, in landlord’s judgment, customarily furnished in comparable office buildings in the immediate market area, and elevator service (if the Building has an elevator) which shall mean service either by non-attended automatic elevators or elevators with attendants, or both, at the option of the Landlord. Notwithstanding the above, except in the case of emergencies, utilities to the Building and elevator service shall be provided every day. At Tenant’s request, Landlord shall provide additional or after hours heating or air conditioning and Tenant shall pay to Landlord a reasonable charge for such services as determined by Landlord (not to exceed Landlord’s actual costs, which costs do not include depreciation). Tenant agrees at all times to cooperate fully with Landlord and to abide by all the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the heating, ventilating and air conditioning system. Wherever heat generating machines, excess lighting or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises, and the cost thereof, including the cost of installation and the cost of operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord. To the extent Tenant requires water, electricity, heat, air conditioning or other services in portions of the Premises which are not metered separately from other tenants of the Project and in amounts in excess of amounts delivered to such other tenants of the Project as reasonably determined by Landlord, Tenant shall pay to Landlord a reasonable charge for such excess amounts as determined by Landlord. Landlord shall make available to Tenant reasonable documentation supporting its charges for such excess services.

          (c) Tenant will not without the written consent of Landlord, which consent shall not be unreasonably, withheld or delayed, use any apparatus or device in the Premises which, when used, puts an excessive load on the Building or its structure or systems, including, without limitation, electronic data processing machines, punch card machines and machines using excess lighting or voltage in excess of the amount for which the Building is designed, which will in any way materially increase the amount of gas, electricity or water usually furnished or supplied for use of the Premises as general office space; nor connect with electric current, except through existing electrical outlets in the Premises, or water pipes or gas outlets, any apparatus or device for the purposes of using gas, electrical current or water. If Tenant shall require water or electrical current or any other resource in excess of that usually furnished or supplied for use of the Premises as general office space, Tenant shall first obtain the consent of Landlord, which Landlord may refuse, to the use thereof, and Landlord may cause a special meter to be installed in the Premises so as to measure the amount of water, electric current or other resource consumed for any such other use. The cost of any such meters and of installation, maintenance an repair thereof shall be paid for by Tenant, and Tenant agrees to pay Landlord promptly upon demand by Landlord for all such water, electric current or other resource consumed, as shown by said meters, at the rates charged by the local public utility, furnishing the same, plus any additional expense incurred, in keeping account of the water, electric current or other resource so consumed.

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          (d) Landlord shall not be in default hereunder, nor be deemed to have evicted Tenant, nor be liable for any damages directly or indirectly resulting from, nor shall the rental herein reserved be abated by reason of (i) the installation, use or interruption of use of any equipment in connection with the foregoing utilities and services; (ii) failure to furnish or delay in furnishing any services to be provided by Landlord when such failure or delay is caused by Force Majeure, or by the making of repairs or improvements to the Premises or to the Building (unless such failure or delay is caused by Landlord’s negligence or willful misconduct); or (iii) the limitation, curtailment, rationing or restriction on use of water, electricity, gas or any other form of energy, or any other service or utility whatsoever serving the Premises, the Building or the Project. Furthermore, Landlord shall be entitled to cooperate with the mandatory requirements of national, state or local governmental agencies or utilities suppliers in connection with reducing energy or other resources consumption. If the Premises become unsuitable for Tenant’s use as a consequence of cessation of gas and electric utilities or other services provided to the Premises resulting from a casualty covered by Landlord’s insurance, then Tenant’s Base Rent and Additional Charges shall abate during the period of time in which Tenant cannot occupy the Premises for Tenant’s use, but only to the extent of rental abatement insurance proceeds received by Landlord. Landlord shall use reasonable diligence to make such repairs as may be required to lines, cables, wires, pipes equipment or machinery within the Project to provide restoration of the services. Landlord is responsible for providing under this Paragraph 12 and, where the cessation or interruption of such services has occurred due to circumstances or conditions beyond Project boundaries, to cause the same to be restored, by diligent application or request to the provider thereof. In no event shall any mortgagee or beneficiary under any mortgage or deed of trust on all or any portion of the Project, the Building, or the land on which all or any portion of the Project is located (any such mortgagee or beneficiary, a “Mortgagee”) be or become liable for any default of Landlord under this Paragraph 12.

     13. TENANT’S CERTIFICATES. Tenant, at any time and from time to time, within ten (10) days from receipt of written notice from Landlord, will execute, acknowledge and deliver to Landlord and, at Landlord’s request, to any prospective tenant, purchaser, ground or underlying lessor or Mortgagee or any other party acquiring an interest in Landlord, a certificate of Tenant substantially in the form attached as Exhibit “D” and also containing any other information that may reasonably be required by any of such persons. It is intended that any such certificate of Tenant delivered pursuant to this Paragraph 13 may be relied upon by Landlord and any prospective tenant, purchaser, ground or underlying lessor or Mortgagee, or such other party. If requested by Tenant, Landlord shall provide Tenant with a similar certificate.

     14. HOLDING OVER. If Tenant (directly or through any successor-in-interest of Tenant) remains in possession of any or all of the Premises after the expiration or termination of this Lease with the consent of Landlord, such continued possession shall be construed to be a tenancy from month to month at one hundred twenty-five percent (125%) of the Monthly Base Rent herein specified (and shall be increased in accordance with Paragraph 4(b) [Adjustments in Base Rent]), together with an amount estimated by Landlord for the monthly Additional Charges payable under this Lease, and shall otherwise be on the terms and conditions herein specified so far as applicable. If Tenant (directly or through any successor-in-interest of Tenant) remains in possession of all or any portion of the Premises after the expiration or termination of this Lease without the consent of Landlord, Tenant’s continued possession shall be on the basis of a tenancy at the sufferance of Landlord. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease, except that the Monthly Base Rent during Tenant’s holding over shall be the greater of the then-fair market rent for the Premises (as reasonably determined by Landlord) or one hundred fifty percent (150%) of the Monthly Base Rent and Additional Charges payable in the last full month prior to the termination hereof (and shall be increased in accordance with Paragraph 4(b) [Adjustments in Base Rent]). In addition to Rent, Tenant shall pay Landlord for all damages proximately caused by reason of the Tenant’s retention of possession. Landlord’s acceptance of Rent after the termination of this Lease shall not constitute a renewal of this Lease, and nothing contained in this provision shall be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law. Tenant acknowledges that, in Landlord’s marketing and re-leasing efforts for the Premises, Landlord is relying on Tenant’s vacation of the Premises on the Expiration Date. Accordingly, Tenant shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs, expenses and damages arising or resulting directly or indirectly from Tenant’s failure to timely surrender the Premises, including (i) any loss, cost or damages suffered by any prospective tenant of all or any part of the Premises, and (ii) Landlord’s damages as a result of such prospective tenant rescinding or refusing to

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enter into the prospective lease of all or any portion of the Premises by reason of such failure of Tenant to timely surrender the Premises.

     15. SUBORDINATION.

          (a) Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to: (i) the Encumbrances and all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building or the land upon which the Building is situated or both; (ii) any CC&R’s, currently in effect or that Landlord may enter into in the future, that affect the Building or the Common Areas; and (iii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Building, land, ground leases or underlying leases, or Landlord’s interest or estate in any of said items, is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or, cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. In the event that any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord at the option of such successor in interest. Notwithstanding anything to the contrary contained herein.(but subject to subparagraph 15(b) below), this Lease shall not be subject or subordinate to any ground or underlying lease or to any lien, mortgage, deed of trust or other security interest affecting the Premises, unless the ground lessor, lender or other holder of the interest to which this lease would be subordinated executes a reasonable recognition and non-disturbance agreement which provides that Tenant shall be entitled to continue in possession of the Premises on the terms and conditions of this Lease if and for so long as Tenant fully performs all of its obligations hereunder. Tenant covenants and agrees to execute and deliver upon demand by Landlord and in the form requested by Landlord and reasonably acceptable to Tenant, any customary additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such mortgage or deed of trust. Tenant shall execute, deliver and record any such documents within twenty (20) days after Landlord’s written request.

          (b) Notwithstanding the provisions of subparagraph 15(a) above to the contrary, specifically with regard to the Ground Lease (as defined in Exhibit “E”), this Lease shall be subject to and subordinate to the terms, covenants and conditions of the Ground Lease and the rights of the Lessor (as defined in the Ground Lease), without the requirement that the Lessor enter into a separate recognition and non- disturbance agreement as contemplated by subparagraph 15(a), provided that Landlord and Tenant agree to the following conditions as required by Article 25 of the Ground Lease:

               (1) Upon any termination or surrender of the Ground Lease, this Lease shall continue in full force and effect and the Tenant (defined as “sublessee” in the Ground Lease) shall attorn to, or, at the option of Lessor (as defined in the Ground Lease), enter into a direct lease on identical terms (i.e. the terms of this Lease) with, Lessor;

               (2) Lessor shall not be bound by any prepayment of rent hereunder; and

               (3) Tenant and Landlord agree that this Lease is an arm’s length transaction between Landlord (defined as “Lessee” in the Ground Lease) and Tenant (defined as “the subtenant” in the Ground Lease), and that Tenant is not an Affiliate (as defined in the Ground Lease) of Landlord.

     16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations attached to this Lease as Exhibit "C” and all reasonable modifications thereof and additions thereto from time to time put into effect by Landlord. Landlord shall not be responsible for the non performance by any other Tenant or occupant of the Building or the Project of any said rules and regulations. In the event of an express and direct conflict between the terms, covenants, agreements and conditions of this Lease and those set forth in the rules and regulations, as modified and amended from time to time by Landlord, this Lease shall control.

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     17. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable times, upon reasonable prior notice (except in the case of an emergency), and subject to Tenant’s, reasonable security precautions and the tight of Tenant to accompany Landlord at all times, have the right to re-enter the Premises to inspect the same, to supply janitor service and any other service to be provided by Landlord to Tenant hereunder (unless Tenant is supplying such service), to show the Premises to prospective purchasers, Mortgagees or tenants (as to prospective tenants, only during the last twelve (12) months of the Lease Term), to post notices of nonresponsibiliry or as otherwise required or allowed by this Lease or by law, and to alter, improve or repair the Premises and any portion of the Building and may for that purpose erect, use, and maintain scaffolding, pipes, conduits, and other necessary structures in and through the Premises where reasonably required by the character of the work to be performed. Landlord shall not be liable in any manner for any inconvenience, disturbance, loss of business, nuisance or other damage arising from Landlord’s entry and acts pursuant to this Paragraph and Tenant shall not be entitled to an abatement or reduction of Base Rent or Additional Charges if Landlord exercises any rights reserved in this paragraph Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any-loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby, except for Landlord’s negligence or willful misconduct. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to un-lock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes, or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises, or portion thereof obtained by Landlord by any of said means, or otherwise, shall not under any emergency circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or; constructive, of Tenant from the Premises or any portions thereof. Landlord shall use best efforts during re-entry to not unreasonably interfere with Tenant’s use of the Premises or its business conducted therein. Tenant acknowledges that the first floor telephone equipment room provides third party access to the electronic sign equipment that operates the sign facing Highway 101 and that Landlord retains the right to access to such facilities at all times without notice. Tenant acknowledges that it has no right hereunder to use of such electronic sign.

     18. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or an assignment of Tenant for the benefit of creditors, or any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization or other debtor relief proceedings, whether now existing or hereafter amended or enacted (collectively “Insolvency Proceeding”), shall at Landlord’s option constitute a breach of this Lease by Tenant unless a petition in bankruptcy, or receiver attachment, or other remedy pursued by a third party is discharged within sixty (60) days. Upon the happening of any such event or at any time thereafter, this Lease shall terminate five (5) days after written notice of termination from Landlord to Tenant. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, reorganization or other debtor relief proceedings.

     19. DEFAULT.

          (a) The failure to perform or honor any covenant, condition or representation made under this Lease shall constitute a “default” hereunder by Tenant upon expiration of the appropriate grace or cure period hereinafter provided. Tenant shall have a period of three (3) days from the date of written notice from Landlord (which notice shall be in lieu of and not in addition to the notice required by Section 1161 of the California Code of Civil Procedure) within which to cure any failure to pay Base Rent or Additional Charges; provided, however, that Landlord shall not be required to provide such notice more than four times during any two (2) year period during the Term with respect to non-payment of Base Rent or Additional Charges, the fifth such non-payment constituting default without requirement of notice. Tenant shall have a period of thirty (30) days from the date of written notice from Landlord within which to cure any other curable failure to perform any obligation under this Lease; provided, however, that with respect to any curable failure to perform other than the payment of Base Rent or Additional Charges that cannot reasonably be cured within thirty (30) days, the cure period shall be extended if Tenant commences to cure within thirty (30) days from Landlord’s notice and continues to prosecute diligently the curing thereof. Notwithstanding the foregoing, (i) if a different cure

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period is specified elsewhere in this Lease or the Work Letter with respect to any specific obligation of Tenant, such specific cure period shall apply with respect to a failure of such obligation; and (ii) the foregoing cure rights shall not extend the specified time for compliance with any required delivery, approval or performance obligation of Tenant under the Work Letter. Upon a default of this Lease by Tenant, Landlord shall have the following rights and remedies in addition to any other rights or remedies available to Landlord at law or in equity:

               (1) The rights and remedies provided by California Civil Code, Section 1951.2, including but not limited to, recovery of the worth at the time of award of the amount by which the unpaid Base Rent and Additional Charges for the balance of the Term after the time of award exceeds the amount of rental loss for the same period that the Tenant proves could be reasonably avoided, as computed pursuant to subsection (b) of said Section 1951.2;

               (2) The rights and remedies provided by California Civil Code, Section 1951.4, that allows Landlord to continue this Lease in effect, and to enforce all of its rights and remedies under this Lease, including the right to recover Base Rent and Additional Charges as they become due, for so long as Landlord does not terminate Tenant’s right to possession; provided, however, if Landlord elects to exercise its remedies described in this Paragraph 19(a)(ii) and Landlord does not terminate this Lease, and if Tenant requests Landlord’s consent to an assignment of this Lease or a sublease of the Premises at such time as Tenant is in default, Landlord shall not unreasonably withhold its consent to such assignment or sublease. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord’s initiative to protect its interest under this Lease shall not constitute a termination of Tenant’s rights to possession;

               (3) The right to terminate this Lease by giving notice to Tenant in accordance with applicable law;

               (4) If Landlord elects to terminate this Lease, the right and power to enter the Premises and remove therefrom all persons and property and, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply such proceeds therefrom pursuant to applicable California law.

          (b) Landlord shall have a period of thirty (30) days from the date of written notice from Tenant within which to cure any default by Landlord under this Lease; provided, however, that with respect to any default that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Landlord commences to cure within thirty (30) days from Tenant’s notice and continues to prosecute diligently the curing thereof. Tenant agrees to give any Mortgagee, by registered or certified mail, a copy of any Notice of Default served upon the Landlord, provided that prior to such notice Tenant has been notified in writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee shall have an additional thirty (30) days (provided that Tenant notifies Mortgagee concurrently with Tenant’s notice to Landlord at the beginning of Landlord’s thirty (30) day period; otherwise Mortgagee shall have sixty days from the date on which it is noticed) within which to cure such default or if such default cannot be cured within that time, then the cure period shall be extended for such additional time as may be necessary to cure such default shall be granted if within such applicable period Mortgagee has commenced and continues to prosecute diligently the cure of such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure).

     20. DAMAGE BY FIRE, ETC. If the Premises or the Building are damaged by fire or other casualty, Landlord shall forthwith repair the same, provided that such repairs can be made within two hundred seventy (270) days after the date of such damage under the laws and regulations of the federal, state and local governmental authorities having jurisdiction thereof. In such event, this Lease shall remain in full force and effect except that Tenant shall be entitled to a proportionate reduction of Base Rent and Additional Charges while such repairs to be made hereunder by Landlord are being made. Such reduction of rent, if any, shall be based upon the greater of (i) the proportion that the area of the Premises rendered untenantable by such damage

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bears to the total area of the Premises; or (ii) the extent to which such damage and the making of such repairs by Landlord shall interfere with the business carried on by Tenant in the Premises, where clause (ii) is limited to the extent of rental abatement insurance allowed by Landlord’s casualty insurance policy. Within twenty (20) days after the date of such damage, Landlord shall notify Tenant of the approximate date by which Landlord believes that it can complete the repair of such damage (“Estimated Damage Completion Date”) (including such dates for each floor of the Premises if the completion thereof will occur on different dates) and the date by which Landlord would need to commence construction (“Estimated Construction Commencement Date”) in order to complete repairs by the Estimated Damage Completion Date and Landlord’s determination thereof shall be binding on Tenant. If Landlord’s Estimated Damage Completion Date is more than two hundred seventy (270) days from the date of such damage, Landlord shall have the option within thirty (30) days after the date of such damage either to: (i) notify Tenant of Landlord’s intention to repair such damage and diligently prosecute such repairs, in which event (subject to Tenant’s right to terminate specified below) this Lease shall continue in full force and effect and the Base Rent and Additional Charges shall be reduced as provided herein; or (ii) notify Tenant of Landlord’s election to terminate this Lease as of a date specified in such notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after notice is given; provided, however, in the event the damage giving rise to such right to terminate this Lease by Landlord is the result of damage in only one of the two buildings in the Project, Landlord’s right to terminate this Lease shall only apply to the portion of the Premises, if any, in such building, and in such event the Lease shall remain in full force and effect with respect to the balance of the Premises and the Base Rent and Tenant’s Share shall be appropriately adjusted to reflect the portion of the Premises, if any, with respect to which this Lease is terminated. In the event that such notice to terminate is given by Landlord, this Lease shall terminate on the date specified in such notice. In the event that Landlord notifies Tenant that Landlord’s Estimated Damage Completion Date is more than two hundred seventy days (270) days following the date of the damage, Tenant shall have a right to terminate the Lease in respect of all floors of the Premises to which Landlord’s notice applies (“Affected Premises Portion”) within fifteen (15) days following receipt of Landlord’s notice, by providing Landlord with written notice of its election to do so. In such event (and also in the event Landlord terminates the lease pursuant to the immediately preceding sentence), Tenant shall have no liability in respect of the portion of the Premises with respect to which the Lease was terminated, for payment of the deductible under Landlord’s insurance relating to such damage. In case of termination by either event, the Base Rent and Additional Charges shall be reduced by a proportionate amount based upon the extent to which such damage interfered with the business carried on by Tenant in the Premises, and Tenant shall pay such reduced Base Rent and Additional Charges up to the date of termination. Landlord agrees to refund to Tenant any Base Rent and Additional Charges previously paid in respect of a portion of the Premises with respect to which the Lease has terminated, for any period of time subsequent to such date of such termination. In the event the Lease is terminated in respect of only a portion of the Premises leaving the Lease in effect with respect to the balance of the Premises the Base Rent and Tenan t’s Share shall be appropriately adjusted. If, and to the extent, neither Landlord nor Tenant have terminated this Lease pursuant to the provisions set forth above, and the construction of the repairs has not commenced within ninety (90) days of the Estimated Construction Commencement Date, Tenant shall have the additional right to terminate this Lease in respect of the Affected Premises Portion during the first five (5) business days of each calendar month following the end of such period until such time as construction of the repairs has commenced, by notice to Landlord (the “Damage Termination Notice”), effective as of a date set forth in the Damage Termination Notice (the “Damage Termination Date”), which Damage Termination Date shall be no earlier than thirty (30) days or later than sixty (60) days following the date of such Damage Termination Notice. At any time, from time to time, after the date occurring sixty (60) days after the date of the damage, Tenant may request that Landlord inform Tenant of Landlord’s reasonable opinion of the date of completion of the repairs and Landlord shall respond to such request in reasonable detail within five (5) business days following receipt of such request. The repairs to be made hereunder by Landlord shall not include, and Landlord shall not be required to repair, any damage by fire or other cause to the property of Tenant or any repairs or replacements of any paneling, decorations, railings, floor coverings or any alterations, additions, fixtures or Improvements installed on the Premises by or at the expense of Tenant (excluding the initial Tenant Improvements constructed by Landlord). Tenant hereby waives the provisions of Section 1932.2, and Section 1933.4, of the Civil Code of California. Notwithstanding anything contained herein to the contrary, if a Major Casualty occurs with respect to any portion of the Building, and the net insurance proceeds obtained as a result of such casualty are ninety percent (90%) or a lesser percentage of the cost of restoration, rebuilding or replacement, then Landlord shall not be obligated to undertake such restoration, rebuilding or replacement

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unless Landlord elects to do so in writing. For the purpose of this Lease, a “Major Casualty” shall mean a casualty that renders unusable twenty percent (20%) or more of the Net Rentable Area of the Building or which materially adversely affects the use of such Building.

     21. EMINENT DOMAIN. If any part over 15% of the Premises shall be taken or appropriated under the power of eminent domain or conveyed in lieu thereof, Tenant shall have the right to terminate this Lease at its option. If any part of the Building shall be taken or appropriated under power of eminent domain or conveyed in lieu thereof and such taking is so extensive that it renders the remaining portion of the Building unsuitable for the use being made of the Building on the date immediately preceding such taking, Landlord may terminate this Lease at its option. In either of such events, Landlord shall receive (and Tenant shall assign to Landlord upon demand from Landlord) any income, rent, award or any interest therein which may be paid in connection with the exercise of such power of eminent domain, and Tenant shall have no claim against Landlord for any part of sum paid by virtue of such proceedings, whether or not attributable to the value of the unexpired term of this Lease except that Tenant shall be entitled to petition the condemning authority for the following : (i) the then unamortized cost of any Alterations or tenant improvements paid for by Tenant from its own funds (as opposed to any allowance provided by Landlord); (ii) the value of Tenant’s trade fixtures; (iii) Tenant’s relocation costs; (iv) Tenant’s goodwill, loss of business and business interruption; and (v) one-half of the amount which is the lesser of (a) the bonus value of this lease, or (b) the amount of the award in excess of the sum of amounts payable to Landlord’s ground lessor (if any) and any holder of a mortgage or other third party lien encumbering Landlord’s ground lease estate or fee simple ownership in the Property. If a part of the Premises shall be so taken or appropriated or conveyed and neither party, hereto shall elect to terminate this Lease and the Premises have been damaged as a consequence of such partial taking or appropriation or conveyance, Landlord shall restore the Premises continuing under this Lease at Landlord’s cost and expense; provided, however, that Landlord shall not be required to repair or restore any injury or damage to the property of Tenant or to make any repairs or restoration of any Alterations installed on the Premises by or at the expense of Tenant. Thereafter, the Base Rent and Additional Charges to be paid under this Lease for the remainder of the Term shall be proportionately reduced, such that thereafter the amounts to be paid by Tenant shall be in the ratio that they are of the portion of the Premises not so taken bears to the total area of the Premises prior to such taking. Notwithstanding anything to the contrary contained in this Paragraph 21, if the temporary use or occupancy of any part of the Premises shall be taken or appropriated under power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Base Rent and Additional Charges payable hereunder by Tenant during the Term; in the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the Term, and Landlord shall be entitled to receive that portion of any award which represents the cost of restoration of the Premises and the use and occupancy of the Premises after the end of the Term. If such temporary taking is for a period longer than two hundred and seventy (270) days and unreasonably interferes with Tenant’s use of the Premises or the Project Common Areas, then Tenant shall have the right to terminate the Lease. Landlord and Tenant understand and agree that the provisions of this Paragraph 21 are intended to govern fully the rights and obligations of the parties in the event of a Taking of all or any portion of the Premises. Accordingly, the parties each hereby waives any right to terminate this Lease in whole or in part under Sections 1265.120 and 1265.130 of the California Code of Civil Procedure or under any similar Law now or hereafter in effect.

     22. SALE BY LANDLORD. If Landlord sells or otherwise conveys its interest in the Premises, Landlord shall be relieved of its obligations under the Lease from and after the date of sale or conveyance (including the obligations of Landlord under Paragraph 39), only when Landlord transfers any security deposit of Tenant to its successor and the successor assumes in writing the obligations to be performed by Landlord on and after the effective date of the transfer (including the obligations of Landlord under Paragraph 39), whereupon Tenant shall attorn to such successor.

     23. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Base Rent or Additional Charges. If Tenant shall default in the payment of any sum of money, other than Base Rent or Additional Charges, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue for the applicable

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cure period provided in Paragraph 19 (except in the event of emergency, when no cure period shall be required), Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as provided in this Lease. All sums so paid by Landlord and all necessary incidental costs together with interest thereon at the Default Rate, from the date of such payment by Landlord shall be payable as Additional Charges to Landlord on demand.

     24. SURRENDER OF PREMISES.

          (a) At the end of the Term or any renewal thereof or other sooner termination of this Lease, Tenant will peaceably deliver to Landlord possession of the Premises, together with all improvements or additions upon or belonging to Landlord, by whomsoever made, in the same condition as received, or first installed, subject to the terms of Paragraphs 39 & 21 and the rights and obligation of Tenant concerning casualty damage pursuant to Paragraph 20, damage by fire, earthquake, Act of God, ordinary wear and tear, Hazardous Substances (other than those for which Tenant is indemnifying Landlord pursuant to Paragraph 39) or the elements alone excepted. Tenant may, upon the termination of this Lease, remove all movable furniture and equipment belonging to Tenant, at Tenant’s sole cost, provided that Tenant repairs any damage caused by such removal. Property not so removed shall be deemed abandoned by Tenant, and title to the same shall thereupon pass to Landlord. Upon request by Landlord, and unless otherwise agreed to in writing by Landlord, Tenant shall remove, at Tenant’s sole cost, any or all Alterations to the Premises installed by or at the expense of Tenant and all movable furniture and equipment belonging to Tenant which may be left by Tenant and repair any damage resulting from such removal.

          (b) The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies.

     25. WAIVER. If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein. Furthermore, the acceptance of Base Rent or Additional Charges by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time Landlord accepted such Base Rent or Additional Charges. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or to decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord.

     26. NOTICES. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail, return receipt requested, reputable overnight carrier, or delivered personally, (i) to Tenant (A) at Tenant’s address set forth in the Basic Lease Information, if sent prior to Tenant’s taking possession of the Premises, or (B) at the Premises if sent subsequent to Tenant’s taking possession of the Premises, or (C).at any place where Tenant may be found if sent subsequent to Tenant’s vacating, deserting, abandoning or surrendering the Premises; or (ii) to Landlord at Landlord’s address set forth in the Basic Lease Information; or (iii) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Paragraph 26.

If and for so long as Oracle Corporation is a Guarantor of the obligations of Tenant under this Lease any notice sent to Tenant shall be given to Oracle Corporation in writing in the manner described above with respect to notices to Tenant.

Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date the return receipt indicates delivery of or refusal of delivery if sent by certified

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mail, the day upon which recipient accepts and signs for delivery from a reputable overnight carrier, or on the date a reputable overnight carrier indicates refusal of delivery, or upon the date personal delivery is made. If Tenant is notified in writing of the identity and address of any Mortgagee or ground or underlying lessor, Tenant shall give to such Mortgagee or ground or underlying lessor notice of any default by Landlord under the terms of this Lease in writing sent by registered or certified mail, and such Mortgagee or ground or underlying lessor shall be given the opportunity to cure such default (as defined in Paragraph 19(b)) prior to Tenant exercising any remedy available to it.

     27. TAXES PAYABLE BY TENANT. At least ten (10) days prior to delinquency Tenant shall pay all taxes levied or assessed upon Tenant’s equipment, furniture, fixtures and other personal property located in or about the Premises. If the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon Tenant’s equipment, furniture, fixtures or other personal property, Tenant shall pay to Landlord, upon written demand, the taxes so levied against Landlord, or the proportion thereof resulting from said increase in assessment.

     28. ABANDONMENT. Tenant shall not abandon the Premises and cease performing its financial and maintenance obligations under this Lease at any time during the Term, and if Tenant shall abandon and cease performing its financial and maintenance obligations under this Lease, or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall, at the option of Landlord, be deemed to be abandoned and title thereto shall thereupon pass to Landlord. Notwithstanding anything to contrary contained herein, Tenant shall not be allowed to vacate the Premises if such would result in a termination of Landlord’s insurance. Upon Tenant’s request, Landlord will ask its insurer if such vacation of the Premises would result in termination of its current insurance policy. For purposes of this Paragraph 28, the Tenant shall not be deemed to have abandoned the Premises solely because the Tenant is not occupying the Premises.

     29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 9, the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective legal and personal representatives, successors and assigns.

     30. ATTORNEY’S FEES. If Tenant or Landlord brings any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Base Rent or Additional Charges or possession of the Premises, the losing party shall pay to the prevailing party a reasonable sum for attorney’s fees, which shall be deemed to have accrued on the commencement of such action and shall be paid whether or not the action is prosecuted to judgment.

     31. LIGHT AND AIR. Tenant covenants and agrees that no diminution of light, air or view by any structure which may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of rent under this Lease, result in any liability of Landlord to Tenant, or in any other way affect this , Lease or Tenant’s obligations hereunder.

     32. SECURITY DEPOSIT.

          (a) Letter of Credit. Concurrently with Tenant’s execution of this Lease, Guarantor shall deliver to Landlord its Guaranty of Tenant’s obligations hereunder. Such Guaranty provides for the termination of the Guaranty when certain criteria have been met including the deposit with Landlord of a letter of credit meeting the requirements of this Paragraph 32. Concurrently with Landlord’s written confirmation of termination of the Guaranty, Tenant shall deliver to Landlord an unconditional, irrevocable, transferable letter of credit, in an amount equal to the “Required Amount” (defined below) issued by a financial institution acceptable to Landlord in the form attached hereto as Exhibit “F”, with an original term of no less than one year and automatic extensions through the end of the Term of this Lease and sixty (60) days thereafter (the “Letter of Credit”). Landlord shall not unreasonably withhold its approval of such a financial institution if it is a national bank with office in the San Francisco Bay Area (including an office allowing the Letter of Credit to be presented to and paid by such office) with assets in excess of twenty billion dollars. The term “Required Amount” shall mean a sum reasonably determined by Landlord as of the date the Letter of Credit is delivered

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hereunder to be the amount of ten (10) months Base Rent plus Additional Charges. Tenant shall keep the Letter of Credit, at its expense, in full force and effect until the sixtieth (60th) day after the Expiration Date or other termination of this Lease, to insure the faithful performance by Tenant of all of the covenants, terms and conditions of this Lease, including, without limitation, Tenant’s obligations to repair, replace or maintain the Premises and Tenant’s obligations under the Work Letter; provided, however, at any time during the term that Landlord holds cash as a security deposit hereunder in the amount of the Letter of Credit, Tenant shall not be in default hereunder for failing to maintain the Letter of Credit. Landlord shall be entitled to draw the full amount of the Letter of Credit (i) at any time Tenant is in “default” (as defined in Paragraph 19(a)), (ii) at any time an event has occurred which, with the passage of time or giving of notice or both, would constitute a default, where Landlord is prevented from, or delayed in, giving such notice because of an Insolvency Proceeding or (iii) on or after thirty (30) days prior to the expiration of the Letter of Credit. The Letter of Credit shall provide for full payment to Landlord, upon presentation of the following to the issuer of the Letter of Credit (x) a letter signed by an authorized agent of Landlord stating that Landlord is entitled to draw the Letter of Credit and (y) the original Letter of Credit. In the event of such payment to Landlord, Landlord shall hold the funds so obtained as the security deposit required under this Lease. Any unused portion of the funds so obtained by landlord shall be returned to Tenant upon replacement of the Letter of Credit or deposit of cash security in the full amount required as the face amount of the Letter of Credit hereunder. If Landlord uses any portion of the Letter of Credit, or the cash security deposit resulting from a draw on the Letter of Credit, to cure any default by Tenant hereunder, Tenant shall replenish the security deposit to the original amount within ten (10) days of notice from Landlord. Tenant’s failure to do so shall become be a material breach of this Lease. Landlord shall keep any cash security funds separate from its general funds, and shall invest such cash security at Tenant’s reasonable direction, and any interest actually earned by Landlord on such cash security shall be paid to Tenant quarterly. If an event of default occurs under this Lease or the Work Letter (including, without limitation, any default by Tenant with respect to its payment and performance obligations under the Work Letter), or if Tenant is the subject of an Insolvency Proceeding, Landlord may present its written demand for payment of the entire face amount of the Letter of Credit and the funds so obtained shall become due and payable to Landlord. Landlord may retain such funds to the extent required to compensate Landlord for damages incurred, or to reimburse Landlord as provided herein, in connection with any such default, and any remaining funds shall be held as a cash security deposit. Without limiting the foregoing, in the event of a default in Tenant’s obligations to complete or pay for the Tenant Improvements in accordance with the Work Letter, Landlord may use the security deposit to complete and/or pay for the Tenant Improvements to the extent of Tenant’s obligations as contemplated by the Work Letter. Landlord shall be entitled to assign the Letter of Credit and its rights thereto in connection with an assignment of this Lease to its Lender as security for the obligations of Landlord to such lender. Tenant shall cooperate with Landlord in connection with any modifications of the Letter of Credit that may be reasonably requested in connection with such assignment.

          (b) Annual Reduction of Letter of Credit. Tenant shall be entitled to reduce the Letter of Credit on the sixth through tenth anniversaries of the Commencement Date in the amount of one-fifth (l/5th) of the initial balance, so long as (i) Tenant is not in default (and no event has occurred which, with the passage of time or giving of notice or both, would constitute a default) under the Lease on such anniversary date, and (ii) Landlord has not delivered a notice of Tenant’s failure to perform any of its monetary obligations hereunder during the previous six months, regardless of whether such failure was cured by Tenant within any applicable grace or cure period; provided, however, that any such notice of failure to perform relating to a non-monetary failure to perform which was disputed, in good faith, by Tenant and ultimately determined (by agreement of the parties, arbitration or judicial action) not to be a violation of this Lease shall not be considered for purposes of determining whether such condition has been met.

          (c) Return of Letter of Credit. The Letter of Credit shall be returned to Tenant if, at any time after the fifth anniversary of the Commencement Date, Tenant (A) can establish to Landlord’s reasonable satisfaction that as of the end of any fiscal year of Tenant following the fifth anniversary of the Commencement Date, Tenant has (i) had revenues for eight consecutive quarters in excess of an annual rate of $75,000,000 “Revenue Criteria”, (ii) Market Capitalization of an average of $750,000,000 over the proceeding twelve months, and (iii) cash and cash equivalents (“Cash Criteria”) (including up to twenty five percent (25%) of which may be comprised of the amount Tenant would receive from a factor, without recourse, in respect of current ninety day or less accounts receivables (which are not and shall not be pledged or factored], certified to

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Landlord by an independent third party factor) in excess of Forty Million Dollars ($40,000,000), all as determined in accordance with GAAP and as reflected on certified, audited financial statements; and (b) is not in default (and no event has occurred which, with the passage of time or giving of notice or both, would constitute a default) under the Lease as of the date the Letter of Credit is returned to Tenant. The term “Market Capitalization” shall mean the average daily closing price of a class of Tenant’s stock which is publicly traded multiplied by the number of shares of Tenant’s stock that is held by shareholders who may freely trade such stock.

          (d) Conversion of Deposit to Loan. Landlord and Tenant acknowledge and agree that, if Tenant defaults under this Lease and Landlord elects to pursue its remedies under California Civil Code Section 1951.2 or under this Lease to terminate this Lease (any such events a “Landlord Action”), (i) Landlord will incur certain damages, costs and expenses, including, without limitation, marketing costs, commissions, relocation costs, tenant improvement costs (but limited to costs for improvements consistent with the level of finish and build out of Tenant’s Improvement), and carrying costs in connection with releasing the Premises, in addition to the other damages, costs and expenses Landlord may incur as a result of such default and/or other defaults under this Lease (all of the foregoing collectively, “Default Damages”); (ii) Landlord has no assurance of a source of funds to cover such Default Damages other than the proceeds of the Letter of Credit (or cash collateral); and (iii) the proceeds of the Letter of Credit (or cash collateral) should be available to Landlord to apply to Default Damages, even if the amount thereof exceeds that amount to which Landlord is ultimately determined to be entitled under this Lease and pursuant to applicable law. Accordingly, at Landlord’s sole election, Landlord shall be entitled to draw the full amount of the Letter of Credit (or the full amount of cash collateral shall be released to Landlord) which is then existing (after any previous application of funds by Landlord and/or replenishment by Tenant pursuant to Paragraph 32(a) above), simultaneously with commencement of a Landlord Action or at any time thereafter. All proceeds thereof in excess of amounts applied (pursuant to Paragraph 32(a)) to Default Damages incurred by Landlord prior to commencement of the Landlord Action shall be deemed a loan from Tenant to Landlord (the “Default Loan”). The Default Loan shall be unsecured and shall not bear interest, and repayment thereof shall be limited to the terms and conditions set forth in this paragraph. Any sums to which Landlord from time to time becomes entitled hereunder and pursuant to law as a result of Tenant’s default and any previous defaults of the Lease, to which the Letter of Credit (or cash collateral) has not previously been applied pursuant to Paragraph 32(a), shall be offset against the principal balance of the Loan. The amount of the Default Loan remaining, if any, after such offset shall be referred to herein as the “Excess Amount”. The Excess Amount shall be payable by Landlord to Tenant from, and only from, first any proceeds from the Letter of Credit (or cash collateral) which have not been applied to Default Damages incurred by Landlord after the same are finally determined (the “Remaining Proceeds”), and then Excess Rent. The Remaining Proceeds shall be paid by Landlord to Tenant promptly upon final determination after the entire Premises are leased to a third party or parties. If Tenant disputes the amount of Remaining Proceeds paid by Landlord, Tenant may submit such dispute to arbitration in accordance with Paragraph 40 [Arbitration of Disputes] of this Lease. “Excess Rent” shall mean the amount by which (x) rent received by Landlord (from the tenant or tenants leasing all or any portion of the Premises after Tenant’s default) in any month exceeds (y) the amount of rent that would have been payable under this Lease for such month if this Lease had not been terminated. Landlord shall pay Tenant one-half of the Excess Rent until the earlier of (A) the date the Excess Amount is fully repaid or (B) the date that would have been the Expiration Date (excluding any Renewal Term) of this Lease. Any remaining balance of the Default Loan on such dat e shall be deemed forgiven. If the Default Loan is insufficient to cover all Default Damages, Tenant shall pay Landlord any such shortfall immediately upon demand by Landlord, and Landlord shall have all rights and remedies available at law or elsewhere in the Lease with respect to such shortfall.

     33. CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a corporation each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing corporation, that Tenant has and is qualified to do business in California, that the corporation has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the corporation were authorized to do so. Upon Landlord’s request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties. Tenant hereby further covenants and warrants to Landlord that all financial information and other descriptive information regarding Tenant’s business, which has been or shall be furnished to Landlord, is to

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Tenant’s best knowledge accurate and complete at the time of delivery to Landlord.

     34. PARKING. Tenant shall have the right to use the Building’s parking spaces in common with other tenants or occupants of the Building, if any, subject to the Encumbrances and the rules and regulations of Landlord for such parking facilities which may be established or altered by Landlord at any time or from time to time during the term. Landlord represents and warrants to Tenant that the number of parking spaces initially constructed by Landlord in connection with the Project shall be equal to or greater than the minimum number required by the City of San Carlos and that Landlord will not thereafter voluntarily reduce the number of parking spaces available to the Project below such minimum number except as may be required by law or in connection with condemnation. Landlord shall not voluntarily agree to an amendment or modification or waiver of provisions of the CC&Rs in a manner that reduces or impairs the parking available to the Project except as may be required by law or in connection with condemnation. Tenant acknowledges that the parking structure is not scheduled to be completed by the Scheduled Commencement Date. Neither Tenant nor any of its employees, visitors or invitees shall have an obligation to pay for parking in the parking structure or otherwise on the Project. Landlord will operate a valet parking service from 8:30 a.m. to 5:30 p.m. Monday through Friday excluding holidays from the date Tenant first takes possession of the Initial Premises (for the operation of its business) through the date the parking structure is completed and available for use.

     35. MISCELLANEOUS.

          (a) The term “Premises” wherever it appears herein includes and shall be deemed or taken to include (except where such meaning would be clearly repugnant to the context) the office space demised and improvements now or at any time hereafter comprising or built in the space hereby demised. The paragraph headings herein are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. The term “Landlord” shall include Landlord and its successors and assigns. In any case where this Lease is signed by more than one person, the obligations hereunder shall be joint and several. The term “Tenant” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators, and permitted assigns, according to the context hereof.

          (b) Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the State of California. This Lease, together with its exhibits, contains all the agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument by the parties hereto.

          (c) If for any reason whatsoever any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.

          (d) Upon Tenant paying the Base Rent and Additional Charges and performing all of Tenant’s obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term as against all persons or entities lawfully claiming by or through Landlord; subject, however, to the provisions of this Lease.

     36. TENANT’S REMEDIES. If any default hereunder by Landlord is not cured within the applicable cure period provided in Subparagraph 19(b), Tenant’s exclusive remedies shall be an action for specific performance or action for actual damages. Tenant hereby waives the benefit of any laws granting it (A) the right to perform Landlord’s obligation, or (B) the right to terminate this Lease or withhold Rent on account of any Landlord default. Tenant shall look solely to Landlord’s interest in the Project for the recovery of any judgment from Landlord. Landlord, or if Landlord is a partnership, its partners whether general or limited, or if Landlord is a corporation, its directors, officers or shareholders, shall never be personally liable for any such judgment. Any lien obtained to enforce such judgment and any levy of execution thereon shall be subject and subordinate to any mortgage or deed of trust (excluding any mortgage or deed of trust which was created as part of an effort to defraud creditors, i.e., a fraudulent conveyance); provided, however that any such judgement

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and any such levy of execution thereon shall not be subject or subordinated to any mortgage or deed of trust that shall have been created or recorded in the official records of Santa Clara County after the date of the judgement giving rise to such lien. Landlord’s interest in the Project shall include any insurance proceeds received by Landlord which are not controlled by Landlord’s tender and any proceeds of the Security Deposit under this Lease that are then held by Landlord.

     37. REAL ESTATE BROKERS. Each party represents that it has not had dealings with any real estate broker, finder or other person with respect to this Lease in any manner, except for any broker named in the Basic Lease Information, whose fees or commission, if earned, shall be paid as provided in the Basic Lease Information. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any other broker, finder or other person with whom the other party has or purportedly has dealt.

     38. LEASE EFFECTIVE DATE. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

     39. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a copy of the following reports (the “Environmental Reports”): “Phase I and II Environmental Assessment Report, Circle Star Theater Property, 1717 Industrial Way, San Carlos, California, January 31, 1997” prepared by McLaren/Hart Environmental Engineering Corporation. Except as noted in the Environmental Reports, Landlord represents and warrants that to the best of its knowledge, the Premises and Project are presently free of asbestos, toxic waste, underground storage tanks and other Hazardous Substances in amounts exceeding legally established maximum thresholds. Additionally, except as noted in the Environmental Reports, Landlord represents that it has received no written notice of any violation or claimed violation with respect to the presence of toxic or Hazardous Substances on, in or under the Project or of any pending or contemplated investigation or other action relating thereto.

          (a) Definition of Hazardous Substances. For the purpose of this Lease, “Hazardous Substances” shall be defined, collectively, as oil, flammable explosives, asbestos, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under applicable environmental laws, ordinance or regulation.

          (b) Tenant Indemnity. Tenant releases Landlord from any liability for, waives all claims against Landlord and shall indemnify, defend and hold harmless Landlord, its employees, partners, agents, subsidiaries and affiliate organizations against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonably attorney fees), damage or liability, whether foreseeable or unforeseeable, by reason of property damage (including diminution in the value of the property of Landlord), personal injury or death directly arising from or related to Hazardous Substances released, manufactured, discharged, disposed, used or stored on, in, or under the Property or Premises during the initial Term and any extensions of this Lease by Tenant or its employees, agents, sublessees, assignees or contractors. The provisions of this Tenant Indemnity regarding Hazardous Substances shall survive the termination of the Lease.

          (c) Landlord Indemnity. Landlord releases Tenant from any liability for, waives all claims against Tenant and shall indemnify, defend and hold harmless Tenant, its officers, employees, and agents to the extent of Landlord’s interest in the Project, against any and all actions by any governmental agency for clean up of Hazardous Substances on or under the Property, including costs of legal proceedings, investigation, clean up, monitoring, and restoration, including reasonable attorney fees, if, and to the extent, arising from the presence of Hazardous Substances on, in or under the Property or Premises, except to the extent caused by the release, disposal, use or storage of Hazardous Substances in, on or about the Premises by Tenant, its employees, agents, sublessees, assignees, or contractors. The provisions of this Landlord Indemnity regarding Hazardous Substances shall survive the termination of the Lease.

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Tenant has informed Landlord, that except for very immaterial amounts of toxic materials incidental to its office use (e.g. copier toner), Tenant will not use and Hazardous Substances in material amounts within the Building and shall comply with any applicable laws to the extent that it does.

     40. ARBITRATION OF DISPUTES.

          ANY CONTROVERSY OR CLAIM ARISING OUT OF THIS LEASE OR A BREACH OF THIS LEASE SOLELY BETWEEN LANDLORD AND TENANT RELATING TO A MONETARY DEFAULT IN AN AMOUNT OF LESS THAN TWENTY-FIVE THOUSAND DOLLARS ($25,000), BUT NOT INCLUDING A DEFAULT WITH RESPECT TO THE TIMELY PAYMENT OF BASE RENT AND ADDITIONAL CHARGES, SHALL BE SETTLED BY ARBITRATION BEFORE THE JUDICIAL ARBITRATION MEDIATION SERVICE (JAMS) IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.

          NOTICE: BY INITIALLY IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

Approved  NCI LEGAL
By:	/s/ Illegible

     WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

     Consent to neutral arbitration by: /s/ Illegible (Landlord): /s/ Illegible (Tenant).

     41. SIGNAGE. Tenant shall be allowed to use a proportional share (based on square footage) of the main lobby directory and the monument sign located at the Project’s entry off of Industrial Road, as well as building standard signage at the lobby on Tenant’s floor as well as Tenant’s main entry door. In addition Tenant shall be entitled to one sign each on the northeast (ie. the glass curtain wall adjacent to the Highway 101 freeway frontage) and northwest (ie. the pre-cast concrete panel visible from the southbound lanes of Highway 101) sides of the Building, such signs (in the aggregate) to comprise no more-than one half of the square footage of such exterior building surface signage allowed in respect of the Project by the City of San Carlos. Such signage shall be in conformity with standards provided by Landlord, and subject to approval by Landlord. All signage shall be at Tenant’s expense. Landlord shall work with Tenant to obtain approval of the applicable governmental authorities for construction of (i) signage on top of the Building and (ii) monument signage at the main entry to the Project. Such signage shall be subject to the reasonable approval of Landlord as well as all applicable governmental authorities.

     42. OPTION TO RENEW. Upon condition that (i) no event of default is continuing under this Lease at the time of exercise or at the commencement of the option term, and (ii) Tenant or its affiliate continues to physically occupy at least fifty percent (50%) of the Premises, then Tenant shall have the right to extend the Term for one (1) period of six (6) years (“Extension Term(s)”) following the initial Expiration Date, by giving written notice (“Exercise Notice”) to Landlord at least eighteen (18) months prior to the Expiration of the Term.

     43. RENT DURING EXTENSION TERM. The Monthly Base Rent during the six (6) year Extension Term shall be the greater of the average Monthly Base Rent (excluding adjustments pursuant to Paragraph 3(b)(i)) paid during the initial Term or the Fair Market Rental Value for the Premises as of the

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commencement of the option term, as determined below:

          (a) Within thirty (30) days after receipt of Tenant’s Exercise Notice, Landlord shall notify Tenant of Landlord’s estimate of the Fair Market Rental Value for the Premises, as determined below, for determining Monthly Base Rent during the ensuing Extension Term; provided, however, if Tenant’s Exercise Notice is given more than eighteen (18) months before the Expiration Date, Landlord’s estimate of Fair Market Rental Value may, but need not be given more than eighteen (18) months before the Expiration Date. Within fifteen (15) days after receipt of such notice from Landlord, Tenant shall notify Landlord in writing that it (i) agrees with such rental rate or (ii) disagrees with such rental rate. No response shall constitute agreement. In the event that Tenant disagrees with Landlord’s estimate of Fair Market Rental Value for the Premises, then the parties shall meet and endeavor to agree within fifteen (15) days after Landlord receives Tenant’s notice described in the immediately preceding sentence. If the parties cannot agree upon the Fair Market Rental Value within said fifteen (15) day period, then the parties shall submit the matter to binding appraisal in accordance with the following procedure except that in any event neither party shall be obligated to start such procedure sooner than eighteen (18) months before the expiration of the Lease Term. Within fifteen (15) days of the conclusion of the period during which the two parties fail to agree (but not sooner than eighteen (18) months before the expiration of the Lease Term), the parties shall either (i) jointly appoint an appraiser for this purpose or (ii) failing this joint action, each separately designate a disinterested appraiser. No person shall be appointed or designated an appraiser unless such person has at least five (5) years experience in appraising major commercial property in San Mateo County and is a member of a recognized society of real estate appraisers. If within thirty (30) days after the appointment, the two appraisers reach agreement on the Fair Market Rental Value for the Premises, that value shall be binding and conclusive upon the parties. If the two appraisers thus appointed cannot reach agreement on the Fair Market Rental Value for the Premises within thirty (30) days after their appointment, then the appraisers thus appointed shall appoint a third disinterested appraiser having like qualifications within five (5) days. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers agree on the Fair Market Rental Value of the Premises, that value shall be binding and conclusive upon the parties. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers cannot reach agreement on the Fair Market Rental Value for the Premises, then the three appraisers shall each simultaneously submit their independent appraisal to the parties, the appraisal farthest from the median of the three appraisals shall be disregarded, and the mean average of the remaining two appraisals shall be deemed to be the Fair Market Rental Value for the Premises and shall be binding and conclusive upon the parties. Each party shall pay the fees and expenses of the appraiser appointed by it and shall share equally the fees and expenses of the third appraiser. If the two appraisers appointed by the parties cannot agree on the appointment of the third appraiser, they or either of them shall give notice of such failure to agree to the parties and if the parties fail to agree upon the selection of such third appraiser within ten (10) days after the appraisers appointed by the parties give such notice, then either of the parties, upon notice to the other party, may request such appointment by the American Arbitration Association or, on it failure, refusal, or inability to act, may apply for such appointment to the presiding judge of the Superior Court of San Mateo County, California.

          (b) Wherever used throughout this Paragraph (Rent during Extension Term) the term “Fair Market Rental Value” shall mean the fair market rental value of the Premises, using as a guide the rate of monthly base rent which would be charged during the Extension Term (including periodic increases during the Extension Term, if any) in the Mid-Peninsula area for comparable high image, Class A office space in comparable condition, of comparable quality, as of the time that the Extension Term commences, with appropriate adjustments regarding taxes, insurance and operating expenses as necessary to insure comparability to this Lease, as the case may be, and also taking into consideration amount and type of parking, location, leasehold improvements, proposed term of lease, amount of space leased, extent of service provided or to be provided, and any other relevant terms or conditions (including consideration of whether or not the monthly base rent is fixed).

          (c) In the event of a failure, refusal or inability of any appraiser to act, his successor shall be appointed by the party who originally appointed him, but in the case of the third appraiser, his successor shall be appointed in the same manner as provided for appointment of the third appraiser.

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           (d) The appraisers shall render their appraisals in writing with counterpart copies to Landlord and Tenant. The appraisers shall have no power to modify the provisions of this Lease.

          (e) To the extent that binding appraisal has not been completed prior to the expiration of any preceding period for which Monthly Base Rent has been determined, Tenant shall pay Monthly Base Rent at the rate estimated by Landlord, with an adjustment to be made once Fair Market Rental Value is ultimately determined by binding appraisal.

          (f) From and after the commencement of the Extension Term, all of the other terms, covenants and conditions of the Lease shall also apply; provided, however, that Tenant shall have no further rights to extend the Term.

     44. SATELLITE ANTENNA. During the Term, Tenant shall have the non-exclusive right, subject to relevant regulatory approvals, availability of space within the roofscreen and Landlord’s-consent, such consent not to be unreasonably withheld or delayed, to install a satellite antenna (“Antenna”) within the roofscreen on the roof of the Building in a location satisfactory to both Landlord and Tenant. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Antenna, if Landlord withholds its consent due to concerns regarding the appearance of the Antenna or the impact on structural aspects of the Building, such withholding of consent shall be presumptively reasonable. Tenant shall not be charged any rent for roof space. Prior to submitting any plans to the City of San Carlos or proceeding with any installation of an Antenna, Tenant shall submit to Landlord elevations and specifications, for the Antenna. Tenant shall install any approved Antenna at its sole expense and shall be responsible for any damage caused by the installation of the Antenna or related to the Antenna. At the end of the Term, Tenant shall remove the Antenna from its location and repair any damage caused by such removal.

     45. SECOND BUILDING.

          (a) Prior to September 1, 1999, for so long as Tenant is not in default hereunder, Landlord shall not execute a letter of intent or Lease with another tenant for any portion of the Second Building. The term “Second Building” shall mean the improvements proposed to be built by Landlord as part of the Project and more fully described on Exhibit “G”; the Second Building is commonly known as One Circle Star Way. From and after September 1, 1999 through October 31, 2000, Tenant shall have the rights described in this Paragraph (“First Right of Offer”) to lease the First Right Space (defined below). During the period of time commencing on September 1, 1999, Landlord shall be free to negotiate and enter into letters of intent or leases with other parties for all or any portion of the First Right Space, provided that Landlord shall provide Tenant with a written “Offer Notice” if Landlord believes that a letter of intent that it receives from, or submits to, another party is likely to result in a letter of intent acceptable to Landlord, If such letter of intent is for the lease of less than the entire Second Building, the Offer Notice will indicate which portion of the First Right Space the letter of intent covers. Tenant shall have seven (7) business days (ending at 5:00 p.m. on such seventh business day) after receipt of the Offer Notice (“Offer Notice Deadline”) to deliver to Landlord the Tenant’s Election Notice electing to lease the space described in the Offer Notice on the terms and conditions set forth in Paragraph 45(c). If Tenant does not deliver to Landlord its Tenant Election Notice within such seven (7) business day period, Landlord shall be entitled to complete the transaction with the party with whom Landlord is negotiating or, within one hundred twenty (120) days following the Offer Notice Deadline, with any other tenant for the space described in the Offer Notice. The “Tenant Election Notice” a letter notifying Landlord of Tenant’s unconditional election to exercise its option to lease the space described in the Offer Notice executed by Tenant. To be effective, the Tenant’s Election Notice must contain the following additional paragraph and be signed by an Authorized Officer of Oracle Corporation:

Oracle Corporation, as Guarantor of the obligations of the Tenant under that certain Lease dated April ___, 1999 by and between Circle Star Center Associates, L.P. as Landlord and Network Computer, Inc. as Tenant, hereby agrees that the additional obligations of Network Computer, Inc. associated with the foregoing election to lease additional

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space from Landlord is approved by Oracle Corporation pursuant to Oracle Corporation’s guaranty of the obligations of Network Computer, Inc. under such Lease.

Oracle Corporation
 

By:  

Its:  

An “Authorized Officer” shall mean the President or any Executive Vice-President, Vice-President or Assistant Vice-President, Treasurer or Assistant Treasurer of Oracle Corporation. In order for the Tenant Election Notice to be effective, it must be accompanied by an incumbency certificate signed by the Secretary or Assistant Secretary of Oracle Corporation certifying that the person signing the Tenant’s Election Notice on behalf of Oracle Corporation is a corporate officer of Oracle Corporation holding one of the offices specified-above. Unless Tenant’s Election Notice meets all of the foregoing requirements and is delivered to Landlord within the seven (7) business day period specified above, such document shall be ineffective and may be disregarded by Landlord.

          (b) Notwithstanding anything to the contrary herein, Tenant’s rights under this Paragraph 45 shall not apply to the third or fourth floor of the Second Building in the event that Landlord elects to lease such space to Centraal Corporation (or its Affiliates). In the event that Centraal Corporation (or it Affiliates) leases both the third and fourth floors of the Second Building, then Centraal Corporation (and its Affiliates), shall be required to vacate the second floor of the Building and the Second Floor of the Building shall be subject to Tenant’s First Right of Offer under the terms and conditions of this Paragraph 45; provided, however, there shall be no Tenant Improvement Allowance for the second floor of the Building except such amount as is required to a ceiling grid with ceiling tiles and install lighting and HVAC ducting consistent with the initial space leased by Tenant in the Building, but in no event shall such Tenant Improvement Allowance exceed $7 per rentable square feet of space located on the second floor of the Building. The term “First Right Space” shall mean the Second Building (subject to the right of Landlord to lease portions thereof to Centraal Corporation (or its Affiliates) in accordance with the foregoing) and the second floor of the Building if, and when, Centraal Corporation leases both the third and fourth floors of the Second Building.

          (c) Terms of Lease of First Right Space.

               (1) Rent. The Base Rent for the First Right Space leased by Tenant pursuant to this Paragraph 45 shall be based on a Rentable Area of the Second Building and 25,179 square feet for the second floor of the Building. Landlord’s architect shall determine the Rentable Area of toe Second Building and each floor thereof, and shall certify such Rentable Area in writing to Landlord and Tenant. The computations called for in the prior two sentences to be made by Landlord’s architect shall be carried out in a manner consistent with the computations for the Building and so that the total Rentable Square Feet for all of the floors of the Second Building shall be the sum of the aggregate Rentable Area of the Building. The initial Base Rent for each First Right Space shall be the Monthly Base Rent specified on the Basic Lease information subject to the adjustment pursuant to Paragraph 3(b)(i) for the Additional Allowance applicable to the First Right Space but at a rate and for the period described in Paragraph 45(c)(2) below.

               (2) Rent Commencement and Expiration Date. If Tenant elects to lease all or part of the First Right Space pursuant to this Paragraph 45, the date Rent shall commence for each First Right Space (the “First Right Space Rent Commencement Date”) shall be a date which is the sum of (i) the number of weeks of Tenant’s Plan Approval Period (defined below) plus (ii) Landlord’s Construction Period (defined below), following the date of Tenant’s notice pursuant to Paragraph 45(a), as extended by the number of days in excess of three (3) business days that it takes Landlord to review and comment upon any plans submitted by Tenant to Landlord pursuant to the

31

Work Letter. The term “Tenant’s Plan Approval Period” shall mean forty-two (42) days. The term “Landlord’s Construction Period” shall mean the following time periods depending upon the number of floors that the First Right Space comprises:

Number of Floors	Landlord’s Construction Period
1	6 Weeks
2	8 Weeks
3	10 Weeks

The above described Landlord’s Construction Periods are estimates of the time period between the date Tenant has completed Tenant’s Plans and obtained Landlord’s approval and processed building permits in respect of the Tenant’s Improvements for the First Right Space, on the one hand, and the date Landlord achieves Substantial Completion of the Tenant Improvements (excluding any Tenant Delay), on the other hand. The Rent payable by Tenant in respect of any First Right Space shall be abated for the number of days, if any, that it takes Landlord to achieve Substantial Completion in excess of the applicable Landlord’s Construction Period (as reasonably increased if Tenant’s proposed improvements are of a character as will require a longer construction period than the character of the improvements to be constructed in respect of the Initial Premises), excluding from such period, Tenant Delays.

Landlord and Tenant acknowledge that until the Tenant Improvements in respect of any First Right Space are completed it will not be possible to compute the adjustment to Monthly Base Rent attributable to the Additional Allowance. Accordingly, Landlord and Tenant agree that upon Substantial Completion of such Tenant Improvements, Landlord shall deliver written notice to Tenant of its calculation of the adjustment to Monthly Base Rent in respect of the Additional Allowance. The Monthly Base Rent shall be increased by an amount equal to the sum determined by amortizing the amount of the Additional Allowance on a straight line basis at 9 % per annum over the period from the date of such Substantial Completion through a date ten (10) years following the applicable First Right Space Rent Commencement Date (“Amortization Ending Date”).

There shall be no Outside Delivery Date in respect of any First Right Space.

               (3) Lease Terms. If Tenant leases any First Right Space pursuant to this Paragraph 45, in addition to the terms set forth in clauses (1) and (2) above, this Lease shall automatically be modified to provide as follows:

                    (A) Both the Initial Premises and the First Right Space shall be part of the “Premises” under this Lease, such that the term “Premises” as used in this Lease shall refer collectively to both the Initial Premises and the First Right Space;

                    (B) Tenant’s Share of Real Estate Taxes and Expenses shall be adjusted to reflect the increased Rentable Area of the Premises, based on the ratio of the Rentable Area of the collective Premises to the total Rentable Area of the Project;

                    (C) Tenant’s right to terminate this Lease pursuant to Paragraph 2(e) shall be modified by extending the effective date of such termination to the eighth anniversary of the last First Right Space Rent Commencement Date (with a corresponding adjustment to the date by which notice of the exercise of such termination option must be given by Tenant) and such right to terminate shall apply only to all (and not less than all) of the portion of the Initial Premises and shall not be applicable to any First Right Space;

32

                    (D) Tenant’s lease of the First Right Space shall be on the same terms and conditions as in effect for the Premises from time to time, except as expressly provided in this Paragraph 45;

                    (E) The Expiration Date applicable to the Initial Premises and the First Right Space shall be the date which is ten (10) years following the last First Right Space Rent Commencement Date. The Base Rent in respect of any portion of the Initial Premises for the period of the initial Term (excluding any extension of the Term pursuant to Paragraph 42) in excess of ten (10) years shall be adjusted by reducing the Base Rent for such excess period by the amount of the adjustment for the Additional Allowance provided for in Paragraph 3(b)(i) in respect of the Initial Premises. The Base Rent in respect of any First Right Space for the period of the initial Term (excluding any extension of the Term pursuant to Paragraph 42) beyond the Amortization Ending Date in respect of such First Right Space shall be adjusted by reducing the Base Rent for such excess period by the amount of the adjustment for the Additional Allowance provided for in Paragraph 45(c)(2);

                    (F) All references to percentage of destruction or taking in Paragraph 20 [Damage by Fire, Etc.] and Paragraph 21 [Eminent Domain] shall be deemed to mean each of the Building and Second Building separately;

                    (G) Landlord shall provide the same Base Building Improvements as provided for the Building (and conduit between the Building and the Second Building and a covered walk way from the side of the Second Building nearest the parking garage to the parking garage, subject to receiving all necessary applicable approvals, which Landlord will use its best efforts to obtain) together with a Tenant Improvement Allowance (increased by 3% on each anniversary of the Commencement Date for the Initial Premises that occurs prior to the Effective Date of Tenant’s written exercise of its right to lease the First Right Space pursuant to this Paragraph 45) and Additional Allowance in the same amounts per Rentable Square Foot as shown in the Basic Lease Information with respect to the initial Premises (except as provided in Paragraph 45 (b) above;

                    (H) The Required Amount of the letter of credit required pursuant to Paragraph 32(a) and the “Market Capitalization”, “Revenue Criteria” and “Cash Criteria” requirements for the return of the letter of credit pursuant to Paragraph 32(c) shall be adjusted to the following amounts based upon the number of additional floors leased by Tenant pursuant to this Paragraph 45 (“M” means million and “B” means billion):

	Additional Number
	of Months of Base
Additional	Rent plus	Market	Revenue	Cash
Floors	Additional Charges	Capitalization	Criteria	Criteria
1	12	$850M	$100M	$65M
2	13	$950M	$100M	$75M
3	14	$  1.1B	$125M	$85M
4	15	$1.25B	$150M	$95M

The parties shall execute a written confirmation of the addition of the Second Building and the foregoing terms and conditions within thirty (30) days after either party’s request, provided that failure to execute such confirmation shall not affect the automatic modification of the Lease as provided in this Paragraph 45(c).

                    (I) In the event Tenant leases two floors in the Second Building, Tenant shall be entitled to one sign on the Second Building similar to the two signs on the Building to

33

which Tenant is entitled pursuant to Paragraph 41, subject to the terms, conditions and limitations thereof.

               (d) No Brokers. Neither party has had any contact or dealings regarding the Second Building through any licensed real estate broker or other person who may claim a right to a commission or finder’s fee as a procuring cause of any lease that might be entered into with respect to the Second Building as contemplated by this Paragraph 45 or otherwise, except for the broker named in the Basic Lease Information, whose fees or commission, if earned, shall be paid by Landlord in accordance with a separate agreement with Landlord. If any other broker or finder makes a claim for a commission or finder’s fee based upon any such contact, dealings, or communications, the party through whom the broker or finder makes his claim shall be responsible for such commission or fee, and all costs and expenses (including reasonable attorneys’ fees) incurred by the other party in defending against such claim.

34

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.

LANDLORD: CIRCLE STAR CENTER ASSOCIATES, L.P. a California limited partnership
By:	M-D Ventures, Inc.
Its: General Partner
By:	/s/ Steve Dostart
	Steve Dostart
	Its: Vice President
TENANT: NETWORK COMPUTER, INC. a Delaware corporation
By:	/s/ Mitchell Kertzman
	Mitchell Kertzman
	Its: CEO & President
By:	/s/ Nancy J. Hilker
	Nancy J. Hilker
	Its: Vice President & Chief Financial Officer

Approved NCI LEGAL
By:	/s/ Illegible

35

EXHIBIT “A”
Page 1 of 2

EXHIBIT “A”
Page 2 of 2

EXHIBIT “B”

WORK LETTER

     1. Base Building: Landlord shall furnish and install the office building, as defined in the plans listed in the attached Exhibit B-1, “Landlord’s Plans,” at Landlord’s expense (“Base Building”).

     2. Tenant’s Plans: Landlord approves Tenant’s use of the architectural firm known as Ehrlich-Rominger (“Tenant’s Architect”). On of before April 1, 1999 Tenant shall submit preliminary plans and specifications including specifications for finishes for Tenant’s proposed tenant improvements (“Preliminary Plans”). Landlord shall have three (3) business days to review and comment upon, or approve, Tenant’s Preliminary Plans, and Landlord’s approval shall not be reasonably withheld or delayed so long as Tenant’s Preliminary Plans are consistent with the Basic Standards as defined below. As part of Landlord’s review of Tenant’s Preliminary Plans, Landlord will notify Tenant of those items, if any, which are “long lead time” items (i.e., items which cannot reasonably be delivered to the job site early enough to maintain the approved construction schedule without substantial overtime work), specifying in such notice the delay in Substantial Completion of the Premises which will be caused by selection of such items (“Long Lead Time Items”), so long as Tenant’s Preliminary Plans specify sufficient detail (e.g., finishes, materials, etc.) to allow Landlord to make such determination. Thereafter, in the preparation of the final Tenant’s Plans, Tenant shall have the right to replace such Long Lead Time Items with other specified items that would not be considered Long Lead Time Items. On or before Tenant’s Plan Delivery Date, as specified in the Basic Lease Information, Tenant shall submit plans and specifications for Tenant’s proposed tenant improvements within the Premises consistent with Tenant’s Preliminary Plans as approved by Landlord (“Tenant’s Plans”). Tenant’s Plans shall include all such information required to prepare construction drawings sufficient to allow Landlord’s contractor to bid and construct said improvements, including but not limited to those items in Exhibit B-2, “Minimum Information Required.” Such plans shall be subject to Landlord’s approval, which shall not be unreasonably withheld so long as the tenant improvements contemplated therein are generally generic with drop ceilings throughout, perimeter private offices around at least 25% of the perimeter of the floor plate, and otherwise reasonably comparable to the improvements existing at Tenant’s existing premises at 1000 Bridge Parkway (“Basic Standards”). Landlord’s contractor shall prepare complete mechanical, electrical, plumbing, and other engineering plans for the installation of the heating, ventilating, air conditioning, electrical and plumbing to be installed in the Premises, on a design/build basis, and the costs charged by Landlord’s contractor for such services shall be included in the scope of work by Landlord’s contractor for the Tenant Improvements and in the cost estimate described in paragraph 5 below. The engineering fees for plumbing and fire sprinkler work shall be competitively bid as design/build with engineered drawings to be included in Landlord’s contractor’s scope of work for the Tenant Improvements.

     3. Tenant Improvements: Landlord shall cause Landlord’s contractor to construct, at Tenant’s expense, subject to the Tenant Allowance as noted below, the additional work in addition to the Base Building to complete the Premises (“Tenant Improvements”) as required by the plans and specifications approved by Landlord and Tenant pursuant to this Work Letter. The quantities,

EXHIBIT “B”
1

character and manner of installation of all of the foregoing work shall be subject to the limitations imposed by any applicable regulations, laws, ordinance, codes and rules.

     4. Tenant’s Expense: The cost of the Tenant Improvements, as well as space planning and preparing the working drawings (including Tenant’s Plans) for the Tenant Improvements or any change to the original instruction and/or plans and specifications shall be paid by Tenant; provided, however, that Landlord shall provide to Tenant an allowance of the amount specified in the Basic Lease Information as the “Tenant Allowance”. The Tenant Allowance may be applied toward the following items in respect of the Tenant Improvements: Architectural and engineering fees, space planning, building permits or other governmental fees, cost of labor materials and other charges included in the construction contract for construction of Tenant Improvements. The cost of the Tenant Improvements to be paid from the Tenant Allowance or by Tenant shall not include the following (which shall be Landlord’s responsibility): (a) costs attributable to improvements installed outside the demising walls of the Premises; (b) costs for improvements which are not shown on or described in the Tenant’s Plans as finally approved by Landlord, other than changes required by the City of San Carlos or other governmental authorities in connection with their review of Tenant’s Plans or issuance of permits, changes necessitated by Tenant Delays (as defined below), or changes that are requested or approved by Tenant; (c) attorneys’ fees incurred in connection with negotiation of construction contracts, and attorneys’ fees, experts’ fees and other costs in connection with disputes with third parties related to the Tenant Improvements, except to the extent such disputes result from Tenant’s acts or omissions; (d) interest and other costs incurred by Landlord to finance Landlord’s construction costs; (e) costs incurred as a consequence of delay (other than Tenant Delays), construction defects or default by Landlord’s contractor; (f) costs recoverable by Landlord upon account of warranties and insurance; (g) restoration costs in excess of insurance proceeds as a consequence of casualties; (h) penalties and late charges attributable to Landlord’s failure to pay construction costs; (i) costs to bring the Base Building into compliance with applicable laws and restrictions at the time building permits are issued for the Tenant Improvements, including, without limitation, the Americans with Disabilities Act and environmental law, except to the extent such laws and restrictions are only triggered by Tenant’s acts, improvements or particular use of the Premises; (j) wages, labor and overhead for overtime and premium time, unless required due to Tenant Delays; (k) offsite construction management or other general construction overhead costs incurred by Landlord; and (1) a General Contractor’s fee in excess of that contemplated in Paragraph 5 below. Upon the approval by Landlord and Tenant of the Landlord’s contractor’s cost estimate in accordance with Paragraph 5 below, Tenant shall provide Landlord with a detailed breakdown of the final costs to be incurred or which have been incurred in connection with the design and construction of the Tenant Improvements (the “Final Costs”). Prior to the commencement of construction of the Tenant Improvements, Tenant shall supply Landlord with cash in an amount (the “Over-Allowance Amount”) equal to the difference between the amount of the Final Costs and the Tenant Allowance (less any portion thereof already disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements). Interest actually accrued on the Over-Allowance Amount shall be credited to Tenant and disbursed with the Over-Allowance Amount. The Over-Allowance Amount shall be disbursed by Landlord pro rata with the Tenant Allowance as costs are incurred for Tenant Improvements. Any amounts payable by Tenant under this Work Letter which are in excess of the Tenant Allowance and Over-Allowance Amount deposited with Landlord shall be paid by Tenant to Landlord within twenty (20) days of receipt of an invoice from Landlord. Landlord shall keep full and detailed accounts and shall exercise such control as may be necessary for the proper financial

EXHIBIT “B”
2

management of the construction of the Tenant Improvements and disbursement of the Tenant Allowance and Over-Allowance Amount. Tenant and Tenant’s representative shall be afforded access, from time to time, upon advance written or oral notice to Landlord, to Landlord’s records, books, correspondence, instructions, drawings, receipts, invoices, agreements (including, without limitation, subcontracts and purchase orders), vouchers and other data relating to the Tenant Improvements and the disbursement of the Tenant Allowance and Over-Allowance Amount for the purpose of reviewing, auditing and/or copying such material. Landlord shall, on not less than a monthly basis on or before the tenth (10th) day of each month, deliver to Tenant a statement showing in complete detail (itemized by contractor, subcontractor, vendors, consultants, etc.) all monies paid out or costs incurred by the Landlord in connection with the Tenant Improvements and the disbursement of the Tenant Allowance and the Over-Allowance Amount, during the period commencing on the first day of each month preceding the then current month and ending on the last day of said preceding month, together with such supporting documentation as may be reasonably required by Tenant.

In addition, the Tenant Improvements shall include window shades meeting the following specifications: Hunter Douglas 8 Mil Atlantis Mini-Blinds; Color: 190 Bright Aluminum.

     5. Cost Estimate: Upon receipt of Tenant’s Plans, Landlord shall obtain a cost estimate for the Tenant Improvements from Landlord’s contractor, such cost estimate to include such detail as may be reasonably requested by Tenant. Landlord shall require that its general contractor secure independent sealed bids from three (3) unionized subcontractors mutually acceptable to Landlord and Tenant for each trade whose costs are in excess of five percent (5%) of the total cost estimate. All bids shall be submitted to Landlord and Tenant simultaneously; at Tenant’s request, Landlord and Tenant shall open the bids together at the offices of the Landlord’s general contractor. Landlord agrees to permit Tenant to designate that the lowest bidding subcontractor be selected. The General Contractor’s fee shall be calculated on a “cost plus a fee” basis where the fee for overhead and profit is four percent (4%) of cost and the amount charged for general conditions and supervision is approved by Tenant, such approval not to be unreasonably withheld. Tenant shall not be charged any fee for Landlord’s oversight of the construction of Tenant’s Improvements. If the cost estimate exceeds the Tenant Allowance, the cost estimate shall be submitted to Tenant. Tenant shall approve or disapprove such estimate within seven (7) days. Failure to disapprove within such period shall constitute approval. If disapproved, Tenant shall provide new sufficient instruction within such seven (7) days for the revision of plans and cost estimates for approval by Landlord. Tenant shall be obligated to approve the cost estimate if the cost is within the Tenant Allowance or any greater budget approved by Tenant. If the cost estimate is in excess of the Tenant Allowance or such greater budget, Tenant shall provide new sufficient instruction which will reduce the cost estimate for the Tenant Improvements to a level acceptable to Tenant and within any allowance provided by Landlord within ten (10) days after receipt of the cost estimate. In the event that, after receiving Tenant’s approval of the cost estimate based upon Tenant’s Plans as approved by Landlord and Tenant, changes to such plans are requested by any governmental agency or building inspector in order to obtain any required permits or to proceed with the construction of the Tenant Improvements, Tenant shall promptly respond to such governmental request and cause such request to be withdrawn or Tenant’s Plans to be revised to comply with such request; and if such revision causes an increase in the cost of the Tenant Improvements such increase shall be made by a change order approved by Tenant. Any delay in achieving Substantial Completion resulting from Tenant’s response to such governmental request or

EXHIBIT “B”
3

approving such change order shall be a Tenant Delay provided for in Paragraph 9 below.

     6. Construction of Tenant Improvements: After Tenant’s approval of the cost estimate for Tenant’s Plans, Landlord shall administer and diligently prosecute the construction of Tenant Improvements in accordance with Tenant’s Plans; provided, however, that Landlord shall not be required to install any Tenant Improvements which do not conform to the plans and specifications for the Base Building, or do not conform to any applicable regulations, laws, ordinances, codes and rules; such conformity shall be the obligation of Tenant (other than mechanical, electrical, plumbing and engineering components of the Tenant Improvements that are design/build by Landlord’s contractor, the conformity of which with Landlord’s Plans and applicable laws shall be the obligation of Landlord). After the cost estimate has been approved by Landlord and Tenant as provided above, neither party shall have the right to require extra work or change orders with respect to the construction of the Tenant Improvements without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed. All change orders shall specify any change in the cost estimate as a consequence of the change order. All Tenant Improvements shall be constructed by Landlord’s contractor, which shall be a reputable, unionized general contractor, subject to approval by Tenant which approval shall not be unreasonably withheld, who will complete the work in a good and workmanlike manner and in accordance with the approved Tenant’s Plans and relevant laws and codes. Subject to the limitation on the General Contractor’s fee imposed by Paragraph 5, Tenant approves the use of Devcon Construction, the General Contractor for the Base Building, as the General Contractor for the Tenant Improvements.

Tenant shall be entitled to receive copies of all of the general contractor’s progress payment request.

     7. Tenant’s Contractors: Cable TV connections, telephone, data and audio-visual equipment and wiring, office equipment and computer wiring, and furniture and security equipment shall be installed by Tenant’s contractors and shall conform with Landlord’s contractor’s schedule and work of installation and shall be handled in such a manner as to maintain harmonious labor relations and as not to interfere with or delay the work of Landlord’s contractors. To the extent that any such improvements furnished and installed by Tenant’s contractors cause Landlord’s contractor to be dependent upon the work of Tenant’s contractors in order for Landlord’s contractor to complete its work, any resulting delays in Landlord’s contractor’s work shall be “Tenant Delays” (as defined in Paragraph 9 below). Tenant’s contractors, subcontractors and labor shall be subject to approval by Landlord which approval shall not be unreasonably withheld or delayed and shall be subject to the reasonable administrative supervision of Landlord’s general contractor and reasonable rules of the site. Contractors and subcontractors engaged by Tenant shall employ laborers and means to insure, so far as may be possible, the progress of the work without interruption on account of strikes, work stoppage or similar causes for delay. Landlord shall give access and entry to the Leased Premises to Tenant’s contractors as may be reasonably necessary during the course of construction of the Tenant Improvements, and at various points during construction as each floor progresses, subject to the requirements of this Paragraph 7; provided, however, that if such entry is prior to the first day of the Term such entry shall be subject to all of the terms and conditions of this Lease except payment of Rent and Additional Charges and Tenant shall not be allowed to commence business in the Premises.

     8. Substantial Completion/Punch List: “Substantial Completion” shall be defined as when Landlord’s contractor has substantially completed all work to be performed by Landlord in

EXHIBIT “B”
4

accordance with Tenant’s Plans, subject only to (i) the completion or correction of items on a punch list to be prepared jointly by Landlord, Tenant and their respective architects which do not substantially interfere with Tenant’s use or occupancy of the Premises (the “Punchlist”), (ii) a certificate of occupancy, or its equivalent, for the Premises having been obtained, (iii) all utilities having been turned on and available for use, (iv) all Building common areas having been substantially completed, and (v) Tenant having reasonable access to the Premises and use of parking to the extent required by the Lease. The items on the Punchlist shall be completed by Landlord’s contractor promptly using commercially reasonable efforts.

Landlord agrees to include a provision in its construction contract with it’s general contractor requiring retention of one hundred fifty percent (150%) of the estimated amount of the cost to complete the items on the Punchlist until the Punchlist is fully completed.

     9. Tenant Delays: “Tenant Delays” shall be defined as those delays caused in achieving Substantial Completion due to: (a) Tenant’s failure to submit (i) Tenant’s Plans, (ii) approval of the cost estimates, or (iii) sufficient instruction to change Tenant’s Plans as a result of disapproval of a cost estimate on or before the dates or time periods called for; (b) Tenant’s change(s) in plans and specifications after said dates that actually delay construction, but only to the extent that Tenant received prior written notice from the Landlord of the amount of delay associated with the changes before the changes were finally approved and authorized by Tenant; (c) Tenant’s request for Long Lead Time Items; (d) any delays caused by Tenant’s contractors as set forth in Paragraph 7, including, without limitation, strikes, work stoppage or similar delay caused by labor disharmony between Tenant’s contractors and Landlord’s contractor, and delays caused by Landlord’s contractor’s dependence on any work done by Tenant’s contractors; or (e) other delays caused by Tenant in construction; provided, however, no Tenant Delay shall be deemed to have occurred unless and until Landlord has given written notice to Tenant specifying any action or inaction which Landlord is aware of and that may cause a Tenant Delay. If Tenant does not take appropriate measures within one (1) business day after Tenant’s receipt of such notice to prevent such action or inaction from occurring, then a Tenant Delay, as set forth in such notice, shall be deemed to have occurred commencing as of the date Tenant received such notice and continuing for the number of days the Substantial Completion of the Premises was in fact delayed as a direct result of such action or inaction; provided, further, that no such notice shall be required in order for Tenant Delay to be deemed to have occurred if such delay results from Tenant’s failure to perform any obligation within a specific date or time period.

     10. Commencement Date: The Premises shall be deemed completed and possession delivered and Tenant shall accept the Premises upon Substantial Completion. Notwithstanding anything to the contrary in the Lease, effective upon delivery of the Premises to Tenant, Landlord does hereby warrant that, (a) the construction (as opposed to the design which is Tenant’s responsibility) of the Tenant Improvements was performed in accordance with all rules, regulations, codes, statutes, ordinances, and laws of all applicable governmental and quasi-governmental authorities and in a good and workman-like manner, (b) all materials and equipment installed therein was new and otherwise of good quality, (c) the electrical, plumbing, and mechanical systems servicing the Premises are in working order and in good condition, and (d) the Base Building is in good condition and water tight. The foregoing warranties shall automatically expire one year after Substantial Completion. Tenant’s obligation under the Lease to pay Rent and Additional Charges

EXHIBIT “B”
5

shall commence upon the later of (i) the Scheduled Commencement Date, as specified in the Basic Lease Information, or (ii) Substantial Completion. If Landlord shall be delayed in substantial completion as a result of Tenant Delays, then the Commencement Date, and Tenant’s obligation to begin paying Base Rent and Additional Charges, shall be adjusted to reflect what the Commencement Date would have been if there had been no Tenant Delays. Notwithstanding the foregoing, if Tenant Delays occur and, as a result thereof, Landlord reasonably anticipates that Substantial Completion will not occur on or before the Scheduled Commencement Date, then at Landlord’s sole election and in addition to any other remedies that may be available to Landlord under the Lease or at law or in equity, at Landlord’s written request Tenant shall commence payment of Base Rent and Additional Charges on the date one month following the Scheduled Commencement Date. If Landlord makes such election, then the Installment of Base Rent, and any installments of any components of Additional Charges, that are first due after Substantial Completion occurs shall be adjusted to reflect the actual Commencement Date. Landlord’s election, as set forth above, shall not constitute a waiver of any default by Tenant or any other remedy available to Landlord as a result thereof, to the extent the circumstances giving rise to a Tenant Delay constitute a default by Tenant hereunder or under the Lease. Within seven (7) days after written request of Landlord, Tenant agrees to give Landlord a letter confirming the Commencement Date and certifying that Tenant has accepted delivery of the Premises and that the condition of the Premises complies with Landlord’s obligations hereunder.

EXHIBIT “B”
6

EXHIBIT “B-1”

LANDLORD’S PLANS

The plans and specifications related to Two Circle Star Way as drawn or assembled by Kenneth Rodrigues & Partners, Inc. as called out below:

GENERAL
A0.0	COVER SHEET	1/22/98
A0.1	GENERAL INFORMATION SHEET/ TITLE 24 ENERGY COMPLIANCE	1/22/98
CIVIL
C0.2 C1.l	STORM WATER POLLUTION PREVENTION PLAN LAYOUT AND PAVING PLAN	11/14/97
Cl.2	LAYOUT AND PAVING PLAN	12/19/97
C2.1	GRADING PLAN	11/14/97
C2.2	GRADING PLAN	11/14/97
C3.1	UTILITY PLAN	11/14/97
C3.2	UTILITY PLAN	11/14/97
C4.1	DETAILS	11/14/97
C4.2	DETAILS	11/14/97
C4.3	DETAILS	12/19/97
ARCHITECTURAL
A2.1	BUILDING ONE FIRST FLOOR PLAN	2/26/98
A2.2	BUILDING ONE SECOND FLOOR PLAN	1/22/98
A2.3	BUILDING ONE THIRD FLOOR PLAN	1/22/98
A2.4	BUILDING ONE FOURTH FLOOR PLAN	1/22/98
A2.5	ENLARGED CORE PLAN	1/22/98
A2.6	ENLARGED BATHROOM PLANS	1/22/98
A3.1	BUILDING ONE ROOF PLAN	1/22/98
A4.1	BUILDING ONE ELEVATIONS	2/26/98
A4.2	BUILDING ONE ELEVATIONS	1/22/98
A5.1	BUILDING SECTION	1/22/98
A5.2	TYPICAL WALL SECTIONS	1/22/98
A7.1	REFLECTED CEILING PLANS	3/5/97
A7.2	ENLARGED STAIR PLANS AND SECTIONS	1/22/98
A7.3	ENLARGED ELEVATOR PLANS AND SECTIONS	1/22/98
A7.4	DOOR AND HARDWARE SCHEDULE/ ROOM FINISH SCHEDULE	3/11/98
A8.1	EXTERIOR DETAILS	1/22/98
A8.2	DOOR/ WINDOW DETAILS	1/22/98
A8.3	ROOF DETAILS	1/22/98
A9.1	WALL TYPES	1/22/98
A9.2	INTERIOR DETAILS	1/22/98

EXHIBIT “B-1”
1

A9.3	UL ASSEMBLIES	11/14/97
STRUCTURAL
S0.l	GENERAL NOTES	10/6/97
S2.1	BUILDING ONE FOUNDATION/ FIRST FLOOR FRAMING PLAN	10/6/97
S2.2	BUILDING ONE 2ND FLR. FRAMING PLAN	10/6/97
S2.3	BUILDING ONE 3RD FLR. FRAMING PLAN	10/6/97
S2.4	BUILDING ONE 4TH FLR. FRAMING PLAN	10/6/97
S2.5	BUILDING ONE ROOF FRAMING PLAN	10/6/97
S2.5A	BUILDING ONE ROOF SCREEN/ SLAB REINFORCING PLAN	10/6/97
S3.1	TYPICAL CONCRETE DETAILS	7/23/97
S3.2	CONCRETE DETAILS NO. 1	10/6/97
S3.3	CONCRETE DETAILS NO. 2	10/6/97
S3.4	CONCRETE DETAILS NO. 3	10/6/97
S5.1	TYPICAL METAL DECK DETAILS NO. 1	10/6/97
S5.2	TYPICAL METAL DECK DETAILS NO. 2	10/6/97
S5.3	TYPICAL STEEL DETAILS	10/6/97
S5.4	COLUMN SCHEDULE AND DETAILS	10/6/97
S5.5	BRACED FRAME ELEVATIONS AND DETAILS	10/6/97
S5.6	STEEL DETAILS NO. 1	10/6/97
S5.7	STEEL DETAILS NO. 2	10/6/97
S9.1	PRECAST PANEL SUPPORT PLAN	10/6/97
S9.2	PRECAST PANEL SUPPORT PLAN	7/30/97
S9.3	PRECAST PANEL SUPPORT DETAILS	10/6/97
LANDSCAPE
L-l	PHASE ONE NOTES AND LEGEND	2/6/98
L-2	PHASE ONE LAYOUT AND GRADING PLAN	2/6/98
L-3	PHASE ONE PLATING PLAN	2/6/98
L-4	PHASE ONE IRRIGATION	2/6/98
L-5	PHASE ONE DETAILS	7/28/97
L-6	PHASE ONE DETAILS	11/26/97
L-7	PHASE ONE DETAILS	2/6/98
MECHANICAL
AC0.01	TITLE 24, DRAWING SCHEDULE, MANDATORY	3/10/98
	MEASURES, AND GENERAL NOTES	3/10/98
AC0.02	EQUIPMENT SCHEDULE	3/10/98
AC1.01	FIRST FLOOR HVAC PLAN	3/10/98
AC1.02	SECOND FLOOR HVAC PLAN	3/10/98
AC1.03	THIRD FLOOR HVAC PLAN	3/10/98
AC1.04	FOURTH FLOOR HVAC PLAN	3/10/98
AC1.05	ROOF PLAN	3/10/98
AC1.06	ROOF COORDINATION PLAN	3/10/98
AC2.01	PIPING SCHEMATICS AND DETAILS	3/10/98

EXHIBIT “B-1”
2

AC7.01	WIRING AND CONTROLS	3/10/98
ELECTRICAL
CIR-E0	COVER SHEET	7/23/97
CIR-SE1	SITE LIGHTING PLAN	7/23/97
CIR-SE2	SITE LIGHTING PLAN	7/23/97
CIR-E1	FIRST FLOOR LIGHTING PLAN	7/23/97
CIR-E2	SECOND FLOOR LIGHTING PLAN	7/23/97
CIR-E3	THIRD FLOOR LIGHTING PLAN	7/23/97
CIR-E4	FOURTH FLOOR LIGHTING PLAN	7/23/97
CIR-E5	FIRST FLOOR POWER PLAN	7/23/97
CIR-E6	SECOND FLOOR POWER PLAN	7/23/97
CIR-E7	THIRD FLOOR POWER PLAN	7/23/97
CIR-E8	FOURTH FLOOR POWER PLAN	7/23/97
CIR-E9	FIRST FLOOR MECHANICAL PLAN	7/23/97
CIR-E10	SECOND FLOOR MECHANICAL PLAN	7/23/97
CIR-E11	THIRD FLOOR MECHANICAL PLAN	7/23/97
CIR-E12	FOURTH FLOOR MECHANICAL PLAN	7/23/97
CIR-E13	ROOF MECHANICAL PLAN	7/23/97
CIR-E14	SINGLE LINE DIAGRAM	11/24/97
CIR-E15	PANEL SCHEDULES	7/23/97
CIR-E16	PANEL SCHEDULES	7/23/97
CIR-E17	TITLE 24	7/23/97
PLUMBING
P1A	1ST FLOOR BELOW GRADE	12/18/97
P1B	1ST FLOOR ABOVE GRADE	12/18/97
P2	2ND FLOOR	12/18/97
P3	3RD FLOOR	12/18/97
P4	4TH FLOOR	12/18/97
P5	ROOF PLAN	12/18/97
FIRE ALARM SYSTEM
FA-1	FIRST FLOOR BUILDING ONE	12/5/97
FA-2	SECOND FLOOR BUILDING ONE	12/5/97
FA-3	THIRD FLOOR BUILDING ONE	12/5/97
FA-4	FOURTH FLOOR BUILDING ONE	12/5/97
FA-5	ROOF PLAN BUILDING ONE	12/5/97

EXHIBIT “B-1”
3

EXHIBIT “B-2”

MINIMUM INFORMATION REQUIRED

FLOOR PLANS INDICATING:

1.	Location and type of all partitions;
2.	Location and type of all doors. Indicate hardware and provide keying schedule;
3.	Location and type of glass partitions, windows and doors. Indicate framing if not Building Standard;
4.	Location of telephone equipment room;
5.	Indicate critical dimensions necessary for construction;
6.	Location of all Building Standard electrical items (outlets, switches, telephone outlets). Building Standard lighting will be subject to approval by Landlord’s architect and contractor;
7.	Location and type of all non-Building Standard electrical items, including lighting.
8.	Location and type of equipment that will require special electrical requirements. Provide manufacturer’s specifications for use and operation;
9.	Location, weight per square foot, and description of any exceptionally heavy equipment or filing system exceeding 50 lbs. psf live load;
10.	Requirements for special air conditioning or ventilation;
11.	Type and color of floor covering;
12.	Location, type, and color of wall covering;
13.	Locations, type and color of Building Standard and non-Building Standard paint or finishes;
14.	Location and type of plumbing;
15.	Location and type of kitchen equipment.

EXHIBIT “B-2”
1

DETAILS SHOWING:

1.	All millwork with verified dimensions (such dimensions to be verified by Landlord’s contractor in the field) and dimensions of all equipment to be built in;
2.	Corridor entrance;
3.	Bracing or support of special walls, glass partitions, etc., if desired.

EXHIBIT “B-2"
2

EXHIBIT “C”

RULES AND REGULATIONS

     1. Sidewalks, halls, passages, exits, entrances, elevators, escalators and stairways shall not be obstructed by Tenant or used by Tenant for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators and stairways are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom Tenant normally deals in the ordinary course of Tenant’s business unless such persons are engaged in illegal activities. Tenant, and Tenant’s employees or invitees, shall not go upon the roof of the Building, except as authorized by Landlord.

     2. No sign, placard, picture, name, advertisement or notice visible from the exterior of the Premises shall be inscribed, painted, affixed, installed or otherwise displayed by Tenant either on the Premises or any part of the Building without the prior written consent of Landlord, and Landlord shall have the right to remove any such sign, placard, picture, name, advertisement or notice without notice to and at the expense of Tenant.

          If Landlord shall have given such consent to Tenant at any time, whether before or after the execution of the Lease, such consent shall not in any way operate as a waiver or release of any of the provisions hereof or of the Lease, and shall be deemed to relate only to the particular sign, placard, picture, name, advertisement or notice so consented to by Landlord and shall not be construed as dispensing with the necessity of obtaining the specific written consent of Landlord with respect to any other such sign, placard, picture, name, advertisement or notice. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord.

     3. The bulletin board or directory of the Building will be provided exclusively for the display of the name and location of tenants (including subtenants) only and Landlord reserves the right to exclude any other names therefrom.

     4. No curtains, draperies, blinds, shutters, shades, screens or other coverings, awnings, hangings or decorations shall be attached to, hung or placed in, or used in connection with, any window, door or patio on the Premises without the prior written consent of Landlord. In any event with the prior written consent of Landlord, all such items shall be installed inboard of Landlord’s window coverings and shall not in any way be visible from the exterior of the Building. No articles shall be placed or kept on the window sills so as to be visible from the exterior of the Building. No articles shall be placed against glass partitions or doors which might appear unsightly from outside the Building.

     5. Landlord reserves the right to exclude from the Building between the hours of 6:00 p.m. and 8:00 a.m. and at all hours on Saturdays, Sundays and holidays all persons who do not possess a building access card provided by Landlord or who are not accompanied by Tenant’s employees. Landlord will furnish access cards to persons for whom Tenant requests the same in writing. Tenant shall be responsible for all persons from who it requests access cards and shall be liable to Landlord for all

EXHIBIT “C”
1

acts of such persons. Landlord shall in no case be liable for damages for error with regard to the admission to or exclusion from the Building of any person.

          During the continuance of any invasion, mob, riot, public excitement or other circumstance rendering such action advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Building by closing the doors, or otherwise, for the safety of tenants and protection of the Building and property in the Building.

     6. Tenant shall not employ any person or persons other than the janitor of Landlord for the purpose of cleaning the Premises unless otherwise agreed to by Landlord in writing. Except with the written consent of Landlord, no person or persons other than those approved by Landlord shall be permitted to enter the Building for the purpose of cleaning the same. Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness of the Premises. Landlord shall not in any way be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitor or any other employee or any other person.

     7. Tenant shall not obtain for use upon the Premises ice, drinking water, food, beverage, towel or other similar services except through facilities approved in writing by Landlord and under regulations fixed by Landlord, or accept barbering or bootblacking services in the Premises except from persons authorized by Landlord. Tenant may have a Lunchroom/Break room in the Premises that has a refrigerator and microwave.

     8. Tenant shall see that the doors of the Premises are closed and securely locked and must observe strict care and caution that all water faucets or water apparatus are entirely shut off before Tenant or its employees leave such Premises, and that all utilities shall likewise be carefully shut off, so as to prevent waste or damage. On multiple-tenancy floors, all tenants shall keep the door or doors to the Building corridors closed at all times except for ingress and egress.

     9. As more specifically provided in the Lease, Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to assure the most effective operation of the Building’s heating and air conditioning, and shall refrain from attempting to adjust any controls other than room thermostats installed for Tenant’s use.

     10. Tenant shall not alter any lock or access device or install a new or additional lock or access device or any bolt on any door of the Premises without the prior written consent of Landlord. If Landlord shall give its consent, Tenant shall in each case furnish Landlord with a key for any such lock.

     11. Tenant shall not make or have made additional copies of any keys or access devices provided by Landlord. Tenant, upon the termination of the tenancy, shall deliver to Landlord all the keys or access devices for the Building, offices, rooms and toilet rooms which shall have been furnished to Tenant or which Tenant shall have had made. In the event of the loss of any keys or access devices so furnished by Landlord, Tenant shall pay Landlord therefor.

     12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind

EXHIBIT “C”
2

whatsoever shall be thrown therein, and the expense of any breakage, stoppage or damage resulting from the violation of this rule by Tenant or Tenant’s employees or invitees shall be borne by Tenant.

     13. Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or inflammable or combustible fluid or material other than limited quantities necessary for the operation or maintenance of office or office equipment. Tenant shall not use any method of heating or air conditioning other than supplied by Landlord.

     14. Tenant shall not use, keep or permit to be used or kept in the Premises any foul or noxious gas or substance or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors and/or vibrations or interfere in any way with other tenants or those having business therein, nor shall any animals or birds be brought or kept in or about the Premises or the Building.

     15. No cooking shall be done or permitted by Tenant on the Premises (except that use by the Tenant of Underwriter’s Laboratory approved equipment for the preparation of coffee, tea, hot chocolate and similar beverages for Tenant and its employees shall be permitted, provided that such equipment and use are in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations), nor shall Premises be used for lodging. See Paragraph 7.

     16. Except with the prior written consent of Landlord, Tenant shall not sell, or permit the sale, at retail, of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise in or on the Premises, nor shall Tenant carry on, or permit or allow any employee or other person to carry on, the business of stenography, typewriting or any similar business in or from the Premises for the service or accommodation of occupants of any other portion of the Building, nor shall the Premises be used for the storage of merchandise (other than incidental merchandise that Tenant may have on hand from time to time) or for manufacturing of any kind, or the business of a public barber shop or beauty parlor, nor shall the Premises be used for any improper, immoral or objectionable purpose, or any business or activity other than that specifically provided for in Tenant’s Lease.

     17. If Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain and comply with Landlord’s reasonable instructions in their installation.

     18. Landlord will direct electricians as to where and how telephone, telegraph and electrical wires are to be introduced or installed. No boring or cutting for wires will be allowed without the prior written consent of Landlord. The location of burglar alarms, telephones, call boxes and other office equipment affixed to the Premises shall be subject to the written approval of Landlord, which shall not be unreasonably withheld.

     19. Tenant shall not install any radio or television antenna (not including the satellite antenna referred to in Paragraph 44 of the Lease), loudspeaker or any other device on the exterior walls or the roof of the Building. Tenant shall not interfere with radio or television broadcasting or reception from or in the Building or elsewhere.

     20. Tenant shall not lay linoleum, tile, carpet or any other floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved in writing by Landlord.

EXHIBIT “C”
3

The expense of repairing any damage resulting from a violation of this rule by Tenant or Tenant’s contractors, employees or invitees or the removal of any floor covering shall be borne by Tenant.

     21. The freight elevator shall be available for use by all tenants in the Building, subject to such reasonable scheduling as Landlord in its discretion shall deem appropriate. No furniture, freight, equipment, materials, supplies, packages, merchandise or other property will be received in the Building or carried up or down the elevators except between such hours and in such elevators as shall be designed by Landlord.

          Landlord shall have the right to prescribe the weight, size, and position of all safes, furniture or other heavy equipment brought into the Building. Safes or other heavy objects shall, if considered necessary by Landlord, stand on wood strips of such thickness as determined by Landlord to be necessary to properly distribute the weight thereof. Landlord will not be responsible for loss of or damage to any such safe, equipment or property from any cause, and all damage done to the Building by moving or maintaining any such safe, equipment or other property shall be repaired at the expense of Tenant.

          Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Landlord or to any tenants in the Building shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. The persons employed to move such equipment in or out of the Building must be acceptable to Landlord.

     22. Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Tenant shall not mark, use double-sided adhesive tape on, or drive nails, screw or drill into, the partitions, woodwork or plaster or in any way deface the Premises or any part thereof, without repairing any resulting damage. Tenant may hang pictures on walls in the Premises. Any damage to the walls caused by molley bolts, or like hanging materials, will be repaired by Tenant.

     23. There shall not be used in any space, or in the public areas of the Building, either by Tenant or others, any hand trucks except those equipped with rubber tires and side guards or such other material-handling equipment as Landlord may approve. No other vehicles of any kind shall be brought by Tenant into or kept in or about the Premises.

     24. Tenant shall store all trash and garbage within the interior of the Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the jurisdiction in which the Premises is located, without violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such times as Landlord shall designate.

     25. Canvassing, soliciting, distribution of handbills or any other written material and peddling in the Building are prohibited, and Tenant shall cooperate to prevent the same. Tenant shall not make room-to-room solicitation of business from other tenants in the Building.

EXHIBIT “C”
4

     26. Landlord shall have the right, exercisable without notice and without liability to Tenant, to change the name and address of the Building.

     27. Landlord reserves the right to exclude or expel from the Building any person who, in Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the rules or regulations of the Building.

     28. Without the prior written consent of Landlord, Tenant shall not use the name of the Building in connection with or in promoting or advertising the business of Tenant except as Tenant’s address. Tenant may use Project’s name on its stationery and business cards.

     29. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

     30. Tenant assumes any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed, unless caused by the gross negligence or willful misconduct of Landlord, its agents, servants, or employees (“Landlord Parties”).

     31. The requirements of Tenant will be attended to only upon application at the office of the Building by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employees will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.

     32. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all tenants of the Building.

     33. Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Building and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinafter stated and any additional rules and regulations which are adopted. No new Rule or Regulation shall be designed to discriminate solely against Tenant.

     34. Tenant shall be responsible for the observance of all of the foregoing Rules and Regulations by Tenant’s employees, agents, clients, customers, invitees and guests.

     35. Unless otherwise defined, terms used in these Rules and Regulations shall have the same meaning as in the Lease.

EXHIBIT “C”
5

EXHIBIT “D”

FORM OF TENANT ESTOPPEL CERTIFICATE

TO:                                                                                  , or Assignee (“Lender”), and/or whom else it may concern:

THIS IS TO CERTIFY THAT:

1. The undersigned is the lessee (“Tenant”) under that certain lease dated                                         , 19     , (“Lease”), by and between                                                                                  as lessor (“Landlord”) and                                                                                 as Tenant, covering those certain premises commonly known and designated as                                                                                   (“Premises”).

2. The Lease has not been modified, changed, altered, assigned, supplemented or amended in any respect (except as indicated below; if none, state “none”). To the best of Tenant’s knowledge, the Lease is not in default and is valid and in full force and effect on the date hereof. The Lease is the only Lease or agreement between the Tenant and the Landlord affecting or relating to the Premises. The Lease represents the entire agreement between the Landlord and the Tenant with respect to the Premises                                         .

3.	The Tenant is not entitled to, and has made no agreement(s) with the Landlord or its agents or employees concerning free rent, partial rent, rebate of rent payments, credit or offset or deduction in rent, or any other type of rental concession, including, without limitation, lease support payments or lease buy-outs (except as indicated below; if none, state “none”).                                                                                                                                                                                         .
4.	The Tenant has accepted and now occupies the Premises, and is and has been open for business since                               , 19     . The Lease term began                                  , 19     . The termination date of the present term of the Lease, excluding unexercised renewals, is                                   , 19     .
5.	The Tenant has paid rent for the Premises for the period up to and including                                         , 19     . The fixed minimum rent and any additional rent (including the Tenant’s share of tax increases and cost of living increases) payable by the Tenant presently is $                                         per month. No such rent has been paid more than two (2) months in advance of its due date, except as indicated below (if none, state “none”). The Tenant’s security deposit is $                                        .
6.	To the best of Tenant’s knowledge, no event has occurred and no condition exists which, with the giving notice or the lapse of time or both, will constitute a default under the Lease. To the

EXHIBIT “D”
1

best of Tenant’s knowledge, the Tenant has no existing defenses or offsets against the enforcement of this Lease by the Landlord, except                                                                                                                                                                  .

7.

The Tenant has received or will receive payment or credit for tenant improvement work in the total amount of $                                                             (or if other than cash, describe below; if none, state “none”). To the best of Tenant’s knowledge, all conditions under this Lease to be performed to date by the Landlord have been satisfied. All required contributions by the Landlord to the Tenant on account of the Tenant’s tenant improvements have been received by the Tenant, except                                                                                                                                                                                                     .

8. The Lease contains, and the Tenant has, no outstanding options or rights of first refusal to purchase the Premises or any part thereof or all or any part of the real property of which the Premises are a part.

9. No actions, whether voluntary or otherwise, are pending against the Tenant or any general partner of the Tenant under the bankruptcy laws of the United States or any state thereof.

10.	The Tenant has not sublet the Premises to any sub lessee and has not assigned any of its rights under the Lease, except as indicated below (if none, state “none”). No one except the Tenant and its employees occupies the Premises.                                                                                  .
11.	The address for notices to be sent to the Tenant is as set forth in the Lease.

12. Except as otherwise provided in the Lease, the Premises have not been used and the Tenant does not plan to use the Premises for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any petroleum product or any toxic or hazardous chemical, material, substance, pollutant or waste.

13.

(INCLUDE THIS PARAGRAPH FOR LOAN TRANSACTIONS.) The Tenant acknowledges that all the interest of the Landlord in and to the Lease is being duly assigned to Lender, and that pursuant to the terms thereof, all rent payments under the Lease shall continue to be paid to the Landlord in accordance with the terms of the Lease unless and until the Tenant is notified otherwise in writing by Lender or its successors or assigns.

It is particularly noted that:

(a)

Under the provisions of this assignment, the Lease cannot be terminated (either directly or by the exercise of any option which could lead to termination) or modified in any of its terms, or consent be given to the release of any party having liability thereon, without the prior written consent of Lender or it successors or assigns, and without such consent, no rent may be collected or accepted more than two (2) months in advance.

(b)

The interest of the Landlord in the Lease has been assigned to Lender for the purposes specified in the assignment. Lender, or its successors or assigns, assumes no duty, liability or obligation whatsoever under the Lease or any extension or renewal thereof.

EXHIBIT “D”
2

(c) Any notices sent to Lender or its affiliates should be sent by registered mail and addressed as follows:                                                                                              .

14. Tenant agrees to give any Mortgagee and/or Trust Deed Holders (“Mortgagee”), by registered mail, a copy of any notice of default served upon the Landlord, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise), of the address of such Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee shall have an additional sixty (60) days within which to cure such default of it such default cannot be cured within that time, then such additional time as may be necessary to cure such default shall be granted if within such sixty (60) days Mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event the Lease shall not be terminated while such remedies are being so diligently pursued.

15. This certification is made to induce Lender to make certain fundings, knowing that Lender relies upon the truth of this certification in disbursing said funds.

16. The undersigned is authorized to execute this Tenant Estoppel Certificate on behalf of the Tenant.

DATED THIS                                                              DAY OF                                                              , 19     .

(Tenant)
By:
	Its:
	Date:

EXHIBIT “D”
3

The undersigned hereby certifies that the certifications set forth above are true as of the date hereof.

(Owner/Landlord)
By:
	Its:
	Dates:

EXHIBIT “D”
4

EXHIBIT “E”

ENCUMBRANCES

1.	Ground Lease:	That certain Lease between Mozad, L.P., as Lessor and Circle Star Center Associates, L.P., as Lessee, dated October 15, 1997.
2.	C, C&R’s:	“Declaration of Covenants, Conditions and Restrictions” dated June 24, 1997 by and between Mozad, L.P. and Homestead Village Incorporated.
3.	Other:	“Approved Conditional Use Permit — Office Complex, 1717 Industrial Road, San Carlos, CA 94070,” effective date June 12, 1997.

EXHIBIT “E”
1

FORM OF LETTER OF CREDIT

DATE:                                         

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER:                     

BENEFICIARY APPLICANT

ATTN:                                                                                                

AMOUNT: $                                          

EXPIRATION:                                         

     We hereby establish in your favor our irrevocable standby letter of credit no.                      which is available with [bank] by payment against presentation of the original of this letter of credit and your draft at sight drawn on [bank].

     This letter of credit shall be deemed automatically extended without amendment for periods of one (1) year unless at least 30 (thirty) days prior to the then current expiration date, we notify you by registered mail or overnight courier service at the above address, that we elect not to renew this letter of credit.

     This letter of credit is transferable. Transfer of this letter of credit is subject to our receipt of our standard form of beneficiary’s instructions regarding the transfer accompanied by the original letter of credit and amendments) if any. Costs or expenses of such transfer shall be for the account of the beneficiary.

     We hereby agree with the beneficiary that the draft drawn under and in compliance with the terms of this letter of credit will be duty honored upon presentation, as specified herein.

     This letter of credit is subject to the uniform customs and practice for documentary letter of credit (1993 revision) international chamber of commerce publication no. 500 and engaged us pursuant to the terms therein.

EXHIBIT “F”

Exhibit “G”

Description of Second Building: The Second Building is the same size and a mirror image of the Building and will be located as set forth on Schedule 1 attached hereto and incorporated herein by reference.

Exhibit “G”

SCHEDULE 1 to
EXHIBIT “G”

  Liberate Technologies
  1000 Bridge Parkway
  Redwood Shores, CA 94065 * USA

Wednesday, September 08, 1999

John Mozart	Hand Delivered
Circle Star Center Associates, L.P.
M-D Ventures, Inc., General Partner
C/o The Mozart Development Company
1068 East Meadow Circle
Palo Alto, CA 94303

RE: Tenant Election Notice

Dear John,

Pursuant to the Offer Notice of September 1 and paragraph 45 of the lease between Circle Star Center Associates, L.P. & Liberate Technologies (formerly known as Network Computer, Inc.), Liberate Technologies hereby delivers this Tenant Election Notice pursuant to which Liberate Technologies unconditionally elects to exercise its option to lease the space described in the Offer Notice.

Sincerely;
 

/s/ Mitchell Kertzman  

Mitchell Kertzman 

President and CEO
Liberate Technologies 

Oracle Corporation 500 Oracle Parkway
Redwood Shares
Callifornia 94065 phone
fax 650.506.7000 650.506.7200

TERMINATION OF GUARANTY OF LEASE

     This Termination of Guaranty of Lease (“Termination Agreement”) is made as of 9/8, 1999, by and between CIRCLE STAR CENTER ASSOCIATES, L.P., a California limited partnership (“Landlord”), and ORACLE CORPORATION, a Delaware corporation (“Guarantor”).

WITNESSETH:

     WHEREAS, Landlord has entered into that certain Lease Agreement dated April 27, 1999 (the “Lease”) with Liberate Technologies (formerly named Network Computer, Inc.) (“Tenant”) for certain premises in the building located at Two Circle Star Way, San Carlos, California; and

     WHEREAS, in connection with the execution and delivery of the Lease, Guarantor made and entered into a Guaranty of Lease dated April 27, 1999, in favor and for the benefit of Landlord with respect to the Tenant’s obligations under the Lease (the “Guaranty of Lease”); and

     WHEREAS, pursuant to paragraph 23 of the Guaranty of Lease, the Guaranty of Lease is to terminate upon the occurrence of certain events as specified therein (the “Termination Events”); and

     WHEREAS, the Termination Events have occurred and Landlord and Guarantor desire to enter into this Termination Agreement to acknowledge the termination of the Guaranty of Lease;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Guarantor hereby acknowledge and agree that, as of the date hereof, the Guaranty of Lease is terminated and shall be of no further force and effect, and Guarantor is hereby released of any further liability or obligation under the Guaranty of Lease. No further notice to or approval of Guarantor shall be required under the Lease, including the provisions of paragraphs 9, 26 and 45 thereof.

     This Termination Agreement shall be binding upon and inure to the benefit of Landlord and Guarantor and their respective successors and assigns. This Termination Agreement shall be governed by and construed in accordance with the laws of the State of California.

     IN WITNESS WHEREOF, Landlord and Guarantor have executed this Termination Agreement as of the day and year first above written.

LANDLORD:	CIRCLE STAR CENTER ASSOCIATES, L.P., a California limited partnership
	By:	M-D VENTURES, INC.,
	Its: General Partner
	/s/ John Mozart
	John Mozart
	President
GUARANTOR:	ORACLE CORPORATION; a Delaware corporation
	By	/s/ Bruce M. Lange
		Bruce M. Lange
		Treasurer

ACKNOWLEDGEMENT OF LANDLORD AND TENANT

     Circle Star Center Associates, L.P., as Landlord, and Liberate Technologies (formerly named Network Computer, Inc.), as Tenant, under the above-described Lease hereby acknowledge the termination of the Guaranty of Lease provided for hereinabove and agree that the consent and approval of, and notice to, Guarantor shall no longer be required with respect to any actions taken, elections made or options exercised by Tenant under the Lease, including, without limitation, Paragraph 9 — Assignment and Subletting and Paragraph 45 — Second Building.

LANDLORD:	CIRCLE STAR CENTER ASSOCIATES, L.P., a California limited partnership
	By:	M-D VENTURES, INC.,
	Its: General Partner
	By:	/s/ John Mozart
		John Mozart
		President

2

TENANT:	LIBERATE TECHNOLOGIES, a Delaware corporation
	By:	/s/ Gordon Yamata
		Its:	Vice President & General Consel
			Gordon Yamata

3

	Oracle Corporation	500 Oracle Parkway	phone	650.506.7000
		Redwood Shores	fax	650.506.7200
		California 94065

CERTIFICATE OF OFFICER
OF
ORACLE CORPORATION

     I, the undersigned, hereby certify that I am the duly elected, qualified and acting Vice President and Treasurer of Oracle Corporation, a Delaware corporation (“Oracle”), and as such, I do hereby certify to Circle Star Center Associates, L.P., a California limited partnership (“Landlord”), pursuant to Paragraph 23 of that certain Guaranty of Lease, made as of April 27, 1999, by Oracle for the benefit of Landlord in support of the obligations of Liberate Technologies, a Delaware corporation formerly known as Network Computer, Inc. (‘Tenant”), and represent and warrant to Landlord on behalf of Oracle that:

     Based on the information supplied by Tenant to Oracle consisting of effective registration statements filed by Tenant with the Securities and Exchange Commission and a Certificate of Tenant’s Secretary, dated as of August 24, 1999 (attached hereto), on or about August 2, 1999, Tenant completed an initial public offering which resulted in Tenant raising a minimum of $40,000,000 (net available to Tenant after payment of all costs associated with such initial public offering).

     IN WITNESS WHEREOF, I have executed this Certificate on this 8th day of September, 1999

/s/ Bruce M. Lange Bruce M. Lange

Vice President and Treasurer

CONFIRMATION OF ADDITION
OF SECOND BUILDING

     Circle Star Center Associates, L.P. as “Landlord” and Liberate Technologies (previously known as Network Computer, Inc.) as “Tenant” pursuant to that certain Lease Agreement dated April 27,1999 (“Lease”) hereby confirm the following:

     1. On September 8, 1999, Tenant exercised its option to lease the entire Second Building pursuant to Tenant’s “First Right of Offer” set forth in Paragraph 45.

     2. The “Landlord’s Construction Period” pursuant to Paragraph 45(c)(2) shall be 12 weeks.

     3. The “Required Amount” of the letter of credit referred to in Paragraph 32(a) and (45(c)(3)(H) shall be increased to an aggregate of $8,787,609 and is required to be increased to this amount immediately.

“LANDLORD”
Circle Star Center Associates, L.P., a California limited partnership
By:	M-D Ventures, Inc.,
Its:	General Partner
/s/ John Mozart John Mozart, President

“TENANT”
Liberate Technologies, a Delaware corporation
/s/ Illegible
	Approved
By:	LIBERATE LEGAL
Its:	BY	/s/ Illegible

Exhibit B

Floor Plan

Exhibit C

Personable Property List

Exhibit D

Sublease Consent

CONSENT TO SUBLEASE

THIS AGREEMENT (“Agreement”) is effective as of the last date of the signature below (“Effective Date”), by and among Circle Star Center Associates, L.P., a California limited partnership (“Landlord”), Liberate Technologies, a Delaware corporation (“Sublessor”), and DemandTec, Inc., a California corporation (“Subtenant”).

Recitals

A. Landlord is the landlord and Network Computer, Inc. (n/k/a Liberate Technologies) is the tenant under a lease dated April 27, 1999, as amended by Confirmation of Addition of Second Building (the “Master Lease”), for a total of 180,815 square feet of space located in certain premises commonly known and designated as Suites 100, 300 and 400 at Two Circle Star Way and all space at One Circle Star Way in San Carlos, California 94070 (“Premises”). Capitalized terms not otherwise defined herein shall have the meanings given them in the Master Lease.

B. Sublessor has requested that Landlord consent to the subletting by Sublessor to Subtenant of a portion of the Premises, consisting of the second floor of One Circle Star Way and generally shown on the floor plan attached hereto as Exhibit B (“Sublet Premises”), pursuant to the Sublease dated December 7, 2001 (the “Sublease”), attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants contained herein, Landlord hereby consents to the Sublease subject to and upon the following terms and conditions, as to each of which Sublessor and Subtenant expressly agree:

1. Nothing contained in this Agreement shall:

(a) operate as a consent to or approval or ratification by Landlord of any specific provisions of the Sublease or as a representation or warranty by Landlord, or cause Landlord to be estopped or bound in any way by any of the provisions of the Sublease, or

(b) be construed to modify, waive or affect (i) any of the provisions, covenants or conditions in the Master Lease, or (ii) any of Sublessor’s obligations under the Master Lease, or (iii) any rights or remedies of Landlord under the Master Lease or otherwise; or to enlarge or increase Landlord’s obligations or Sublessor’s rights under the Master Lease or otherwise, or

(c) be deemed to make Subtenant a third-party beneficiary of the provisions of the Master Lease, or create or permit any direct right of action by Subtenant against Landlord for breach of the covenant of quiet enjoyment or any other covenant of Landlord under the Master Lease, or

(d) be construed to waive any past, present, or future breach or default on the part of Sublessor under the Master Lease.

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2. The Sublease shall be subject and subordinate at all times to the Master Lease and to all of its provisions, covenants and conditions. Except for rent payable under the Master Lease, Subtenant shall perform faithfully and be bound by all of the terms, covenants, conditions, provisions and agreements of the Master Lease (including, without limitation, insurance requirements, as though Subtenant were the “Tenant” under the Master Lease), for the period covered by the Sublease, but only to the extent applicable to the Sublet Premises. In case of any conflict between the provisions of the Master Lease and the provisions of the Sublease as among Landlord, Sublessor and Subtenant, the provisions of the Master Lease shall prevail unaffected by the Sublease. As between Sublessor and Subtenant, the provisions of the Sublease shall control.

3. Neither the Sublease nor this consent thereto shall release or discharge Sublessor from any liability under the Master Lease. Sublessor shall remain liable and responsible for the full performance and observance of all the provisions, covenants and conditions set forth in the Master Lease on the part of Sublessor to be performed and observed. Any breach or violation of any provision of the Master Lease by Subtenant shall be deemed to be, and shall constitute, a default by Sublessor in fulfilling such provision.

4. This consent by Landlord shall not be assignable or transferable and shall not be construed as a consent by Landlord to any further subletting by Sublessor or Subtenant or to any assignment by Sublessor of the Master Lease or assignment by Subtenant of the Sublease, whether or not the Sublease purports to permit the same, and, without limiting the generality of the foregoing, both Sublessor and Subtenant agree that Subtenant has no right whatsoever to assign, mortgage or encumber the Sublease nor to sublet any portion of the Sublet Premises or permit any portion of the Sublet Premises to be used or occupied by any other party or in any other manner to transfer all or any part of Subtenant’s rights with respect to the Sublease or the Sublet Premises, except with the consent of Landlord, which will not be unreasonably withheld. All provisions in the Master Lease restricting or prohibiting transfer of Tenant’s interests shall also apply to restrict or prohibit transfer by Subtenant (but, except only as otherwise expressly provided to the contrary in this Agreement, no provisions in the Master Lease permitting any transfer by Sublessor shall apply to permit any transfer by Subtenant). This consent may not be construed as a consent by Landlord to any modification, amendment, extension or renewal of the Sublease, without Landlord’s prior written consent.

5. Sublessor hereby absolutely and irrevocably assigns to Landlord any and all rights to receive rent and other consideration from any sublease, including the Sublease, during the pendency of any Event of Default under the Master Lease, and agrees that Landlord, as assignee for Sublessor for purposes hereof, or a receiver for Sublessor appointed on Landlord’s application may (but shall not be obligated to) collect such rents and other consideration and apply the same toward Sublessor’s obligations to Landlord under the Master Lease during the pendency of any default under the Master Lease; provided,- however, that Landlord grants to Sublessor at all times prior to occurrence of any default under the Master Lease, the right to collect such rents. Sublessor and Subtenant agree that upon receipt of notice from Landlord directing Subtenant to pay sublease rent directly to Landlord, Subtenant shall pay rent due under the Sublease to Landlord. Landlord shall credit

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Sublessor with any rent received by Landlord under such assignment, but the acceptance of any payment on account of rent from Subtenant as the result of any such default shall in no manner whatsoever serve to release Sublessor from any Liability under the Master Lease, except to the extent of the rent so credited.

6. Upon the expiration or any earlier termination of the term of the Master Lease, the voluntary or involuntary tender of the Master Lease by Sublessor to Landlord, or a mutual cancellation of the Master Lease by Landlord and Sublessor, the Sublease and its term shall terminate and Subtenant shall vacate the Premises on or before the effective date of such termination. In the event of the failure of Subtenant to so vacate the Premises, Landlord shall be entitled to enforce against Subtenant all of the rights and remedies available to a landlord against a tenant holding over after the expiration of a term.

7. Both Sublessor and Subtenant shall be and continue to be liable for the payment of (a) all bills rendered by Landlord for charges incurred by Subtenant for services and materials supplied to the Sublet Premises beyond that which is requited by the terms of the Master Lease, and (b) any additional costs incurred by Landlord for maintenance and repair of the Sublet Premises (beyond that which is required by the Master Lease) as the result of Subtenant occupying the Sublet Premises (including, but not limited to, any excess cost to Landlord of services furnished to or for the Sublet Premises).

8. Notwithstanding anything to the contrary contained in the Sublease, Landlord may require that requests for any service to be supplied by Landlord to the Sublet Premises, requests to alter the Sublet Premises, requests to further sublet the Sublet Premises or assign the Sublease, and other requests for Landlord’s consent or approval be made by Sublessor on behalf of Subtenant.

9. Sublessor and Subtenant each covenants and agrees that under no circumstances shall Landlord be liable for any brokerage commission or other charge or expense in connection with the Sublease.

10. Sublessor and Subtenant understand and acknowledge that Landlord’s consent to the Sublease expressed herein is not a consent to any improvement or alteration work to be performed in the Sublet Premises (including without limitation any improvement work contemplated in the Sublease), that Landlord’s consent for such work must be separately sought and that any such work shall be subject to all the provisions of the Master Lease with respect thereto.

11. In the event of any conflict between the provisions of this Agreement and the provisions of the Sublease as between Landlord and Sublessor or between Landlord and Subtenant, the provisions of this Agreement shall prevail.

12. In addition to complying with all provisions of the Master Lease concerning estoppel certificates, Sublessor and Subtenant each also agree to execute and deliver from time to time upon request such other estoppel certificates as Landlord may require with respect to the Sublease.

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13. In the event of any arbitration or action or proceeding at law or in equity between or among the parties to this Agreement as a consequence of any controversy, claim or dispute relating to this agreement or the breach thereof or to enforce any of the provisions and/or rights hereunder, the unsuccessful party or parties to such arbitration, action or proceeding shall pay to the successful party or parties all costs and expenses, including reasonable attorneys’ fees incurred therein by such successful party or parties.

14. Each of Subtenant and Sublessor, jointly and severally, shall indemnify, defend and hold Landlord harmless from and against any and all claims arising out of any claim for brokerage commissions or other charges or expenses in connection with the Sublease; and from and against any and all damages, losses, liabilities, lawsuits, judgments, and costs and expenses (including without limitation reasonable attorneys’ fees) arising in connection with any such claim or claims, or any action or proceeding brought thereon. If any such action or proceeding be brought against Landlord, the indemnifying party, upon notice from Landlord, shall defend the same at the indemnifying party’s sole expense by counsel reasonably satisfactory to Landlord.

15. This Agreement shall be construed in accordance with the laws of the State of California and, together with the Sublease and the Master Lease, contains the entire agreement of the parties hereto with respect to the subject matter hereof and may not be changed or terminated orally or by course of conduct.

16. This Agreement is hereby incorporated into the Sublease and shall be attached to the Sublease.

17. Master Landlord represents and warrants to Subtenant that (i) the Master Lease is unmodified and in full force and effect, (ii) Master Landlord is not in default under the Master Lease, nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Master Landlord under the Master Lease, and (iii) to the best of Master Landlord’s knowledge, Sublandlord is not in default under the Master Lease, nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Sublandlord under the Master Lease.

18. Master Landlord agrees that its waiver and covenants in Paragraph 11 of the Master Lease, entitled “Waiver of Subrogation”, shall apply in favor of Subtenant and its agents, employees, successors, assignees and subtenants.

19. Master Landlord agrees that Subtenant may assign the Sublease or sublet the Subleased Premises or any portion thereof, without Master Landlord’s consent, to any partnership, corporation or other entity which controls, is controlled by, or is under common control with Subtenant or Subtenant’s parent (control being defined for such purposes as ownership of at least 50% of the equity interests in, or the power to direct the management of, the relevant entity), or to any partnership, corporation or other entity resulting from a merger or consolidation with Subtenant or Subtenant’s parent, or to any person, partnership, corporation or other entity which acquires (whether by means of an

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asset purchase of all or substantially all the assets of Subtenant or by means of a transfer of Subtenant’s capital stock) Subtenant as a going concern (including as part of an initial public offering of Subtenant’s stock or other equity interests or as part of a re-incorporation of Subtenant in another jurisdiction) ( collectively, an “Affiliate”), provided that, in the event of an assignment, the Affiliate assumes in writing all of Subtenant’s obligations under the Sublease (but no such assumption shall relieve Subtenant from liability under this Sublease). Subtenant shall give Master Landlord notice of any assignment or sublet to an Affiliate. In no event shall any public offering of Subtenant’s capital stock or other equity interests, whether as part of an initial public offering or any secondary public offering, or any transfer of Subtenant’s capital stock or other equity interests through the “over the counter” market or any recognized national or international securities exchange, or issuance of stock for purposes of raising financing be deemed an assignment of the Sublease or a sublease of the Subleased Premises so long as any such, event does not result in any change in control of Subtenant.

20. Master Landlord does not consent hereby to Subtenant’s right to sublease any other part of Sublessor’s premises leased under the terms of the Master Lease, including without limitation the First Refusal Space (as defined in Section 11 of the Sublease).

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IN WITNESS WHEREOF, the parties hereto have duty executed this Agreement:

LANDLORD:

CIRCLE STAR CENTER ASSOCIATES, L.P.

By: MD Ventures, Inc.
Its: Managing Partner

Signed:	/s/ Illegible
Date:

SUBLESSOR:

Liberate Technologies

By: Mitchell Kertzman
Its: Chief Executive Officer

		Approved
Signed:	/s/ Mitchell Kertzman	LIBERATE LEGAL
Date:		By	/s/ Illegible

SUBTENANT:

DemandTec, Inc.

By: MARK CULHANE
Its: EVP & CFO

Signed:	/s/ Mark Culhane
Date:	12/7/01

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Exhibit A

Sublease

SUBLEASE

This Sublease (“Sublease”), is entered into by and between liberate Technologies, a Delaware corporation (“Sublandlord”), and DemandTec, Inc., a California corporation (“Subtenant”), as of December 7, 2001.

Recitals

A. Sublandlord leases certain premises (the “Master Lease Premises”) located in that certain building (“Building”) located at One Circle Star Way, San Carlos, California, from Circle Star Center Associates, L.P., a California limited partnership (the “Master Landlord”), pursuant to that certain Lease dated April 27, 1999, as amended by an undated letter agreement entitled “Confirmation of Addition of Second Building,” complete copies of which are attached hereto as Exhibit A (collectively, the “Master Lease”). Capitalized terms used but not defined herein have the same meanings as they have in the Master Lease.

B. Sublandlord desires to sublease a portion of the Master Lease Premises to Subtenant, and Subtenant desires to sublease a portion of the Master Lease Premises from Sublandlord on the terms and provisions hereof.

Now, therefore, in consideration of the mutual covenants and conditions contained herein, Sublandlord and Subtenant covenant and agree as follows:

Agreement

1. Subleased Premises. On and subject to the terms and conditions below and subject to the terms of the Master Lease and Consent To Sublease, Sublandlord hereby leases to Subtenant, and Subtenant hereby leases from Sublandlord, approximately 25,179 square feet of space located and comprising all rentable space on the second floor of the Building, which space is shown on Exhibit B attached hereto (the “Subleased Premises”).

2. Term. This Sublease shall commence on December 10, 2001. The term shall expire on the last day of the thirty-sixth full month after the Commencement Date (the “Expiration Date”), unless sooner terminated pursuant to any provision hereof.

3. Rent & Deposit.

(a) Rent. Subtenant will pay Sublandlord rent as follows:

Months	Rental Schedule	Square Footage	Monthly Rent
0-6	Free	15,000 sq. ft	$	0
7-12	$3.10 Fully Serviced	18,000 sq. ft	$	55,800
12-18	$3.15 Fully Serviced	20,000 sq. ft	$	63,000
19-24	$3.20 Fully Serviced	25,179 sq. ft	$	80,572
25-36	$3.30 Fully Serviced	25,179 sq. ft	$	83,091

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(b) Personal Property. During the entire term of this Sublease, Subtenant shall hare the right to use the furniture, cabling system, telephone system, printers, and various other items of personal property located in the Subleased Space and described on Exhibit C, which will be provided by Sublandlord and agreed to by Subtenant within ten business days of the date of this agreement (collectively, the “Personal Property”) at no additional cost. Subtenant shall keep the Personal Property in good condition and repair and shall return the same to Sublandlord at the end of the Sublease term, subject to ordinary wear and tear. Sublandlord represents and warrants to the best of its knowledge that all Personal Property shall be in good working order and repair as of the Commencement Date.

(c) Sublandlord will provide $40,000 toward the purchase and installation of a PBX and voicemail system for use by Subtenant. Sublandlord will own and retain tide to the PBX and voicemail system.

(d) Security Deposit. Upon execution of this Sublease, Subtenant shall pay to Sublandlord the sum of Three Hundred Fifty Thousand Dollars ($350,000) to secure the performance of Subtenant’s obligations hereunder (the “Security Deposit”). Provided that Subtenant is not in default, the Security Deposit shall be reduced to Two Hundred Fifty Thousand Dollars ($250,000) after the 18^th month of the term and to One Hundred Seventy-Five Thousand Dollars ($175,000) after the 24^th month of the term. The Security Deposit may be in the form of cash or an irrevocable letter of credit in a form reasonably acceptable to Sublandlord. The Security Deposit is not advance rental, nor a measure of Sublandlord’s damages. Sublandlord shall not be required to keep the Security Deposit separate from its general accounts. Upon the occurrence of any default by Subtenant, if the default shall continue after the expiration of any applicable notice and cure period, Sublandlord may, from time to time and without prejudice to any other remedy available to Sublandlord provided herein or by law, use the Security Deposit to the extent necessary to make good any arrears in Rent or other payments due hereunder, or other damage, injury, expense or liability caused by such default. Subtenant shall pay to Sublandlord, upon demand, the amount so applied to restore the Security Deposit to the amount immediately prior to such application. Any remaining balance shall be returned to Subtenant after Subtenant has surrendered the Subleased Premises in the condition required by this Sublease and all Subtenants’ other obligations under this Sublease have been fulfilled.

4. Acceptance of Subleased Premises. Sublandlord shall deliver the Subleased Premises to Subtenant professionally cleaned, including all carpeting, with any and all damage caused by Sublandlord’s occupancy of or move from the Subleased Premises repaired. Subject to this Section 4, Subtenant has inspected the Subleased Premises and accepts the same in its current condition “AS-IS” and waives the right to make any claim against Sublandlord for any matter directly or indirectly arising out of the condition of the Subleased Premises, appurtenances thereto, and the improvement thereof. Subtenant acknowledges that the taking of possession of the Subleased Premises by Subtenant shall be conclusive evidence that the Subleased Premises are in good and satisfactory condition at the time such possession was so taken. Subtenant has determined to its satisfaction that the Subleased Premises can be used for the purposes for which the same is leased. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SUBLANDLORD MAKES NO

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WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR HABITABILITY OF THE SUBLEASED PREMISES. Sublandlord represents and warrants to Subtenant that as of the Commencement Date, (a) the Subleased Premises are in good condition with all building systems, including but not limited to HVAC, electrical and plumbing in good working order and repair, (b) the Subleased Premises are not currently in violation of any laws, codes, ordinances and other governmental requirements then applicable to the Subleased Premises or the building in which the Subleased Premises are located, and (c) there are no material defects in the Subleased Premises or building which would unreasonably interfere with Sublessee’s use and enjoyment of the Subleased Premises.

5. Right of Early Entry. Sublandlord shall use reasonable efforts to give Subtenant access to the Subleased Premises by December 3, 2001 for the purposes of making the Subleased Premises ready for occupancy. Such early entry shall be subject to each and every provision of this Sublease except Subtenant’s obligation to pay Rent.

6. Use. Subtenant may use the Subleased Premises only for uses permitted by the Master Lease. Subtenant shall not use or permit the use of the Subleased Premises in a manner that will create waste or a nuisance, interfere with or disturb other tenants in the Building or violate the provisions of the Master Lease.

7. Incorporation of Sublease. All of the terms and provisions of the Master Lease, except as specifically excluded therefrom in this paragraph, are incorporated into and made a part of this Sublease and the rights and obligations of the parties under the Master Lease are hereby imposed upon the parties hereto with respect to the Subleased Premises, Sublandlord being substituted for the “Landlord” in the Master Lease (except in Sections 1, 7, 9, 10(f), 12, 16, 20, 21, 39(c), and the introductory paragraph of 39, in which references to “Landlord” shall continue to be deemed to refer to the Master Landlord, not Sublandlord) and Subtenant being substituted for the “Tenant” in the Master Lease. It is further understood that where reference is made in the Master Lease to the “Premises,” the same shall mean the Subleased Premises as defined herein; where reference is made to the “Commencement Date,” the same shall mean the Commencement Date as defined herein; and where reference is made to “this Lease,” the same shall mean this Sublease. Notwithstanding the foregoing, Sublandlord shall have no obligation to perform any of Master Landlord’s obligations under the Master Lease but upon request of Subtenant, Sublandlord shall use commercially reasonable efforts to cause Master Landlord to perform such obligations. The following Sections of the Master Lease are not incorporated herein: Basic Lease information, Sections 2, 3(a), 3(b), 3(c), 32, 34, 37, 42, 43, 44, 45, Exhibit B (Work Letter), Exhibit F (Form of Letter of Credit), and Exhibit G (Description of Second Building).

Sublandlord represents and warrants to Subtenant that (i) except as specifically set forth herein, the Master Lease is unmodified and in full force and effect, (ii) to the best of Sublandlord’s knowledge, Sublandlord is not in default under the Master Lease, nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Sublandlord under the Master Lease, (iii) to the best of Sublandlord’s knowledge, Master Landlord is not in default under the Master Lease,

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nor is there any event or circumstance which has occurred or is occurring that with notice or the passage of time or both would result in a default by Master Landlord under the Master Lease, (iv) Sublandlord shall not exercise its termination rights, if any, under the Master Lease (except any such rights arising from a condemnation or casualty of the Master Lease Premises) or otherwise agree to an early termination of the Master Lease or surrender of the Subleased Premises unless Master Landlord accepts this Sublease as a direct lease between Master Landlord and Subtenant and (v) Sublandlord shall not amend or otherwise modify the terms of the Master Lease in a manner that would materially and adversely affect; Subtenant’s use and enjoyment of the Subleased Premises as contemplated by this Sublease.

Section 6 of the Master Lease, which is incorporated herein, requires that Sublandlord notify Subtenant whether any Alterations will be required to be removed and the Subleased Premises restored to its condition upon delivery to Subtenant Sublandlord hereby notifies Subtenant that at the expiration or earlier termination of this Sublease, any alterations or additions to the Subleased Premises performed by Subtenant must be removed and the Subleased Premises’ returned to the condition in which they were first delivered to Subtenant (damage by ordinary wear and tear excepted), all at Subtenant’s sole cost and expense.

8. Assignment and Subletting. Subtenant must obtain the consent of Master Landlord and Sublandlord, which will not be unreasonably withheld, and be in compliance with its obligations under this Sublease before it may assign, sublet, transfer, pledge, hypothecate or otherwise encumber the Subleased Premises (each, a “Transfer”), in whole or in part, or permit the use or occupancy of the Subleased Premises by anyone other than Subtenant. Regardless of Sublandlord’s and/or Master Landlord’s consent, no subletting or assignment shall release Subtenant from its obligations hereunder.

In the event of such a Transfer, Subtenant shall deliver to Sublandlord fifty percent (50%) of all sums received from the assignee, sublessee or other transferee in excess of the Rent and other sums due from Subtenant to Sublandlord under this Sublease; provided that Subtenant may first deduct from such excess its “Transfer Costs.” As used herein, “Transfer Costs” shall mean (i) any brokerage commissions paid by Subtenant in connection with the Transfer, (ii) any improvement allowance or other concessions or payments made by Subtenant to the transferee as an inducement to enter into the Transfer, (iii) the costs of any alterations, additions or improvements made by Subtenant to the Subleased Premises to make the same suitable for occupancy by the transferee, and (iv) reasonable attorneys’ fees in connection with the Transfer.

Notwithstanding anything to the contrary in this Section 8, Subtenant may, subject to the terms of the Consent To Sublease, assign this Sublease or sublet the Subleased Premises or any portion thereof, without first obtaining Sublandlord’s consent, to any partnership, corporation or other entity that controls, is controlled by or is under common control with Subtenant or Subtenant’s parent (control being defined for such purposes as ownership of at least 50% of the equity interests in, or the power to direct the management of, the relevant entity), or to any partnership, corporation or other entity resulting from a merger or consolidation with Subtenant or Subtenant’s parent, or to any person, partnership, corporation or other entity that acquires (whether by means of an asset purchase of all or

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substantially all of the assets of Subtenant or by means of a transfer of Subtenant capital stock) Subtenant as a going concern including as part of an initial public offering of Subtenant’s stock or other equity interests or as part of a re-incorporation of Subtenant in another jurisdiction) (collectively, an “Affiliate”), provided that (i) in the event of such assignment or subletting, the Affiliate assumes in writing all of Subtenant’s obligations under this Sublease pertaining to the portion of the Subleased Premises that is the subject of the assignment or sublease (but no such assumption shall relieve Subtenant from primary liability under this Sublease) and (ii) in the event of such assignment, the financial strength of the Affiliate is equal to or greater than the financial strength of Subtenant at the date of such assignment or subletting.

In no event shall any public offering of Subtenant’s capital stock or other equity interests, whether as part of an initial public offering of any secondary public offering, or any transfer of Subtenant’s capital stock or other equity interests through the “over the counter” market or any recognized national or international securities exchange, or issuances of stock for purposes of raising financing be deemed, a Transfer hereunder.

Notwithstanding anything contained herein or the Master Lease to the contrary, Sublandlord shall have no right to recapture all or any portion of the Subleased Premises in the event of a sublease or assignment by Subtenant. .

9. Parking. Subtenant shall have the right to use, in common with other occupants of the Building and the project of which the Building is a part, 3.3 unassigned parking spaces per thousand square feet of space it is then leasing, which as of the Commencement Date shall be 83 parking spaces.

10. Notices. The addresses specified in the Master Lease for receipt of notices to each of the parties are deleted and replaced with the following:

To Sublandlord:	Two Circle Star Way San Carlos, CA 94070 Attn: General Counsel
To Subtenant:	One Circle Star Way
	San Carlos, CA 94070 Attn: CFO

11. Right of First Refusal. Sublandlord hereby grants to Subtenant an ongoing right of first refusal (“First-Refusal Right”) to lease all or any portion of the remaining Master Lease Premises (the “First-Refusal Space”) in the Building, subject to the consent of the Master Landlord. Upon receipt of a third-party offer to lease all or any portion of the First-Refusal Space, which offer Sublandlord desires to accept, Sublandlord shall provide Subtenant with written notice (the “First-Refusal Notice”) of such offer and all terms thereof, including rent, tenant improvement allowances or other concessions, lease term and landlord’s pre-delivery work obligations, if any. Sublandlord shall ensure that the First-Refusal Notice specifically describes the First-Refusal Space that will be available for lease (the “Specific First- Refusal

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Space”). If Subtenant wishes to exercise its First-Refusal Right with respect to the Specific First-Refusal Space, Subtenant, within five (5) business days after the delivery of the First-Refusal Notice to Subtenant, shall deliver notice to Sublandlord of Subtenant’s intention to exercise its First-Refusal Right with respect to all the Specific First-Refusal Space. If Subtenant does not exercise its First-Refusal Right within the five-business-day period, the First-Refusal Right shall terminate for the Specific First-Refusal Space, and Sublandlord thereafter shall be free to lease the Specific First-Refusal Space to anyone on the terms set forth in the First Refusal Notice. If Subtenant exercises its First-Refusal Right, Sublandlord and Subtenant shall promptly enter into a written sublease agreement on the same general terms and conditions as this Sublease except that Rent and all other economic terms for the Specific First- Refusal Space shall be as set forth in the First Refusal Notice. The term of this Sublease as it pertains to the Specific First Refusal Space shall be co-terminus with the term of this Sublease as it pertains to the balance of the Subleased Premises.

12. Master Landlord’s Consent. This Sublease is conditioned upon Master Landlord’s written approval hereof as evidenced by Master Landlord’s execution of a consent to sublease substantially in the form attached hereto as Exhibit D (“Master Landlord’s Consent”). If Sublandlord and Subtenant shall not have obtained Master Landlord’s consent to this Sublease by December 7, 2001, then either Subtenant or Sublandlord may terminate this Sublease and all sums paid by Subtenant to Sublandlord hereunder immediately shall be returned to Subtenant.

13. Authority. Sublandlord hereby warrants and represents that it is a corporation, duly authorized and in good standing under the laws of the State of Delaware and has the power to execute and deliver this Sublease. The persons signing on behalf of the Sublandlord hereby represent and warrant that they are the duly authorized representatives of the Sublandlord and have the power and authority to bind the Sublandlord. Subtenant hereby warrants and represents that it is a corporation, duly authorized and in good standing under the laws of the State of California and has the power to execute and deliver this Sublease. The persons signing on behalf of the Subtenant hereby represent and warrant that they are the duly authorized representatives of the Subtenant and have the power and authority to bind the Subtenant.

14. No Animals. Subtenant shall not permit any animals to be brought into the Premises, the Building or the common areas of the project of which the Building is a part, except animals assisting disabled persons.

15. Counterparts. This Sublease may be executed in two (2) or more counterparts, each of which shall be deemed an original but when taken together shall constitute one and the same instrument.

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16. Sublandlord’s Obligations.

(a) Sublandlord’s Remaining Obligations. The obligations that Subtenant has agreed to perform hereunder ate hereinafter referred to as the “Subtenants Obligations”, and all other obligations of the “Tenant” under the Master Lease are herein referred to as the “Sublandlord’s Remaining Obligations.” Sublandlord agrees to maintain the Master Lease in force during the entire Term of this Sublease and to pay rent to Master Landlord in accordance with the terms of the Master Lease, subject, however, to any earlier termination of the Master Lease without the fault of the Sublandlord and due to casualty or condemnation. Further, Sublandlord agrees to comply with and perform Sublandlord’s Remaining Obligations and to indemnify, defend with counsel reasonably acceptable to Subtenant and hold Subtenant free and harmless from and against all liability, judgments, costs, damages, claims or demands arising out of (i) any default by Sublandlord under this Sublease; (ii) any default by Sublandlord of Sublandlord’s Remaining Obligations under the Master Lease; (iii) any breach of any representation or warranty made by Sublandlord in this Sublease; or (iv) the negligence or willful misconduct of Sublandlord, its agents, employees, contractors or invitees.

(b) Sublandlord’s Additional Obligations. With respect to any obligation to be performed by Master Landlord under the Master Lease, Sublandlord shall be obligated, upon receipt of notice from Subtenant, to use good faith efforts to obtain Master Landlord’s performance of such obligation. If, after receipt of request from Subtenant, Sublandlord shall fail or refuse to take action to obtain Master Landlord’s performance or to enforce Sublandlord’s rights against Master Landlord with respect to the Subleased Premises (“Action”), Subtenant shall have the right to take such Action in its own name, and for that purpose and only to such extent, all of the rights of Sub landlord as “Tenant” under the Master Lease hereby are conferred upon and assigned to Subtenant, and Subtenant hereby is subrogated to such rights to the extent that the same shall apply to the Subleased Premises. If any such Action against Master Landlord in Subtenant’s name shall be barred by reason of lack of privity, nonassignability or otherwise, Subtenant may take such Action in Sublandlord’s name; provided that Subtenant shall indemnify, protect, defend by counsel reasonably satisfactory to Sublandlord and hold Sublandlord harmless from and against any and all liability, loss claims, demands, suits, penalties or damage (including reasonable attorneys’ and experts fees) which Sublandlord may incur or suffer by reason of such Action except to the extent any such liability, loss, claims, demands, suits, penalties or damage arises out of Sublandlord’s negligence or willful misconduct.

(c) Notices. Sublandlord promptly shall deliver to Subtenant copies of all notices, demands and requests that Sublandlord may receive from Master Landlord under the Master Lease affecting the Subleased Premises.

17. Indemnification.

(a) Subtenant’s Indemnification. In addition to the indemnification set forth in Section 10(c) of the Master Lease, Subtenant shall indemnify, protect, defend with counsel reasonably acceptable to Sublandlord and hold harmless Sublandlord from and against any and all claims, liabilities, judgments, causes of action, damages, costs and expenses (including

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reasonable attorneys’ and experts’ fees), caused by or arising in connection with: (i) a breach of Subtenant’s obligations under this Sublease; (ii) a breach of Subtenant’s obligations under the Master Lease to the extent incorporated into this Sublease.

(b) Sublandlord’s Indemnification. In addition to the indemnification set forth in Section 10(a) of the Master Lease, Sublandlord shall indemnify, protect, defend with counsel reasonably acceptable to Subtenant and hold Subtenant harmless from and against any and all claims, liabilities, judgments, causes of action, damages, costs, and expenses (including reasonable attorneys’ and experts’ fees) caused by or arising in connection with: (i) a breach of Sublandlord’s obligations under this Sublease; or (ii) a breach of Sublandlord’s Remaining Obligations under the Master Lease; or (iii) a termination of the Master Lease or this Sublease arising out of or in any way connected with Sublandlord’s default and/or any resulting termination of this Sublease.

The foregoing indemnifications, together with the indemnifications set forth in Section 10 of the Master Lease, shall survive the expiration or earlier termination of this Sublease.

18. No Voluntary Termination. Sublandlord shall not voluntarily terminate the Master Lease during the Term unless and until Master Landlord has agreed in writing to continue this Sublease in full force and effect as a direct lease between Master Landlord and Subtenant upon and subject to all of the terms, covenants and conditions of this Sublease for the balance of the Term hereof. If Master Landlord so consents, Subtenant shall attorn to Master Landlord in connection with any such voluntary termination and shall execute an attornment agreement in such form as may reasonably be requested by Master Landlord; provided, however, that the attornment agreement does not materially adversely affect the use by Subtenant of the Subleased Premises in accordance with the terms of this Sublease, materially increase Subtenant’s obligations under this Sublease or materially decrease Subtenant’s rights under this Sublease. The prohibition against voluntary termination set forth in this Paragraph shall apply to the “Tenant’s” termination rights as set forth in Section 2 of the Master Lease.

19. Signage. At Subtenant’s cost, Subtenant shall have their pro-rata share of monument signage in addition to lobby directory and floor signage.

20. Amendment or Modification. Sublandlord and Master Landlord shall not amend or modify the Master Lease in any way so as to materially or adversely affect Subtenant or its interest hereunder, materially increase Subtenant’s obligations hereunder or materially restrict Subtenant’s rights hereunder, without the prior written consent of Subtenant, which may be withheld in Subtenant’s sole but reasonable discretion.

21. Surrender. Notwithstanding anything to the contrary contained in this Sublease or the Master Lease, Subtenant’s obligation to surrender the Subleased Premises shall be fulfilled if Subtenant surrenders possession of the Subleased Premises in the condition existing at the Commencement Date, excepting ordinary wear and tear, acts of God, casualties, condemnation, alterations or improvements which Master Landlord and Sublandlord state in writing may be surrendered at the termination of this Sublease and any additions, alterations or improvements made to the Subleased Premises by Sublandlord or Master Landlord prior

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to the Commencement Date.

22. Sublandlord’s Representations and Warranties. As an inducement to Subtenant to enter this Sublease, to the best of Sublandlord’s knowledge, Sublandlord represents and warrants with respect to the Subleased Premises that:

(a) The Master Lease is in full force and effect, the copy attached hereto is a true and correct copy thereof, and there exists under the Master Lease no default or event of default, nor has there occurred any event which, with the giving of notice or passage of time or both, could constitute such a default or event of default.

(b) There are no pending or threatened actions, suits or proceedings before any court or administrative agency against Sublandlord or against Master Landlord or third parties which could, in the aggregate, adversely affect the Subleased Premises or any part thereof or the ability of Master Landlord to perform its obligations under the Master Lease or of Sublandlord to perform its obligations under this Sublease, and Sublandlord is not aware of any facts which might result in any such actions, suits or proceedings.

(c) Sublandlord has not received any notice from any insurance company of any defects or inadequacies in the Subleased Premises or any part thereof which could adversely affect the insurability of the Subleased Premises or the premiums for the insurance thereof.

23. Quiet Enjoyment; Right to Cure. Subtenant shall peacefully have, hold and enjoy the Subleased Premises, subject to the terms and conditions of this Sublease, provided that Subtenant pays all Rent and performs all of Subtenant’s covenants and agreements contained herein. If Sublandlord defaults in the performance or observance of any of Sublandlord’s Remaining Obligations or fails to perform Sublandlord’s stated obligations under this Sublease to enforce, for Subtenant’s benefit, Master Landlord’s obligations under the Master Lease, then Subtenant shall give Sublandlord notice specifying in what manner Sublandlord has defaulted, and if such default shall not be cured by Sublandlord within thirty (30) days thereafter (except that if such default cannot be cured within said 30-day period, this period shall be extended for an additional reasonable time, provided that Sublandlord commences to cure such default within such 30-day period and proceeds diligently thereafter to effect such cure as quickly as possible except where there is imminent danger of injury to person or property (“Imminent Injury”, Sublandlord shall cure such default promptly), then in addition, Subtenant shall be entitled, at Subtenant’s, option, to cure such default and promptly collect from Sublandlord Subtenant’s reasonable expenses in so doing. Subtenant shall not be required, however, to wait the entire cure period described herein if earlier action is required to comply with the Master Lease or with any applicable governmental law, regulation or order, or in the case of Imminent Injury if Sublandlord does not promptly cure such default.

24. Authorization to Direct Sublease Payments. Sublandlord hereby acknowledges that Sublandlord’ s failure to pay the Rent and other sums owing by Sublandlord to Master Landlord under the Master Lease will cause Subtenant to incur damages, costs and expenses not contemplated by this Sublease, especially in those cases where Subtenant has paid sums to Sublandlord hereunder which correspond in whole or in part to the amounts owing by Sublandlord to Master Landlord under the Master Lease. Accordingly, Subtenant shall have

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the right to pay all Rent and other sums owing by Subtenant to Sublandlord hereunder for those items which also are owed by Sublandlord to Master Landlord under the Master Lease directly to Master Landlord. If Subtenant reasonably believes that Sublandlord has failed to make any payment required to be made by Sublandlord to Master Landlord under the Master Lease and Sublandlord fails to provide adequate proof of payment within ten (10) business days after Subtenant’s written demand requesting such proof. If Subtenant makes such payments, Subtenant shall not prepay any amounts owing by Subtenant without the consent of Sublandlord, and shall provide to Sublandlord concurrently with any payment to Master Landlord reasonable evidence of such payment. If Sublandlord notifies Subtenant that it disputes any amount demanded by Master Landlord, Subtenant shall not make any such payment to Master Landlord unless Master Landlord has provided a three-day notice to pay such amount or forfeit the Master Lease.

Any sums paid directly by Subtenant to Master Landlord in accordance with this Paragraph shall be credited toward the amounts payable by Subtenant to Sublandlord under this Sublease. In the event Subtenant tenders payment directly to Master Landlord in accordance with this Paragraph and Master Landlord refuses to accept such payment, Subtenant shall have the right to deposit such funds in an account with a national bank for the benefit of Master Landlord and Sublandlord, and the deposit of said funds in such account shall discharge Subtenant’s obligation under this Sublease to make the payment in question.

25. Insurance Deductibles. Notwithstanding anything contained herein or the Master Lease to the contrary, Subtenant shall not be responsible for the payment of any insurance deductibles under the Master Lease unless the loss is due to Subtenant’s gross negligence or willful misconduct.

26. Structural Repairs. Notwithstanding anything contained herein of the Master Lease to the contrary, Subtenant shall have no requirement to make structural repairs or maintenance unless necessitated by Subtenant’s gross negligence or willful misconduct.

27. Damage and Destruction. Notwithstanding anything contained herein of the Master Lease to the contrary, if the repairs referenced in Section 20 of the Master Lease will take longer than six(6) months to complete, Subtenant may terminate this Sublease.

27. Condemnation. Notwithstanding anything contained herein of the Master Lease to the contrary, for any temporary taking for longer than six (6) months, Subtenant may terminate this Sublease.

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first written above.

SUBLANDLORD:
Liberate Technologies
By:	Mitchell Kertzman	Approved
Its:	Chief Executive Officer	LIBERATE LEGAL
/s/ Mitchell Kertzman		BY	/s/ Illegible
SUBTENANT:
Demand Tec, Inc.
By:	Mark Culhane
Its:	EVP & CFO

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Exhibit B

Floor Plan

EX-10.6

Exhibit 10.6

50 First Street-Suite 307
San Francisco, CA 94105
tel (415) 995-8570
fax (415) 995-8577
www.demandtec.com

June 1, 2001

Dan Fishback

Dear Dan:

Dan I am personally very excited to ask you to join our team. Beyond all the important skills and experiences you bring to the table, you represent very well the culture we are trying to build. I know you will do great things here.

This letter confirms our offer to you of employment with DemandTec, Inc., a Delaware Corporation (“the Company”), as President and Chief Executive Officer at our facility in San Francisco. You will be responsible for duties commensurate with this position and will report to the Board of Directors.

The following serves as a record of initial terms of your employment:

Effective Date:	June 4, 2001
Annual Compensation:	Your annualized Base Salary, as a salaried exempt employee, shall be $150,000. You will be paid semi-monthly. Your performance and salary will be reviewed annually in accordance with our salary administration policies. Any merit increase in base salary for your first year would be based on an annualized percentage, prorated from your date of hire.
Contingent Bonus:	In addition to your annual base salary, you also shall be eligible to earn an annual bonus to be determined by the Board of Directors or the Compensation Committee, initially set at $150,000 (but not limited to $150,000), paid quarterly, based on your achievement of performance objectives determined jointly by the Compensation Committee of the Board of Directors and you. Such bonus, if any, shall be paid in accordance with the terms set forth by the same committee. The Compensation Committee may also elect to change the bonus periodically, as the company grows.
Stock Options:	So that you may participate in the Company’s success, you will be granted an option to purchase 1,368,750 shares of the Company’s common stock. The exercise price of such shares shall be the fair market value of the stock at the time of the grant, as determined by the Company’s Board of Directors. The current fair market value of the Company’s common stock is $.20. The Company has a four (4) year vesting schedule where 1/8th of these shares vest at the end of your first six months of employment and 1/48th of these shares vest on a monthly basis thereafter, subject to certain acceleration events below.
Subscription Right:	In addition to your stock option grant, you shall be entitled to subscribe to purchase 164,250 shares of the Series B Preferred Stock of the Company at a purchase price of $1.64 per share. Any such purchase shall be made pursuant to the Company’s standard form of Series B Preferred Stock Purchase Agreement.

Dan Fishback
June 1, 2001
Page 2

	To exercise this subscription right, you must exercise this option within 90 days of your employment start date with the Company.
Vacation:	Your vacation entitlement will be three weeks (15 days) per year (accrued at 10 hours per month). Please refer to the Company’s then current vacation guidelines for further policy details.
Benefits:	You are eligible to participate in the Company’s benefit programs as described in the enclosed summary.

As a Company employee, you will be expected to promote the goodwill and name of the Company and to use your best efforts to further the interests and establish the high reputation of the Company. You shall adhere to and comply with all Company policies, rules and directions as they currently exist and as changed by the Company from time to time and sign and comply with the Company’s standard Proprietary Information and Inventions Agreement which prohibits unauthorized use or disclosure of the Company’s proprietary information. Without limiting the generality of the foregoing, you understand that the solicitation of another employee or consultant is prohibited while either person is on working time. You also acknowledge and agree that the Company prohibits harassment of employees or consultants by another employee, consultant, supervisor, and third party for any reason including, but not limited to, age, race, color, physical or mental disability, marital status, veteran status, national origin, religion and/or sex.

In accordance with the Immigration Reform and Control Act of 1986, the Company is required to verify the identity and employment eligibility of every candidate. Please review the enclosed Employment Eligibility Verification (1-9) form. You must supply the documents listed on the
1-9 form to Human Resources on you first day of employment. This offer of employment is contingent upon your providing all the necessary documents on your first day of employment. The Company cannot allow you to work unless proper documentation is supplied.

You acknowledge that your employment with the Company is for an unspecified duration that constitutes AT-WELL employment, and that either you or the Company can terminate this relationship at any time, with or without cause and with or without notice. This AT-WILL employment relationship cannot be changed except in a writing signed by a Company officer.

Notwithstanding the foregoing, if at any time you are terminated by the Company (or, in the case of a merger, the surviving corporation) without “Cause” (as defined below) or you terminate your employment with the Company for “Constructive Termination” (as defined below) in each case within one (1) year following a “Corporate Transaction” (as defined below), 50% of the shares under the option that are subject to vesting as of the effective date of termination shall vest automatically.

For the purposes of this letter, the following capitalized terms shall have the meanings set forth below:

(a) “Corporate Transaction” shall mean (i) a sale of substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation in which shareholders immediately before the merger or consolidation have, immediately after the merger or consolidation, greater stock voting power); (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise (other than a reverse merger in which stockholders immediately before the merger have, immediately after the merger, greater stock voting power in the surviving corporation); or (iv) any transaction or series of related transactions in which in excess of 50% of the Company’s voting power is transferred.

(b) “Cause” for termination shall mean: (i) your conviction of any felony or of any crime involving moral turpitude; (ii) your participation in any fraud against the Company; (iii) your material

Dan Fishback
June 1, 2001
Page 3

breach of the any terms of this letter, and your failure to cure such breach within thirty (30) days after your receipt of written notice thereof; (iv) your failure to perform your job or your neglect of your responsibilities, and your failure to remedy such failure or neglect within thirty (30) days after your receipt of written notice thereof or (iv) your intentional damage to any material property of the Company.

(c)

“Constructive Termination” shall mean (i) your involuntary dismissal or discharge or discharge by the Company for reasons other than Cause, (ii) your assignment to duties inconsistent with your position as Chief Executive Officer, or which reflect a material adverse change in authority, responsibility or status with the Company or any successor; (iii) a reduction in your base salary or benefits package, unless because of financial circumstances the Company reduces the base salaries and benefits of all executives by the same percentage; (iii) relocation of your primary work location (other than business travel) by more man 35 miles; or (iv) the failure of the Company to obtain a satisfactory agreement from any successor to the Company, or purchaser of all or substantially all of the Company’s assets, to assume and agree to perform this letter.

In addition, upon termination of this Agreement by the Company without Cause prior to the date four (4) years from your employment start date, you shall be entitled to the following severance benefits:

(a)	payment, in a lump sum, of any and all base salary, as well as any bonus due to you through the date of termination, plus an amount equal to your earned but unused vacation through such date;
(b)	continuation of your then-current base salary for a period of three (3) months after the date of termination; and
(c)	continuation of coverage under the medical, dental, life and disability insurance programs maintained by Company to the extent such continuation thereunder is permitted under the terms of the insurance contracts governing such programs for a period of three (3) months after the date of termination or, in the alternative, reimbursement for all premiums paid to maintain medical and dental coverage under the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of three (3) months after the date of termination; and
(d)	continuation of your then-current stock option vesting for a period of three (3) months after the date of termination.

As a full-time employee, you will be expected to devote all of your employable time to performing your duties on behalf of the Company. Without limiting the generality of the foregoing, during the period of your employment, you shall not engage in any employment or business activity for a competitor of the Company. You will be responsible for notifying the Company of all other engagements in which you are involved.

This letter states the entire agreement of the parties with respect to your employment with the Company and supersedes and replaces all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations, understandings or other agreements between the parties in connection with the subject matter except as specifically set forth in this agreement and none have been relied on. This letter shall be governed by California law.

This offer is valid until June 14, 2001. Please send your written acceptance of this offer, to my attention at:

DemandTec, Inc.
50 First Street, Suite 307
San Francisco, CA 94105

Dan Fishback
June 1, 2001
Page 4

By signing below you confirm that you have not executed nor are you bound by, or a party to, any non compete covenant, restriction or other agreement, contractual or otherwise, with any prior or current employer, supplier, customer or firm with which you have been associated which would prevent you from performing the services for the Company in the capacity as stated herein, or otherwise impede or restrict the fulfillment of the terms of this agreement with the Company.

Dan, welcome aboard. Let’s sign documents and get to work!

Your very truly,

/s/ Michael Neal
Michael Neal

Chairman of the Board, DemandTec, Inc.

ACCEPTED:

SIGNATURE: /s/ Dan Fishback DATE: 6/4/01

DemandTec, Inc.

February 11, 2005

Mr. Dan Fishback

Dear Dan:

     We are pleased to inform you that on February 11, 2005, the Board of Directors of DemandTec, Inc. (the “Company”) approved the following provisions for accelerated vesting of your option shares. The following terms apply to all of your options granted or to be granted to you during your employment with the Company, as well as any shares that you may have already purchased under options previously granted to you (collectively, the “Options”).

     1. Accelerated Vesting of Shares. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company, then you will vest in 50% of your then unvested shares under each of the Options as of the date of the Change in Control and the Company’s repurchase right shall lapse as to a corresponding number of shares purchasable under each such Option. Any shares remaining unvested under each of the Options after the date of the Change in Control shall vest and the Company’s repurchase right shall lapse in equal monthly installments over the subsequent 12 months. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company and you are subject to an Involuntary Termination within 12 months after that Change in Control, then you will vest in all of your shares under each of the Options such that you are then fully vested and the Company’s repurchase right shall lapse as to all such shares.

     2. Severance. The provisions governing severance in your offer letter dated June 1, 2001 (the “Offer Letter”) are hereby amended in their entirety to read as follows:

“In addition, upon termination of this Agreement by the Company without Cause, you shall be entitled to the following severance benefits:

(a) payment, in a lump sum, of any and all base salary due and owing to you through the date of termination, plus an amount equal to your earned but unused vacation through such date;

(b)	payment, in a lump sum, of six (6) months of your then-current base salary; and
(c)	continuation of coverage under the medical, dental, life and disability insurance programs maintained by Company to the extent such continuation thereunder is permitted under the terms of the insurance contracts governing such programs for a period of six (6) months after the date of termination or, in the alternative, reimbursement for all premiums paid to

Mr. Dan Fishback
February 11, 2005
Page 2

	maintain medical and dental coverage under the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of six (6) months after the date of termination; and
(d)	continuation of your then-current stock option vesting for a period of six (6) months after the date of termination.

However, the foregoing severance provisions will not apply unless you (a) resign as a member of the boards of directors of the Company and all of its subsidiaries, to the extent applicable, (b) sign a general release of claims (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (c) have returned all Company property.”

Except as so modified, the Offer Letter shall remain in full force and effect.

     3. Definitions. For all purposes hereunder, the following terms shall be defined as specified below:

          A. “Cause” shall mean (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct.

          B. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          C. “Involuntary Termination” shall mean the termination of your Service by reason of: your involuntary discharge by the Company (or the Parent or Subsidiary employing you) for reasons other than Cause; or your voluntary resignation following the date that (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more.

          D. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Plan.

     4. Entire Agreement. This Agreement supersedes all prior agreements (whether verbal or written) between you and the Company relating to the subject matter of

Mr. Dan Fishback
February 11, 2005
Page 3

acceleration of vesting of option shares on an acquisition or other change in control of the Company. This Agreement supersedes all prior agreements (whether verbal or written), including without limitation the Offer Letter, between you and the Company relating to the subject matter of your rights to severance benefits in connection with a termination of employment. Each of the option agreements evidencing Options previously granted to you shall remain in full force and effect except to the extent necessary to give effect to the terms of this Agreement.

     5. Miscellaneous. This Agreement shall be binding upon the Company, its successors and assigns (including, without limitation, the surviving entity or successor party resulting from the Change in Control) and shall be construed and interpreted under the laws of the State of California.

     Please indicate your acceptance of the foregoing by signing the enclosed copy of this letter and returning it to the Company.

Very truly yours,
Demandtec, Inc.
By:	/s/ Mark Culhane
	Name:	Mark Culhane
	Title:	EVP & CFO

Accepted and Agreed to:

/s/ Dan Fishback                    
Dan Fishback

2/11/05                                     
Date

DemandTec, Inc.
One Circle Star Way, Suite 200
San Carlos, CA 94070

December 2, 2005

Mr. Dan Fishback

Dear Dan:

     We are pleased to inform you that on December 2, 2005, the Board of Directors of DemandTec, Inc. (the “Company”) approved the following amendment and restatement of the letter agreement dated February 11, 2005, between you and the Company (the “Prior Agreement”).

     1. General Rule on Accelerated Vesting. Except as provided in Section 2 below, the following terms apply to all of the options granted or to be granted to you during your employment with the Company, as well as any shares that you may have already purchased under options previously granted to you (collectively, the “Options”). The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company, then you will vest in 50% of your then unvested shares under each of the Options as of the date of the Change in Control and the Company’s repurchase right shall lapse as to a corresponding number of shares purchasable under each such Option. Any shares remaining unvested under each of the Options after the date of the Change in Control shall vest and the Company’s repurchase right shall lapse in equal monthly installments over the subsequent 12 months. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company and you are subject to an Involuntary Termination within 12 months after that Change in Control, then you will vest in all of your shares under each of the Options such that you are then fully vested and the Company’s repurchase right shall lapse as to all such shares.

     2. Special Rule for December 2, 2005 Option. Section 1 above will apply to the option granted to you on December 2, 2005 (the “2005 Option”), except as provided in this Section 2. If the Company, within 60 days after December 1, 2005, receives a bona fide term sheet with respect to the acquisition (by merger, consolidation or otherwise) of the Company and such term sheet results in a Change in Control while you remain employed with the Company, then you will vest in 25% (instead of 50%) of the then unvested shares subject to the 2005 Option as of the date of such Change in Control and the Company’s repurchase right will lapse as to a corresponding number of shares purchasable under the 2005 Option. Any shares remaining unvested under the 2005 Option after the date of such Change in Control will vest, and the Company’s repurchase right will lapse, in equal monthly installments over the subsequent 12 months. If such Change in Control occurs and you are subject to an Involuntary Termination within 12 months after such Change in Control, then you will vest in all of your shares under the 2005 Option such that you are then fully vested and the Company’s repurchase

Mr. Dan Fishback
December 2, 2005
Page 2

right will lapse as to all such shares. In the event of a Change in Control that does not result from a bona fide term sheet received within 60 days after December 1, 2005, Section 1 above will apply to the 2005 Option.

               3. Severance. The provisions governing severance in your offer letter dated June 1, 2001 (the “Offer Letter”), are hereby amended in their entirety to read as follows:

“In addition, if a Corporate Transaction occurs while you remain employed with the Company and you are subject to an Involuntary Termination within 12 months after that Corporate Transaction, you shall be entitled to the following severance benefits:

(a)	payment, in a lump sum, of any and all base salary due and owing to you through the date of termination, plus an amount equal to your earned but unused vacation through such date;
(b)	payment, in a lump sum, of six (6) months of your then-current base salary; and
(c)	continuation of coverage under the medical, dental, life and disability insurance programs maintained by Company to the extent such continuation thereunder is permitted under the terms of the insurance contracts governing such programs for a period of six (6) months after the date of termination or, in the alternative, reimbursement for all premiums paid to maintain medical and dental coverage under the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of six (6) months after the date of termination.

If the Company terminates your employment without Cause (and not within 12 months after a Corporate Transaction), you shall be entitled to the following severance benefits:

(a)	payment, in a lump sum, of any and all base salary due and owing to you through the date of termination, plus an amount equal to your earned but unused vacation through such date;
(b)	payment, in a lump sum, of six (6) months of your then-current base salary;
(c)	continuation of coverage under the medical, dental, life and disability insurance programs maintained by Company to the extent such continuation thereunder is permitted under the terms of the insurance contracts governing such programs for a period of six (6) months after the date of termination or, in the alternative, reimbursement for all premiums paid to maintain medical and dental coverage under the continuation

Mr. Dan Fishback
December 2, 2005
Page 3

	coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of six (6) months after the date of termination; and
(d)	continuation of your then-current stock option vesting for a period of six (6) months after the date of termination.

However, the foregoing severance provisions will not apply unless you (a) resign as a member of the boards of directors of the Company and all of its subsidiaries, to the extent applicable, (b) sign a general release of claims (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (c) have returned all Company property.”

In addition, the definition of “Involuntary Termination” set forth in Section 4.C below shall be incorporated in the Offer Letter. Except as so modified, the Offer Letter shall remain in full force and effect.

     4. Definitions. For all purposes hereunder, the following terms shall be defined as specified below:

          A. “Cause” shall mean (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct.

          B. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          C. “Involuntary Termination” shall mean the termination of your Service by reason of: your involuntary discharge by the Company (or the Parent or Subsidiary employing you) for reasons other than Cause; or your voluntary resignation following the date that (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more.

          D. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Company’s 1999 Equity Incentive Plan.

Mr. Dan Fishback
December 2, 2005
Page 4

     5. Entire Agreement. This Agreement supersedes all prior agreements (whether verbal or written) between you and the Company relating to the subject matter of acceleration of vesting of option shares on an acquisition or other change in control of the Company, including (without limitation) the Prior Agreement. This Agreement supersedes all prior agreements (whether verbal or written), including without limitation the Offer Letter, between you and the Company relating to the subject matter of your rights to severance benefits in connection with a termination of employment. Each of the option agreements evidencing Options granted to you shall remain in full force and effect except to the extent necessary to give effect to the terms of this Agreement.

     6. Miscellaneous. This Agreement shall be binding upon the Company, its successors and assigns (including, without limitation, the surviving entity or successor party resulting from the Change in Control) and shall be construed and interpreted under the laws of the State of California.

     Please indicate your acceptance of the foregoing by signing the enclosed copy of this letter and returning it to the Company.

Very truly yours,
DemandTec, Inc.
By:	/s/ Mark Culhane
	Name:	Mark Culhane
	Title:	EVP & CFO

Accepted and Agreed to:

/s/ Dan Fishback                              
Dan Fishback

12/2/05                                                  
Date

EX-10.7

Exhibit 10.7

DemandTec Inc.
50 First Street, Suite 307; San Francisco, CA 94105

July 20, 2001

Mark Culhane

Dear Mark:

     DemandTec, Inc. (the “Company”) is pleased to offer you employment on the following terms:

     1. Position. The Company will employ you in a full-time position. Your initial title will be Executive Vice President and Chief Financial Officer, and you will initially report to me. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

     2. Cash Compensation. The Company will pay you a starting salary at the rate of $200,000 per year, payable in accordance with the Company’s standard payroll schedule. In addition, you will be paid a signing bonus of $50,000 less applicable withholdings at the first payroll date following your commencement of employment. For purposes of any merit increases to your base salary after your first year of employment, we will treat you as having a base salary $250,000.

     3. Employee Benefits. AS a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in effect from time to time. In addition, the Company shall reimburse you for the business related expenses of maintaining a cell phone, home fax and home internet connection upon presentation of appropriate supporting documentation, all in accordance with the Company’s generally applicable policies.

     4. Stock Options. Subject to the approval of the Company’s Board of Directors, you will be granted an option to purchase 385,000 shares of the Company’s Common Stock, which represents 1.73% of the currently outstanding capital stock of the Company on a fully diluted basis. The exercise price per share will be equal to the fair market value per share on the date the option is granted or on your first day of employment, whichever is later. The option will be subject to the terms and conditions applicable to options granted under the Company’s 1999 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Stock Option Agreement. The option will be immediately exercisable, but the purchased shares

Mark Culhane
July 20, 2001
Page 2

will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 1/8th of the option shares after six months of continuous service, and the balance will vest in equal monthly installments of 1/48^th over the next 42 months of continuous service, as described in the applicable Stock Option Agreement.

     If the Company is subject to a Change in Control (as defined in the Plan) and you are subject to a Constructive Termination within 12 months after that Change in Control, then you will be vested in an additional number of your then unvested option shares as of the date of your termination of employment as set forth in the table below. The percentage of shares accelerated shall be calculated separately for each of your options.

Year in which Change in Control	Percentage of Unvested Shares
Occurs Following Grant Date	Accelerated
Year 1	50%
Year 2	66.66%
Year 3	73%
Year 4	100%

“Constructive Termination” means either (a) that your service is terminated by the Company without Cause or (b) that you resign because (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more, “Cause” means (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct. The foregoing, however, is not an exclusive list of all acts or omissions that the Company may consider as grounds for discharging any person in its service.

     5. Severance Pay. If the Company terminates your employment prior to your completion of 4 years of service for any reason other than Cause or permanent disability, then the Company will continue to pay your base salary for a period of six months following the termination of your employment and you will be vested in an additional number of shares under all of your Company options as if you had been employed for an additional six months. Your base salary will be paid at the rate in effect at the time of the termination of your employment and in accordance with the Company’s standard payroll procedures. If you elect to continue your health insurance coverage under COBRA following the termination of your employment, then the Company will pay your monthly premium under COBRA until the earliest of (a) the close of the six-month period following the termination of your employment, (b) the expiration of your continuation coverage under COBRA or (c) the date when you receive substantially equivalent health insurance coverage in connection with new employment or self-employment. However, this Paragraph 5 will cot apply unless you (a) have executed a general reiease (in a form

Mark Culhane
July 20, 2001
Page 3

prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (b) have agreed not to prosecute any legal action or other proceeding based on those claims.

     6. Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition to your employment with the Company, to sign the Company’s standard Employee Proprietary Information and Inventions Agreement a copy of which is attached hereto as Exhibit. A.

     7. Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures; may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company.

     8. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

     9. Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.

     10. Entire Agreement. This letter agreement supersedes and replaces any prior understandings or agreements, whether oral or written, between you and the Company regarding the subject matter described in this letter agreement.

* * * * *

     We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Employee Proprietary Information and Inventions Agreement and returning them to me. This offer, if not accepted, will expire at the close of business on July ___, 2001. As required by law, your employment with the Company is contingent upon your providing legal proof of your identify and authorization to work in the United States. Your employment is also contingent upon your starting work with the Company on or before August 1, 2001.

Mark Culhane
July 20, 2001
Page 4

If you have any question, please call me at (415) 995-9845.

Very truly yours,

DemandTec, Inc.

/s/ Dan Fishback

BY:    Dan Fishback

Title:    President and Chief Executive Officer

I have read and accept this employment offer:

/s/ Mark Culhane
Signature of Mark Culhane
Dated:	7/30/01

Attachment

Exhibit A: Employee Proprietary Information and Inventions Agreement

DemandTec, Inc.

February 11, 2005

Mr. Mark Culhane

Dear Mark:

     We are pleased to inform you that on February 11, 2005, the Board of Directors of DemandTec, Inc. (the “Company”) approved the following provisions for accelerated vesting of your option shares. The following terms apply to all of your options granted or to be granted to you during your employment with the Company, as well as any shares that you may have already purchased under options previously granted to you (collectively, the “Options”).

     1. Accelerated Vesting of Shares. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company, then you will vest in that percentage of your then unvested shares under each of the Options determined pursuant to the table below as of the date of the Change in Control and the Company’s repurchase right shall lapse as to a corresponding number of shares purchasable under each such Option. The percentage of shares accelerated shall be calculated separately for each of your options. Any shares remaining unvested under each of the Options after the date of the Change in Control shall vest and the Company’s repurchase right shall lapse in equal monthly installments over the subsequent 12 months. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company and you are subject to an Involuntary Termination within 12 months after that Change in Control, then you will vest in all of your shares under each of the Options such that you are then fully vested and the Company’s repurchase right shall lapse as to all such shares.

Year in which Change in
Control Occurs Following	Percentage of Unvested
Grant Date	Shares Accelerated
Year 1	50%
Year 2	66.66%
Year 3	75%
Year 4	100%

     2. Severance. The first sentence in the section entitled “Severance” of your offer letter dated July 20, 2001 (the “Offer Letter”) is hereby amended to read as follows: “If the Company terminates your employment for any reason other than Cause or permanent disability, then the Company will pay you a lump sum severance benefit in an amount equal to your base

Mr. Mark Culhane
February 11, 2005
Page 2

salary for six months and you will be vested in an additional number of shares under all of your Company options as if you had been employed for an additional six months.” Except as so modified, the Offer Letter shall remain in full force and effect.

     3. Definitions. For all purposes hereunder, the following terms shall be defined as specified below:

          A. “Cause” shall mean (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct.

          B. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          C. “Involuntary Termination” shall mean the termination of your Service by reason of: your involuntary discharge by the Company (or the Parent or Subsidiary employing you) for reasons other than Cause; or your voluntary resignation following the date that (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more.

          D. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Plan.

     4. Entire Agreement. This Agreement supersedes all prior agreements (whether verbal or written) between you and the Company relating to the subject matter of acceleration of vesting of option shares on an acquisition or other change in control of the Company. This Agreement supplements the Offer Letter with respect to your rights to severance benefits in connection with a termination of employment. Each of the option agreements evidencing Options previously granted to you shall remain in full force and effect except to the extent necessary to give effect to the terms of this Agreement.

     5. Miscellaneous. This Agreement shall be binding upon the Company, its successors and assigns (including, without limitation, the surviving entity or successor party resulting from the Change in Control) and shall be construed and interpreted under the laws of the State of California.

Mr. Mark Culhane
February 11, 2005
Page 3

          Please indicate your acceptance of the foregoing by signing the enclosed copy of this letter and returning it to the Company.

Very truly yours, Demandtec, Inc.
By:	/s/ Dan Fishback
	Name:	Dan Fishback
	Title:	President & CEO

Accepted and Agreed to:

/s/ Mark Culhane                              
Mark Culhane

2/11/05                                                  
Date

DemandTec, Inc.
One Circle Star Way, Suite 200
San Carlos, CA 94070

December 2, 2005

Mr. Mark Culhane

Dear Mark:

          We are pleased to inform you that on December 2, 2005, the Board of Directors of DemandTec, Inc. (the “Company”) approved the following amendment and restatement of the letter agreement dated February 11, 2005, between you and the Company (the “Prior Agreement”).

          1. General Rule on Accelerated Vesting. Except as provided in Section 2 below, the following terms apply to all of the options granted or to be granted to you during your employment with the Company, as well as any shares that you may have already purchased under options previously granted to you (collectively, the “Options”). The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company, then you will vest in that percentage of your then unvested shares under each of the Options determined pursuant to the table below as of the date of the Change in Control and the Company’s repurchase right shall lapse as to a corresponding number of shares purchasable under each such Option. The percentage of shares accelerated shall be calculated separately for each of your options. Any shares remaining unvested under each of the Options after the date of the Change in Control shall vest and the Company’s repurchase right shall lapse in equal monthly installments over the subsequent 12 months. The Company hereby agrees that, in the event that a Change in Control occurs while you remain employed with the Company and you are subject to an Involuntary Termination within 12 months after that Change in Control, then you will vest in all of your shares under each of the Options such that you are then fully vested and the Company’s repurchase right shall lapse as to all such shares.

Year in which Change in
Control Occurs Following	Percentage of Unvested
Grant Date	Shares Accelerated
Year 1	50%
Year 2	66.66%
Year 3	75%
Year 4	100%

     2. Special Rule for December 2, 2005 Option. Section 1 above will apply to the option granted to you on December 2, 2005 (the “2005 Option”), except as provided in this Section 2. If the Company, within 60 days after December 1, 2005, receives a bona fide

Mr. Mark Culhane
December 2, 2005
Page 2

term sheet with respect to the acquisition (by merger, consolidation or otherwise) of the Company and such term sheet results in a Change in Control while you remain employed with the Company, then you will vest in 25% of the then unvested shares subject to the 2005 Option as of the date of such Change in Control and the Company’s repurchase right will lapse as to a corresponding number of shares purchasable under the 2005 Option. Any shares remaining unvested under the 2005 Option after the date of such Change in Control will vest, and the Company’s repurchase right will lapse, in equal monthly installments over the subsequent 12 months. If such Change in Control occurs and you are subject to an Involuntary Termination within 12 months after such Change in Control, then you will vest in all of your shares under the 2005 Option such that you are then fully vested and the Company’s repurchase right will lapse as to all such shares. In the event of a Change in Control that does not result from a bona fide term sheet received within 60 days after December 1, 2005, Section 1 above will apply to the 2005 Option.

          3. Severance. Paragraph 5 of your offer letter dated July 20, 2001 (the “Offer Letter”) is hereby amended in its entirety to read as follows:

               “5. Severance Pay. If a Change in Control occurs while you remain employed with the Company and you are subject to a Constructive Termination within 12 months after that Change in Control, then the Company will pay you a lump sum severance benefit in an amount equal to your base salary for six months. If the Company terminates your employment for any reason other than Cause or permanent disability, and if the preceding sentence does not apply, then the Company will pay you a lump sum severance benefit in an amount equal to your base salary for six months and you will be vested in an additional number of shares under all of your Company options as if you had been employed for an additional six months. In either case, you will be entitled to continuation of coverage under the medical, dental, life and disability insurance programs maintained by Company to the extent such continuation thereunder is permitted under the terms of the insurance contracts governing such programs for a period of six months after the date of termination or Constructive Termination or, in the alternative, reimbursement for all premiums paid to maintain medical and dental coverage under the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of six months after the date of termination or Constructive Termination. However, this Paragraph 5 will not apply unless you (a) have executed a general release (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (b) have agreed not to prosecute any legal action or other proceeding based on those claims.”

Except as so modified, the Offer Letter shall remain in full force and effect.

          4. Definitions. For all purposes hereunder, the following terms shall be defined as specified below:

Mr. Mark Culhane
December 2, 2005
Page 3

          A. “Cause” shall mean (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct.

          B. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          C. “Involuntary Termination” shall mean the termination of your Service by reason of: your involuntary discharge by the Company (or the Parent or Subsidiary employing you) for reasons other than Cause; or your voluntary resignation following the date that (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more.

          D. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Company’s 1999 Equity Incentive Plan.

     5. Entire Agreement. This Agreement supersedes all prior agreements (whether verbal or written) between you and the Company relating to the subject matter of acceleration of vesting of option shares on an acquisition or other change in control of the Company, including (without limitation) the Prior Agreement. This Agreement supplements the Offer Letter with respect to your rights to severance benefits in connection with a termination of employment. Each of the option agreements evidencing Options granted to you shall remain in full force and effect except to the extent necessary to give effect to the terms of this Agreement.

     6. Miscellaneous. This Agreement shall be binding upon the Company, its successors and assigns (including, without limitation, the surviving entity or successor party resulting from the Change in Control) and shall be construed and interpreted under the laws of the State of California.

Mr. Mark Culhane
December 2, 2005
Page 4

     Please indicate your acceptance of the foregoing by signing the enclosed copy of this letter and returning it to the Company.

Very truly yours, DemandTec, Inc.
By:	/s/ Dan Fishback
	Name:	Dan Fishback
	Title:	President & CEO

Accepted and Agreed to:

/s/ Mark Culhane                                        
Mark Culhane

12/2/05                                                  
Date

EX-10.8

Exhibit 10.8

November 17, 2003

John Crouch

Dear John:

     DemandTec, Inc. (the “Company”) is pleased to offer you employment on the following terms:

     1. Position. The Company will employ you in a full-time position. Your initial title will be Senior Vice President of World Wide Sales, and you will report to the Company’s President and CEO. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

     2. Cash Compensation. The Company will pay you a starting salary at the rate of $200,000 per year, payable in accordance with the Company’s standard payroll schedule. In addition to your base salary, you will be eligible to earn $100,000 in annual targeted variable compensation at 100% achievement of goals outlined in the Executive Management Team (XMT) Sales Compensation Plan as approved by the Company’s Board of Directors. The foregoing notwithstanding, the Company guarantees that your variable compensation will be at least $42,000 per year in year 1 and then again in year 2 of your employment at DemandTec to be paid monthly, the guaranteed variable compensation of $3,500 per month, less all withholdings, which payments will represent non-refundable advances against compensation.

     3. Employee Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in effect from time to time.

     4. Stock Options. Subject to the approval of the Company’s Board of Directors, within six months of your start date, you will be granted an option to purchase 474,000 shares of the Company’s Common Stock (the “First Option”). To the extent permitted by law, the first option shall be an Incentive Stock Option. The exercise price per share will be equal to the fair market value per share on the date the First Option is granted, as determined by the Company’s Board of Directors. The First Option will be subject to the terms and conditions applicable to options granted under the Company’s 1999 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Stock Option Agreement. The First Option will be immediately exercisable, but the unvested purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest

Mr. John Crouch
November 17, 2003
Page 2

in 1/8th of the option shares after six months of continuous service, and the balance will vest in equal monthly installments of 1/48^th over the next 42 months of continuous service, as described in the applicable Stock Option Agreement. The vesting commencement date for this option will be your first day of employment. The Stock Option Agreement for the First Option (and for all subsequent stock option agreements between you and the Company including the Second Option, as defined below) will contain the following terms and features unless such terms or features are prohibited by the Plan or applicable law as of the date of the agreement: (a) following the termination of your employment for any reason, a period of three months to exercise all shares subject to the option agreement which were vested as of the date of termination, and (b) no repurchase rights in the Company’s favor with respect to vested shares.

     In addition, in the event that in the six months following the date hereof, the Company closes a financing event (“Financing Event”, as further defined below), subject to the approval of the Board and provided you are employed by the Company at the time of grant, you will be granted a second option (the “Second Option”) covering that number of shares of Common Stock that when added to the First Option will equal one percent (1.35%) of the sum of the outstanding capital stock of the Company and the Company’s outstanding options and warrants (assuming the conversion or exercise of any convertible or exercisable securities outstanding, whether or not currently convertible or exercisable, and including the First Option and Second Option) as of the close of the Financing Event. The exercise price per share will be equal to the fair market value per share on the date the Second Option is granted. The Second Option will be subject to the terms and conditions applicable to options granted under the Plan, as described in the Plan and the applicable Stock Option Agreement and shall be, to the extent permitted by law, an Incentive Stock Option. The Second Option will be immediately exercisable, but the unvested portion of the purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 1/8th of the option shares after six months of continuous service (with your service commencing on your first day of employment), and the balance will vest in equal monthly installments of 1/48th over the next 42 months of continuous service, as described in the applicable Stock Option Agreement.

     A “Financing Event” means the issuance or sale by the Company of its preferred stock or convertible notes.

     If the Company is subject to a Change in Control (as defined in the Plan) and you are subject to a Constructive Termination within 12 months after that Change in Control, then you will be vested in an additional 50% of your then unvested option shares as of the date of your termination of employment.

“Constructive Termination” means either (a) that your service is terminated by the Company without Cause or (b) that you resign because (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more. “Cause” means (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct. The foregoing, however, is not an exclusive list of all acts or omissions that the Company may consider as grounds for discharging any person in its service.

     5. Severance Pay. If, during the first four years of your employment, the Company terminates your employment for any reason other than Cause or permanent disability, then the Company will continue to pay your base salary for a period of four months following the termination of your employment. Your base salary will be paid at the rate in effect at the time of the termination of your employment and in accordance with the Company’s standard payroll procedures. If you elect to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of your employment, then the Company will pay your monthly premium under COBRA until the earliest of (a) the close of the four month period following the termination of your employment, (b) the expiration of your health insurance coverage under COBRA or (c) the date when you receive substantially equivalent health insurance coverage in connection with new employment or self-employment. However, this Paragraph 5 will not apply unless you (a) have executed a general release (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (b) have agreed not to prosecute any legal action or other proceeding based on those claims.

     6. Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition to your employment with the

Mr. John Crouch
November 17, 2003
Page 3

Company, to sign the Company’s standard Employee Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.

     7. Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company.

     8. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

     9. Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.

     10. Successors and Assigns. The obligations of the Company under this letter agreement shall be binding upon its successors, successors in interest and assigns.

     11. Entire Agreement. This letter agreement supersedes and replaces any prior understandings or agreements, whether oral or written, between you and the Company regarding the subject matter described in this letter agreement.

     We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Employee Proprietary Information and Inventions Agreement and returning them to me. This offer, if not accepted, will expire at the close of business on November 17, 2003. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. Your employment is also contingent upon your starting work with the Company on or before November 17, 2003.

Mr. John Crouch
November 17, 2003
Page 4

If you have any questions, please call me at 650-226-4700.

	Very truly yours, DemandTec, Inc.
	/s/ Dan Fishback
	Dan Fishback
	President and CEO
I have read and accept this employment offer:

/s/ John Crouch                                        
                    Signature of [Name]

Dated: 11/17/03

Attachment

Exhibit A: Employee Proprietary Information and Inventions Agreement

EX-10.9

Exhibit 10.9

February 5, 2004

Mr. James Dai

Dear James:

     DemandTec, Inc. (the “Company”) is pleased to offer you employment on the following terms:

     1. Position. The Company will employ you in a full-time position. Your initial title will be Vice President, Engineering and you will report to the Chief Executive Officer of the Company. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

     2. Cash Compensation. The Company will pay you a starting salary at the rate of $200,000 per year, payable in accordance with the Company’s standard payroll schedule. In addition to your base salary, you will be eligible to earn $50,000 in annual targeted variable compensation at 100% achievement of goals outlined in the Executive Management Team (XMT) Compensation Plan as approved by the Company’s Board of Directors. The foregoing notwithstanding, the Company guarantees that your variable compensation for your first full year of employment will be at least $50,000. To this end, during each of your first twelve months of employment, the Company will pay to you an additional $4,166 per month, less all withholdings, which payments will represent non-refundable advances against the first year’s variable compensation. In addition, on the six-month anniversary of your hire date, the Company will pay you a $20,000 signing bonus.

     3. Employee Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. These benefits are described in the employee benefit summary that will be presented to you upon your first day of employment. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in effect from time to time.

     4. Stock Options. So that you may participate in the Company’s success, you will be granted a First Option to purchase 430,000 shares of the Company’s Common Stock (the “First Option”), subject to the approval of the Company’s Board of Directors. The exercise price of such shares will be equal to the fair market value per share on the date the First Option is granted, as determined by the Company’s Board of Directors. The First Option will be subject to the terms and conditions applicable to options granted under the Company’s 1999 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Stock Option Agreement. The First Option will be immediately exercisable, but the unvested purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 1/8^th of the option shares after six months of continuous service, and the balance will vest in equal monthly installments of 1/48^th over the next 42 months of continuous service, as described in the applicable Stock Option Agreement.

     In addition, in the event that in the six months from your date of hire, the Company closes a financing event (“Financing Event” as defined below), subject to the approval of the Board and provided you are employed by the Company at the time of grant, you will be granted a Second Option covering that number of shares of Common Stock that when added to the First Option will equal one percent (1%) of

the fully-diluted capital stock of the Company as of the close of the Financing Event. The exercise price per share will be equal to the fair market value per share on the date the Second Option is granted. The Second Option will be subject to the terms and conditions applicable to options granted under the Plan, as described in the Plan and the applicable Stock Option Agreement. The Second Option will be immediately exercisable, but the unvested purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 1/8 ^thof the option shares after six months of continuous service, and the balance will vest in equal monthly installments of 1/48^th over the next 42 months of continuous service, as described in the applicable Stock Option Agreement.

     A Financing Event means the sale by the Company of its preferred stock to investors resulting in more than 15% dilution to the Common Shareholders of the Company.

     If the Company is subject to a Change of Control (as defined in the Plan) and you are subject to a Constructive Termination within 12 months of that Change in Control, then you will be vested in an additional 50% of your unvested option shares as of the date of your termination of employment.

     “Constructive Termination” means either (a) that your service is terminated by the Company without Cause, or (b) that you resign because (i) you have been assigned to duties which reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company, or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more. “Cause” means (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company; (b) conviction of, or a plea of “guilty” or “no contest” to a felony under the laws of the United States or any State or any crime involving moral turpitude; (c) your participation in any fraud against the Company; or (d) your intentional damage to any material property of the Company or other gross misconduct. The foregoing, however, is not an exclusive list of all acts or omissions that the Company may consider as grounds for discharging any person in its service.

     5. Severance Pay. If, during the first four years of your employment, the Company terminates your employment for any reason other than Cause or permanent disability, then the Company will continue to pay your base salary for a period of 3 months following the termination of your employment. Your base salary will be paid at the rate in effect at the time of the termination of your employment and in accordance with the Company’s standard payroll procedures. If you elect to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of your employment, then the Company will pay your monthly premium under COBRA until the earliest of (a) the close of the 3 month period following the termination of your employment, (b) the expiration of your health insurance coverage under COBRA or (c) the date when you receive substantially equivalent health insurance coverage in connection with new employment or self-employment. However, this Paragraph 5 will not apply unless you (a) have executed a general release (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (b) have agreed not to prosecute any legal action or other proceeding based on those claims.

     6. Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition to your employment with the Company, to sign the Company’s standard Employee Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.

     7. Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change

from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the CEO of the Company.

     8. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. While you render services to the Company, you will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

     9. Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.

     10. Entire Agreement. This letter agreement supersedes and replaces any prior understandings or agreements, whether oral or written, between you and the Company regarding the subject matter described in this letter agreement.

     We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Employee Proprietary Information and Inventions Agreement and returning them to me. This offer, if not accepted, will expire at the close of business on February 6, 2004. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. Your employment is also contingent upon your starting work with the Company on or before March 15, 2004.

     If you have any questions, please call me at 650-226-4700.

Very truly yours,

DemandTec, Inc.
 

/s/ Mark Culhane  

Mark Culhane 

Chief Financial Officer 

I have read and accept this employment offer

/s/ James Dai                              
Signature of James Dai

Dated: 2/6/04

EX-10.10

Exhibit 10.10

1 Circle star way, suite 200
San Carlos, CA 94070
tel (650) 226-4600
fax (650) 556-1190
www.demandtec.com

November 1, 2006

Mr. Mike Frandsen

Dear Mike:

     DemandTec, Inc. (the “Company”) and TradePoint Solutions, Inc. (“TradePoint”) have entered into an Agreement and Plan of Merger dated October 6, 2006 (the “Merger Agreement”), pursuant to which TradePoint will become a subsidiary of DemandTec. We are pleased to offer you continued employment following the merger, on the terms and conditions set forth below:

     1. Effectiveness. This letter constitutes a binding offer of employment effective only upon the Closing Date (hereafter referred to as the “Effective Date”) as defined in the Merger Agreement, currently anticipated to be November 6, 2006. In the event the Merger Agreement is terminated for any reason without the Effective Date having occurred, this offer letter shall be terminated without further obligation or liability of either party.

     2. Position. From and after the Effective Date, the Company will employ you in a full-time position as Senior Vice President, Products and Product Strategy, initially reporting to the CEO. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

     3. Cash Compensation. The Company will pay you a starting salary at the rate of $225,000 per year, payable in accordance with the Company’s standard payroll schedule. In addition to your salary, you will be eligible to receive an annual performance bonus of $75,000 in accordance with the incentive compensation plan that was in effect at TradePoint prior to the Effective Date. The period of measurement for your incentive plan began on January 1, 2006 and ends on December 31, 2006. The bonus will be pro-rated for the period from the Start Date through and including December 31, 2006.

     4. Employee Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. These benefits are described in the employee benefit summary that will be presented to you upon your first day of employment. In addition, you will be entitled to paid time off in accordance with the Company’s Paid Time Off Policy, as in effect from time to time.

     5. Stock Options. So that you may participate in the Company’s success, you will be granted two options to purchase a total of 158,260 shares of the Company’s Common Stock, subject to the approval of the Company’s Board of Directors. The exercise price of such shares will be equal to the fair market value per share on the date the options are granted, as determined by the Company’s Board of Directors. The options will be subject to the terms and conditions applicable to options granted under the Company’s 1999 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Stock Option Agreement. The first option of 66,000 shares will vest in 25% of the option shares after six months of continuous service, and the balance will vest in equal monthly installments over the next 18 months of continuous service, as described in the applicable Stock Option Agreement. The second option of 92,260 shares will vest in 12.5% of the option shares after six months of continuous service, and the balance will vest in equal monthly installments over the next 42 months of continuous service, as described in the applicable Stock Option Agreement.

     6. Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition to your employment with the Company, to sign the Company’s standard Employee Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.

     7. Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company.

     8. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

     9. Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.

     10. Entire Agreement. This letter agreement supersedes and replaces any prior understandings or agreements, whether oral or written, between you and the Company regarding the subject matter described in this letter agreement.

     We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Employee Proprietary Information and Inventions Agreement and returning them to Steve Feller, Senior Director of Human Resources. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. Your employment is also contingent upon your starting work with the Company on the Effective Date.

If you have any questions, please contact your manager, or call Steve Feller at 650-226-4625.

Very truly yours,

/s/ Mark Culhane

Mark Culhane

Executive Vice President and Chief Financial Officer

DemandTec, Inc

I have read and accept this employment offer.
/s/ Mike Frandsen	11-1-06
Signature of Mike Frandsen	Date

Attachment: Employee Proprietary Information and Inventions Agreement

DemandTec, Inc.
One Circle Star Way, Suite 200
San Carlos, CA 94070

May 15, 2007

Mr. Mike Frandsen

Dear Mike:

          We are pleased to inform you that on May 15, 2007, the Board of Directors of DemandTec, Inc. (the “Company”) approved the following supplement to the letter agreement dated November 1, 2006, between you and the Company (the “Prior Agreement”).

          1.      Accelerated Vesting. This Section 1 applies to all of the options to purchase shares of the Company’s Common Stock granted to you during your employment with the Company, as well as any shares of the Company’s Common Stock that you may already have purchased under options previously granted to you (collectively, the “Options”). If a Change in Control occurs while you remain employed with the Company and you are subject to a Constructive Termination within 12 months after that Change in Control, then you will vest in 50% of the remaining unvested shares under each of the Options.

          2.      Severance Pay. If the Company terminates your employment for any reason other than Cause or Permanent Disability, then you will be entitled to the following benefits:

     (a)      The Company will continue to pay your base salary for a period of three months following the termination of your employment. Your base salary will be paid at the rate in effect at the time of the termination of your employment and in accordance with the Company’s standard payroll procedures. However, if you are considered a “specified employee” under Section 409A(a)(2)(B)(i) of the Internal Revenue Code and the regulations thereunder when your employment terminates, then (i) the salary continuation payments under this Subsection (a) will commence on the earliest practicable date that occurs more than six months after the employment termination date and (ii) the installments that otherwise would have been paid during the first six months following the employment termination date will be paid to you in a lump sum on the earliest practicable date that occurs more than six months after the employment termination date.

     (b)      If you elect to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of your employment, then the Company will pay the

Mr. Mike Frandsen
May 15, 2007
Page 2

same portion of your monthly premium under COBRA as it pays for active employees until the earliest of (i) the close of the three-month period following the termination of your employment, (ii) the expiration of your continuation coverage under COBRA or (iii) the date when you become eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment.

However, this Section 2 will not apply unless you (i) resign as a member of the Boards of Directors of the Company and all of its subsidiaries, to the extent applicable, (ii) sign a general release of claims (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company or persons affiliated with the Company and (iii) have returned all Company property.

          3.      Definitions. The following terms have the meaning set forth below wherever they are used in this supplemental letter agreement:

          “Cause” means (a) any breach of the Proprietary Information and Inventions Agreement between you and the Company, (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State or any crime involving moral turpitude, (c) your participation in any fraud against the Company or (d) your intentional damage to any material property of the Company or other gross misconduct.

          “Change in Control” means (a) a sale, lease or other disposition of all or substantially all of the assets of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation or (c) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise. The foregoing notwithstanding, a merger or consolidation or a reverse merger does not constitute a “Change in Control” if immediately after the merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of the continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to the merger or consolidation.

          “Constructive Termination” means either (a) that your service is terminated by the Company without Cause or (b) that you resign because (i) you have been assigned to duties that reflect a material adverse change in your authority or responsibility with the Company or any successor, (ii) the annual rate of your base salary was reduced by the Company or (iii) the Company has relocated your principal place of work by a distance of 35 miles or more.

          “Permanent Disability” means that you are unable to perform the essential functions of your position, with or without reasonable accommodation, for a period of at least 120 consecutive days because of a physical or mental impairment.

Mr. Mike Frandsen
May 15, 2007
Page 3

          4.      Prior Agreement. Except as expressly set forth above, the Prior Agreement shall remain in effect.

          Please indicate your acceptance of the foregoing by signing the enclosed copy of this letter and returning it to the Company.

Very truly yours, DemandTec, Inc.
By:	/s/ Dan Fishback
	Dan Fishback
	President and Chief Executive Officer

Accepted and Agreed to:

/s/ Mike Frandsen

Mike Frandsen

5/15/07

Date

EX-10.11

Exhibit 10.11

March 1, 2007

Mr. Ronald Codd

Dear Ron:

          DemandTec, Inc. (“DemandTec”) is pleased to offer you a position as a member of the DemandTec Board of Directors (the “Board”). The following is some information on the benefits available to you as a member of the Board.

          You will be eligible for an annual retainer of $16,000 payable $4,000 per quarter. It is expressly understood that this compensation is provided solely for services being rendered by you as a member of the DemandTec Board of Directors.

          Subject to the approval of the Board, you will be granted an option to purchase 165,000 shares of DemandTec’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the DemandTec 1999 Equity Incentive Plan, as described in that Plan and the applicable stock option agreement. The Option will vest in 25% of the Option shares after one year of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.

          If the Company is subject to a Change in Control (as defined below) and your service with the Company terminates, then you will be vested in 100% of the Option shares then unvested as of the Change in Control date. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          Board meetings are generally held once a quarter and we would hope that your schedule would permit you to attend all of the meetings. In addition, from time to time, there may be projects that we would ask you to assist in. These projects would generally be limited in scope and would not be expected to require a significant time commitment.

Ronald Codd
March 1, 2007
Page 2

          DemandTec will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with DemandTec’s generally applicable policies.

          Nothing in this offer or the stock Option agreement should be construed to interfere with or otherwise restrict in any way the rights of DemandTec’s stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

          We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating the enclosed duplicate original of this letter and returning it to me.

          We look forward to you joining the Board.

Very truly yours, DemandTec, Inc.
By:	/s/ James Sayre
	James Sayre
	Chairman of the Nominating Committee

I have read and accept this offer:
/s/ Ronald Codd	3/5/07
Signature of Ronald Codd	Dated

EX-10.12

Exhibit 10.12

April 27, 2005

Ms. Linda Fayne Levinson

Dear Linda:

          DemandTec, Inc. (“DemandTec”) is pleased to offer you a position as a member of the DemandTec Board of Directors (the “Board”). The following is some information on the benefits available to you as a member of the Board.

          You will be eligible for a retainer of $2,500 per meeting attended in person paid monthly in arrears. It is expressly understood that this compensation is provided solely for services being rendered by you as a member of the DemandTec Board of Directors.

          Subject to the approval of the Board, you will be granted an option to purchase 200,000 shares of DemandTec’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the DemandTec 1999 Equity Incentive Plan, as described in that Plan and the applicable stock option agreement. The Option will be immediately exercisable, but the purchased shares will be subject to repurchase by DemandTec at the exercise price in the event that your service terminates before you vest in the shares. You will vest in 25% of the Option shares after one year of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.

          If the Company is subject to a Change in Control (as defined below) before your service with the Company terminates and within 12 months of the date of grant of the Option, then you will be vested in 25% of the Option shares. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise. If the Company is subject to a Change in Control 12 months or more after the date of grant of the Option, then no additional vesting will be credited.

Linda Fayne Levinson
April 27, 2005
Page 2

          Board meetings are generally held eight (8) times per year and we would hope that your schedule would permit you to attend all of the meetings. In addition, from time to time, there may be projects that we would ask you to assist in. These projects would generally be limited in scope and would not be expected to require a significant time commitment.

          DemandTec will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with DemandTec’s generally applicable policies.

          Nothing in this offer or the stock Option agreement should be construed to interfere with or otherwise restrict in any way the rights of DemandTec’s stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

          We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating the enclosed duplicate original of this letter and returning it to me.

          We look forward to you joining the Board.

Very truly yours, DemandTec, Inc.
By:	/s/ Dan Fishback
	Dan Fishback, Chief Executive Officer

I have read and accept this offer:
/s/ Linda Fayne Levinson	7/14/05
Signature of Linda Fayne Levinson	Dated:

1 Circle Star Way, Suite 200
San Carlos, CA 94070
tel (650) 226-4600
fax (650) 556-1190
www.demandtec.com

February 15, 2007

Ms. Linda Fayne Levinson

Re: DemandTec, Inc. (“DemandTec”) Board Compensation

Dear Linda:

     This letter is to confirm our previous understanding that effective from the first quarter of DemandTec’s fiscal year 2007 (commenced March 1, 2006), in connection with and solely in exchange for services being rendered by you as a member of DemandTec’s Board of Directors, you are eligible to receive an annual retainer of $16,000 payable in equal quarterly installments.

Very Truly Yours,
 

/s/ Dan Fishback  

Dan Fishback 

President & CEO 

Agreed and Accepted:

/s/ Linda Fayne Levinson Linda Fayne Levinson

Date: Feb 16, 2006

EX-10.13

Exhibit 10.13

March 22, 2005

Mr. Vic Lund

Dear Vic:

          DemandTec, Inc. (“DemandTec”) is pleased to offer you a position as a member of the DemandTec Board of Directors (the “Board”). The following is some information on the benefits available to you as a member of the Board.

          You will be eligible for a retainer of $2,500 per meeting attended in person paid monthly in arrears. It is expressly understood that this compensation is provided solely for services being rendered by you as a member of the DemandTec Board of Directors.

          Subject to the approval of the Board, you will be granted an option to purchase 200,000 shares of DemandTec’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the DemandTec 1999 Equity Incentive Plan, as described in that Plan and the applicable stock option agreement. The Option will be immediately exercisable, but the purchased shares will be subject to repurchase by DemandTec at the exercise price in the event that your service terminates before you vest in the shares. You will vest in 25% of the Option shares after one year of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.

          If the Company is subject to a Change in Control (as defined below) before your service with the Company terminates and within 12 months of the date of grant of the Option, then you will be vested in 25% of the Option shares. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise. If the Company is subject to a Change in Control 12 months or more after the date of grant of the Option, then no additional vesting will be credited.

Vic Lund
March 22, 2005
Page 2

          Board meetings are generally held eight (8) times per year and we would hope that your schedule would permit you to attend all of the meetings. In addition, from time to time, there may be projects that we would ask you to assist in. These projects would generally be limited in scope and would not be expected to require a significant time commitment.

          DemandTec will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with DemandTec’s generally applicable policies.

          Nothing in this offer or the stock Option agreement should be construed to interfere with or otherwise restrict in any way the rights of DemandTec’s stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

          We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating the enclosed duplicate original of this letter and returning it to me.

          We look forward to you joining the Board.

Very truly yours, DemandTec, Inc.
By:	/s/ Larry Lowry
	Larry Lowry, Chairman of the Board

I have read and accept this offer:
/s/ Vic Lund	3/30/05
Signature of Vic Lund	Dated:

Cc:	Mark Culhane
	Dan Fishback

1 Circle Star Way, Suite 200
San Carlos, CA 94070
tel (650) 226-4600
fax (650) 556-1190
www.demandtec.com

February 15, 2007

Mr. Victor Lund

Re: DemandTec, Inc. (“DemandTec”) Board Compensation

Dear Vic

     This letter is to confirm our previous understanding that effective from the first quarter of DemandTec’s fiscal year 2007 (commenced March 1, 2006), in connection with and solely in exchange for services being rendered by you as a member of DemandTec’s Board of Directors, you are eligible to receive an annual retainer of $16,000 payable in equal quarterly installments.

Very Truly Yours,
 

/s/ Dan Fishback  

Dan Fishback
President & CEO 

Agreed and Accepted:

/s/ Victor Lund Victor Lund

Date: 2/16/07

EX-10.14

Exhibit 10.14

March 1, 2007

Mr. Joshua Pickus

Dear Josh:

          DemandTec, Inc. (“DemandTec”) is pleased to offer you a position as a member of the DemandTec Board of Directors (the “Board”). The following is some information on the benefits available to you as a member of the Board.

          You will be eligible for an annual retainer of $16,000 payable $4,000 per quarter. It is expressly understood that this compensation is provided solely for services being rendered by you as a member of the DemandTec Board of Directors.

          Subject to the approval of the Board, you will be granted an option to purchase 165,000 shares of DemandTec’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the DemandTec 1999 Equity Incentive Plan, as described in that Plan and the applicable stock option agreement. The Option will vest in 25% of the Option shares after one year of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.

          If the Company is subject to a Change in Control (as defined below) and your service with the Company terminates, then you will be vested in 100% of the Option shares then unvested as of the Change in Control date. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          Board meetings are generally held once a quarter and we would hope that your schedule would permit you to attend all of the meetings. In addition, from time to time, there may be projects that we would ask you to assist in. These projects would generally be limited in scope and would not be expected to require a significant time commitment.

Joshua Pickus
March 1, 2007
Page 2

          DemandTec will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with DemandTec’s generally applicable policies.

          Nothing in this offer or the stock Option agreement should be construed to interfere with or otherwise restrict in any way the rights of DemandTec’s stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

          We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating the enclosed duplicate original of this letter and returning it to me.

          We look forward to you joining the Board.

Very truly yours, DemandTec, Inc.
By:	/s/ James Sayre
	James Sayre
	Chairman of the Nominating Committee

I have read and accept this offer:
/s/ Joshua Pickus	3/10/07
Signature of Joshua Pickus	Dated

EX-10.15

Exhibit 10.15

September 12, 2006

Mr. Chuck Robel

Dear Chuck:

          DemandTec, Inc. (“DemandTec”) is pleased to offer you a position as a member of the DemandTec Board of Directors (the “Board”). The following is some information on the benefits available to you as a member of the Board.

          You will be eligible for an annual retainer of $16,000 payable $4,000 per quarter. It is expressly understood that this compensation is provided solely for services being rendered by you as a member of the DemandTec Board of Directors.

          Subject to the approval of the Board, you will be granted an option to purchase 150,000 shares of DemandTec’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the DemandTec 1999 Equity Incentive Plan, as described in that Plan and the applicable stock option agreement. The Option will vest in 25% of the Option shares after one year of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.

          If the Company is subject to a Change in Control (as defined below) and your service with the Company terminates, then you will be vested in 100% of the Option shares then unvested as of the Change in Control date. “Change in Control” shall mean (i) a sale, lease or other disposition of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.

          Board meetings are generally held once a quarter and we would hope that your schedule would permit you to attend all of the meetings. In addition, from time to time, there may be projects that we would ask you to assist in. These projects would generally be limited in scope and would not be expected to require a significant time commitment.

Chuck Robel
September 12, 2006
Page 2

          DemandTec will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with DemandTec’s generally applicable policies.

          Nothing in this offer or the stock Option agreement should be construed to interfere with or otherwise restrict in any way the rights of DemandTec’s stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

          We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating the enclosed duplicate original of this letter and returning it to me.

          We look forward to you joining the Board.

Very truly yours, DemandTec, Inc.
By:	/s/ Dan Fishback
	Dan Fishback, Chief Executive Officer

I have read and accept this offer:
/s/ Chuck Robel	9/18/06
Signature of Chuck Robel	Dated:

EX-10.16

Exhibit 10.16

MASTER SERVICE AGREEMENT

This Master Service Agreement (“Agreement”) is entered into on 8/19, 2005(“MSA Effective Date”) by and between the Equinix Entities and the undersigned customer (“Customer”), and includes the following exhibits:

a.	Exhibit A — Confidentiality Provisions; and
b.	Exhibit B — Sublicensing Provisions.

Capitalized terms used herein but not otherwise defined will have the meaning ascribed to them in Section 10.

1. Services.

Subject to the terms and conditions set forth in this Agreement, Equinix will provide the Services to Customer.

2. Ordering.

     a. Customer may request Services during the Term by (i) executing a Sales Order, (ii) placing an Online Order, or (iii) placing a Phone Order. Each Order, which will only be effective when accepted by Equinix, will be governed by the terms and conditions of this Agreement.

     b. Equinix will provide Customer with an account and password to access the Customer Care Website. Customer is responsible for maintaining the confidentiality of its account and password and for restricting and granting access thereto. Notwithstanding anything in this Agreement to the contrary, Customer is responsible and liable for all activities that occur under Customer’s account (including all payments owed for any Orders that are placed under Customer’s account), regardless of whether such activities are conducted by Customer, a Sublicensee or any other third party, and regardless of whether such Orders are authorized by Customer. None of the Equinix Entitles have any obligation to verify that anyone using Customer’s account and password has Customer’s authorization.

3. Payment Terms and Taxes.

     a. Unless otherwise agreed between the parties in writing, Service Fees for the Services will begin to accrue on the Billing Commencement Date. Equinix will invoice Customer for the Services on a monthly basis (partial months will be billed on a pro rata basis) and Customer will pay for the Services in accordance with this Section 3 and the Orders. Customer will pay in full all invoices from Equinix within thirty (30) days of the date of invoice. Any past due amounts owed by Customer will accrue interest at the lesser of one and a half percent (1.5%) per month or the highest rate permitted by applicable law. Unless otherwise stated in the Order, all invoices will be paid in U.S. Dollars.

     b. The Service Fees for Services ordered through Sales Orders will be listed on the Sales Orders. For all other Orders, the Service Fees for Services will be Equinix’s then-current list price for such Services, unless otherwise agreed to by the parties in writing or in an Order Confirmation. Customer agrees to pay for the Services for the duration of the Term. Notwithstanding anything in this Agreement to the contrary, for each Service, excluding Power Services, upon the expiration of the initial Service Term, the rates and fees for such Service will be subject to change, at Equinix’s reasonable discretion, upon sixty (60) days’ prior notice to Customer.

     c. Notwithstanding anything to the contrary in this Agreement, including Section 3(b), at Equinix’s reasonable discretion, upon sixty (60) days’ prior notice to Customer, Equinix may change the rates and fees for the Power Services at any time after the first year of the Service Term for such Power Services, except that if Customer draws more than an average of 1.75 kVA per cabinet or rack in the Licensed Space in such IBX Center in which the Power Services are being provided, Equinix may also change the rates and fees for the Power Services at any time prior to the end of the first year of the Service Term for such Power Services.

     d. No Equinix Entity is responsible or in any way liable for any Taxes or third-party charges related to the activities, or the ownership or operation of the equipment (including Customer’s Equipment), of any of the following: Customer, Customer’s Authorized Persons, Accompanying Persons, and Associated Entities, at any IBX Center, or attributable to, any IBX Center. Without limiting the foregoing, Customer will be responsible for paying any and all Taxes separately imposed, levied or assessed against Customer by, and preparing and filing any necessary return with, any governmental, quasi-governmental or tax authorities by the date such payments and returns are due. In no event will Customer’s Equipment be construed to be fixtures.

     e. Service Fees are exclusive of any Taxes imposed on Service Fees. Customer will be responsible for paying any Taxes Imposed on Service Fees at the same time it pays the Service Fees. Customer will be responsible for timely paying in full all Taxes.

     f. If Customer is required to make any deduction or withholding or to make any payment, on account of any Taxes in any jurisdiction, In respect of any amounts payable hereunder by Customer to the Equinix Entities, such amounts will be increased to the extent necessary to ensure that after the making of such deduction, withholding or payment, the Equinix Entities receive when due and retain (free from any liability in respect of any such deduction, withholding or payment) an amount equal to what would have been received and retained had no such deduction, withholding or payment been required or made.

     g. In the event that Customer’s account is past due two (2) or more times in any twelve (12) — month period, Equinix may charge Customer a deposit equal to one (1) month of the recurring Service Fees that are billable at the time such deposit is charged (the “Deposit”). The Deposit shall be held by Equinix and returned or credited to Customer, without interest, upon termination of this Agreement if Customer so requests in writing at that time. In the event of breach of this Agreement by Customer, Equinix shall, without limiting its remedies otherwise available, have the right to apply the Deposit to the damages suffered by Equinix as a result of such breach.

4. Access and Use of the IBX Centers, and Use of Customer’s Equipment

     a. Subject to the terms and conditions of this Agreement, Customer will have access to the Licensed Space twenty-four (24) hours per day, three hundred sixty-five (365) days per year.

     b. Unless otherwise expressly provided in an Order (and then only to the extent otherwise expressly provided therein), Customer will be responsible for configuring, providing, placing, installing, upgrading, adding, maintaining, repairing, and operating Customer’s Equipment, which actions Customer may engage in only to the extent permitted by, and subject to, the terms and conditions of this Agreement Customer represents, warrants and covenants that Customer has the legal right and authority (including regulatory consents), and will continue to have the legal right and authority throughout the Term, to operate, configure, provide, place, install, upgrade, add, maintain and repair Customer’s Equipment as contemplated by this agreement. Without limiting the foregoing, Customer will obtain, and maintain throughout the term, such consent of Customer’s subcontractors, third party providers, vendors, Sublicensees and any other parties as may be necessary for Equinix (including any contractors or others acting at Equinix’s request) to have the right to use and access Customer’s Equipment for the purpose of providing Services.

     c. At all times during the Term, Equinix and Customer agree to comply with the Policies, which are at all times incorporated by reference into this Agreement. Customer acknowledges that it has received a copy of the current Policies prior to the execution of this Agreement. Any modification by Equinix to the Policies will be effective upon notice to

EQUINIX MSA UNITED STATES Equinix Proprietary and Confidential

Customer, except modifications to the Shipping Policies, which will be effective immediately upon being made.

     d. Customer will be responsible and liable for all acts or omissions of Customer’s Authorized Persons, Accompanying Persons, and Associated Entitles, and all such acts or omissions will be attributed to Customer for all purposes under this Agreement (to the same extent as if Customer had committed the act or omission), including for purposes of determining responsibility, liability and indemnification obligations.

     e. Customer will not file a mechanic’s lien or similar lien on the Licensed Space or IBX Centers, and Customer will be responsible for any mechanic’s lien or similar lien filed by any Authorized Person, Accompanying Person or Associated Entity. Without limiting the foregoing, In the event any such lien is filed, Customer will be responsible for the immediate satisfaction, payment or bonding of any such lien.

5. Indemnification.

     a. Equinix will Indemnify, defend and hold harmless the Customer Parties from any and all liability, damages, costs and expenses (including reasonable attorneys’ fees and expenses) for personal injury or damage to tangible property resulting from the gross negligence or willful misconduct of Equinix.

     b. Customer will indemnify, defend and hold harmless the Equinix Parties from any and all liability, damages, costs and expenses (Including reasonable attorneys’ fees and expenses) for (i) personal injury or damage to tangible property resulting from the gross negligence or willful misconduct of Customer; (ii) any claim by any of Customer’s Authorized Persons, Accompanying Persons or Associated Entities or any employee of Customer other than a claim based on the gross negligence or willful misconduct of Equinix; (iii) any claim relating to, or arising out of, Customer’s, or any of its customers’, services, equipment (including Customer’s Equipment) or Customer’s use of the Services provided under this Agreement (including claims relating to Interruptions, suspensions, failures, defects, delays, impairments or inadequacies In any of the aforementioned services, including the Services from Equinix); (iv) any claim that Customer has failed to fulfill a contractual obligation with a third party; and (v) any claim resulting from Customer’s failure to obtain or maintain the required consents pursuant to Section 4(b).

     c. Through counsel of its own choosing, the indemnified party has the right to participate in (but not control the defense of) any proceeding in which it is being indemnified under this Agreement, but in such event the indemnified party will be solely responsible for paying the legal fees and expenses for its own counsel. The indemnifying party will, however, continue to be solely responsible for all other expenses relating to the action, Including the legal fees and expenses of the counsel it selects to defend the claims.

6. Warranty Disclaimer, Limitation of Liability, Credits.

     a. NONE OF THE EQUINIX ENTITIES WARRANT THAT THE SERVICES PROVIDED HEREUNDER WILL BE UNINTERRUPTED, ERROR-FREE, OR COMPLETELY SECURE. THE EQUINIX ENTITIES DO NOT MAKE, AND THE EQUINIX ENTITIES HEREBY DISCLAIM, ANY AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE EQUINIX ENTITIES DO NOT MAKE, AND HEREBY DISCLAIM, ALL EXPRESS WARRANTIES. ALL SERVICES PROVIDED PURSUANT TO THIS AGREEMENT ARE PROVIDED OR PERFORMED ON AN “AS IS”, “AS AVAILABLE” BASIS, AND CUSTOMER’S USE OF THE SERVICES IS SOLELY AT ITS OWN RISK.

     b. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT WILL ANY OF THE EQUINIX ENTITIES OR CUSTOMER BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INDIRECT. INCIDENTAL, SPECIAL, RELIANCE, EXEMPLARY OR PUNITIVE DAMAGES INCLUDING LOST PROFITS, LOSS OF BUSINESS, LOSS OF REVENUES, LOSS OF DATA, INTERRUPTION OR CORRUPTION OF DATA, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR ANY OTHER TYPE OF DAMAGES OTHER THAN DIRECT DAMAGES.

     c. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE EQUINIX ENTITIES’ TOTAL LIABILITY TO CUSTOMER IN THE AGGREGATE FOR THE ENTIRE TERM (AND REGARDLESS OF WHETHER THE CLAIMS ARE BROUGHT DURING OR AFTER THE TERM) WITH RESPECT TO ALL CLAIMS ARISING FROM OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT (INCLUDING ATTORNEY’S FEES) WILL NOT EXCEED THE AMOUNT ACTUALLY PAID BY CUSTOMER FOR THE THREE (3)- MONTH PERIOD IMMEDIATELY PRECEDING THE MONTH IN WHICH THE FIRST CLAIM AROSE. AS A FURTHER LIMITATION, THE EQUINIX ENTITIES’ MAXIMUM LIABILITY FOR ANY CLAIMS RELATING TO SERVICES OFFERED OR PROVIDED BY EQUINIX (I) FOR A NON-RECURRING CHARGE ONLY, OR (II) AS SMART HANDS SERVICES, SHALL NOT EXCEED THE AMOUNT OF THE SERVICE FEE FOR SUCH SERVICE PROVIDED ON THE OCCASION GIVING RISE TO THE CLAIM.

     d. THE LIMITATIONS SET FORTH IN SECTIONS 6(b)-(c) WILL APPLY TO ANY AND ALL CLAIMS AND CAUSES OF ACTION WHATSOEVER, REGARDLESS OF WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHER THEORY.

     e. The Equinix Entities and Customer each waive the right to bring any claim against the other Party arising or in any way relating to this Agreement more than six (6) months after the date this Agreement expires or is earlier terminated.

     f. If some or all of the Licensed Space is not usable for a period exceeding one hour (the “Temporarily Unusable Licensed Space”), Customer will be entitled to a credit of one seven hundred twentieth (1/720) of the monthly recurring portion of the Service Fee for such Temporarily Unusable Licensed Space for each hour that such space is unusable. This credit is Customer’s sole and exclusive remedy for interruptions, suspensions, failures, defects, delays, impairments or inadequacies in any of the Services. Notwithstanding the foregoing, Customer will only have the right to receive a credit if (i) Customer notifies Equinix within five (5) days of its inability to use the Temporarily Unusable Licensed Space and (ii) the Temporary Unusable Licensed Space is not usable for reasons other than for (a) the actions or emissions of Customer, Customer’s Authorized Persons, Accompanying Persons, or Associated Entitles; (b) Customer’s Equipment, or the equipment of any of Customer’s Authorized Persons, Accompanying Persons, or Associated Entitles; or (c) circumstances or events beyond Equinix’s control.

7. Insurance.

     a. Customer agrees to maintain, at Its expense, for each IBX Center during the entire time this Agreement is in effect, (i) Commercial General Liability insurance in an amount not less than One Million U.S. Dollars ($1,000,000), or the local currency equivalent, per occurrence for bodily injury, death and property damage, which policy will include contractual liability coverage related to this Agreement; (ii) Workers’ Compensation and employer’s liability insurance in an amount not less than that prescribed by law; and (iii) umbrella or excess liability insurance with a combined single limit of no less than Two Million U.S. Dollars ($2,000,000) or the local currency equivalent. Prior to any use of the Licensed Space at an IBX Center (including, but not limited to, delivery of any of Customer’s Equipment to an IBX Center), Customer will finish Equinix with certificates of insurance that evidence the minimum levels of insurance set forth herein and which name as additional insureds the Equinix Entities and other parties with an interest in the Licensed Space or the IBX Center, as designated by Equinix. In addition, Customer will notify Equinix of any non-renewal, cancellation, reduction in policy limit or other material change in Customer’s coverage at least forty-five (45) days prior to such change in coverage. None of the Equinix Entities have any obligation to insure any property belonging to or in the possession of Customer.

     b. Customer will cause and ensure that each insurance policy referred to in Section 7(a), will provide that the insurers waive all claims and rights of recovery by subrogation against the Equinix Parties in connection with any liability or damage covered by Customer’s insurance policies. As to any property insurance carried by Equinix on the IBX Centers where any of the Licensed Space is located, Equinix will obtain a

EQUINIX MSA UNITED STATES Equinix Proprietary and Confidential Page 2 of 6

waiver of subrogation in favor of Customer. Except as set forth in Section 5, Customer will not have any responsibility for any loss or damage to equipment owned by any of the Equinix Entities, and none of the Equinix Entities will have any responsibility for any loss or damage to Customer’s Equipment.

8. Term of Agreement, Suspension of Service, Termination, and Removal of Customer’s Equipment.

     a. This Agreement will commence on the MSA Effective Date. Unless earlier terminated in accordance with its terms, this Agreement will terminate on the date the last Order then in effect expires or is terminated pursuant to the terms and conditions set forth in this Agreement (which will be the date on which the last Service Term of such last Order expires or is terminated pursuant to the terms and conditions of this Agreement). For each Service ordered on a Sales Order, the initial Service Term for such Service will be stated in the applicable Sales Order. Unless otherwise agreed to by the parties in writing or in an applicable change order or order confirmation agreed to by the parties, the initial Service Term for each Service ordered via a Phone Order or Online Order will be the Online/Phone Order Service Term. Unless otherwise agreed to by the parties in writing or in an applicable change order agreed to by the parties, for each Service, upon expiration of the Initial Service Term, and upon expiration of each renewal, the Service Term for such Service will renew automatically for additional terms of one (1) year each, unless either Equinix notifies Customer, or Customer notifies Equinix, at least ninety (90) days prior to the end of the then-current Service Term for such Service that it has elected to terminate the Service Term for such Service, in which event the Service Term for such Service will terminate at the end of such then-current Service Term.

     b. Either Party may terminate this Agreement by giving notice of termination to the other Party if the other Party breaches any material term or condition of this Agreement end fails to cure such breach within thirty (30) days after receipt of notice of the same. Notwithstanding the foregoing, except where Customer has failed to timely cure a monetary breach, if a Party fails to timely cure a material breach as to only one IBX Center, and Customer has Licensed Space in more than one IBX Center, then the non-breaching Party may only terminate this Agreement (and the corresponding Orders) as to the IBX Center where the material breach has not been timely cured, and this Agreement will remain in full force and effect as to all other IBX Centers.

     c. Notwithstanding Section 8(b), the Equinix Entities may terminate this Agreement (or, at Equinix’s sole discretion, suspend the provision of Services, including discontinuing the supply of power and denying access to the IBX Center) if (I) Customer fails to cure any monetary breach of this Agreement (e.g. fails to pay any amounts owed) within ten (10) days of notice of the same (five (5) days in the event Customer’s account is past due on three (3) or more occasions during a six (6)-month period); (II) Customer liquidates, ceases to do business, or becomes insolvent; (III) Customer breaches any provision of this Agreement that in Equinix’s reasonable Judgment interferes with Equinix’s operation or maintenance of the IBX Center or with its other customers’ use thereof, and Customer fails to cure such breach within one (1) hour of being notified of the same, or (iv) Customer breaches any provision of this Agreement that in Equinix’s reasonable Judgment has the potential to interfere with Equinix’s operation or maintenance of the IBX Center or with its other customers’ use thereof, and Customer fails to cure such breach within forty-eight (48) hours of being notified of the same. Notwithstanding the foregoing, if clause (III) or (iv) above is applicable, while Equinix may suspend the provision of Services in accordance with the above Equinix will not terminate this Agreement based on such clauses alone unless Customer’s breach continues for at least ten (10) days. If Equinix suspends a Service pursuant to this Section 8(c), unless Equinix has subsequently terminated this Agreement as permitted herein. Equinix will resume the discontinued Service within twenty-four (24) hours after it is reasonably satisfied Customer has cured the breach(es) which gave rise to Equinix’s right to suspend the Service. Equinix may charge a reinstatement fee equal to the direct out-of-pocket expenses incurred by Equinix to resume the discontinued Service.

     d. The Equinix Entities may terminate this Agreement as to any affected Licensed Space or IBX Center if any portion of the IBX Center in which the affected Licensed Space is located becomes subject to a condemnation proceeding or is condemned, Equinix’s possession is otherwise terminated or abated, or Equinix cannot provide Customer with access to the affected Licensed Space as contemplated herein for a period exceeding thirty (30) days. Customer may terminate this Agreement as to a Licensed Space if Equinix changes the Policies in a way that materially end adversely affects Customer’s use of the Services in such Licensed Space, but only if within ten (10) days after Customer’s receipt of notification of such change in the Policies, Customer notifies Equinix that Customer wishes to terminate this Agreement as to such Licensed Space on such grounds.

     e. Upon expiration or termination of an Order (or any portion thereof), all other rights of Customer with respect to the Licensed Space Licensed under such Order (or the affected portion thereof) (“Terminated Space”) will terminate, and Customer will remove all of Customer’s Equipment and other property belonging to Customer or Customer’s Authorized Persons, Accompanying Persons and/or Associated Entities, but excluding any wiring, cable or other equipment or property owned, leased or licensed by any of the Equinix Entities, from the Terminated Space no later than the effective date of such termination. If Customer fails to remove any such property in accordance with this Section 8(e), the Equinix Entities will be entitled to pursue all available legal remedies against Customer, including one or more of the following remedies: (i) immediately removing any or all such property and storing it at Customer’s expense at an on-site or off-site location, (ii) shipping such property to the address set forth at the end of this Agreement at Customer’s risk and expense, or (iii) upon providing thirty (30) days’ prior notice to Customer, and if Customer fails to remove such property within such thirty (30)-day period, liquidating such property in any commercially reasonable manner and charging Customer for all costs associated with the liquidation. Notwithstanding anything in this Agreement to the contrary, Customer will not be entitled to remove any Customer’s Equipment from an IBX Center, and Customer waives its right to do so, upon termination of this Agreement if Customer’s account is past due.

     f. While Customer has no right to use the Services provided under an Order after the end of the Service Term, if Customer does so, Customer will be obligated to pay for such Services pursuant to the terms and conditions of this Agreement and any such Order, and any such Order will continue in effect for as long as the Services are used by Customer. Notwithstanding the foregoing, in such event, any such Order will be terminable at will by Equinix effective immediately upon notice to Customer. In addition, notwithstanding anything in this Agreement to the contrary, if this Agreement would have otherwise terminated prior to Customer’s cessation of its use of the Services, this Agreement will continue in effect for as long as the Services are used by Customer, but this Agreement will be terminable at will by the Equinix Entities effective immediately upon notice to Customer.

     g. Customer grants Equinix a security interest in all of Customer’s Equipment now or hereafter located at each IBX Center, to secure payment of all amounts and satisfaction of all obligations due under this Agreement. In connection therewith, if required by applicable law, Equinix will be entitled to file one or more financing statements with respect to its security interest and Customer will sign all necessary documents, and take such other actions as Equinix reasonably requests, to perfect or continue such security interest. Equinix will not take any action to enforce its security interest in the Equipment until such time as any invoice is sixty (60) days or more past due.

     h. Neither Party will be liable to the other Party for property terminating this Agreement or any portion thereof in accordance with its terms, but Customer will be liable to the Equinix Entities for any amounts owed prior to the effective date of termination. Notwithstanding anything to the contrary in this Agreement, the Equinix Entities have the right to recover from Customer all damages recoverable under law for the period past the end of the Term, if the Equinix Entities terminate this Agreement prior to the end of the full Term due to Customer’s material breach.

     i. Notwithstanding anything in this Agreement (including in any Order) to the contrary, under no circumstances will any Order survive the expiration or earlier termination of this Agreement, and under no circumstances will any Order pertaining to an IBX Center survive the termination of this Agreement as to that IBX Center. None of the Equinix Entities will have any obligation to provide any Services after the expiration or earlier termination of this Agreement, and none of the Equinix Entities will have any obligation to provide any Services at an IBX Center after the expiration or earlier termination of this Agreement as to such IBX Center

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9. Miscellaneous.

     a. Except where otherwise expressly stated in the Agreement, (and regardless of whether certain provisions in this Agreement expressly require written notice, consent or approval) all notices, consents, or approvals required by this Agreement will only be effective if in writing and sent by (i) certified or registered air mail, postage prepaid, (ii) overnight delivery requiring a signature upon receipt, (iii) delivery by hand, or (iv) facsimile or electronic mail (promptey confirmed by certified or registered mail or overnight delivery), to the parties at the respective street addresses, facsimile numbers, or electronic mail addresses set forth at the end of this Agreement or such other addresses or facsimile numbers as may be designated in writing by the respective parties. Notices, consents and approvals will be deemed effective on the date of receipt, Notwithstanding anything to the contrary in this Agreement, notices sent by Equinix pursuant to Sections 3(b), 3(c) and 4(c) may be sent by first class US mail, and receipt of such notices shall be presumed to occur five (5) days after mailing.

     b. This Agreement will be governed in all respects by the internal laws of the State of California without regard to its conflict of laws provisions. The Parties irrevocably agree to the exclusive jurisdiction of the courts of San Francisco, California. If any legal action is brought by either Party arising from, or related to, the subject matter of this Agreement, the prevailing Party will be entitled to an award of its reasonable attorneys’ fees and costs.

     c. No Party’s directors, officers or employees will have any liability to any other Party with respect to this Agreement. Except as may be specifically otherwise consented to in writing by an Affiliate of a Party (and none of the other terms of this Agreement shall be deemed to constitute such consent), no Party’s Affiliates will have any liability to any other Party with respect to this Agreement, including with respect to any Orders. Notwithstanding anything in this Agreement to the contrary, an Affiliate of an Equinix Entity shall not be deemed to have consented to liability to Customer as a result of such Affiliate executing, amending (i.e., agreeing to a change order amending an Order) or otherwise being a Party to, one or more. Orders, or such Affiliate acting in connection with or relating to any such Order.

     d. Any Order may be amended by a change order that expressly provides it amends such Order, but only if such change order is either executed by Equinix end Customer, or is prepared by Equinix and agreed to by Equinix and Customer, and Equinix’s and Customer’s agreement to such amendment to the Order is reflected in the manner required by the change order. Any Order amended by a change order shall thereafter, as amended, continue to be governed by the terms and conditions of this Agreement. This Agreement, the exhibits, the Policies then in effect, and all Orders executed at any time during the Term, all of which are incorporated herein by reference into this Agreement, constitute the complete and entire agreement between the parties with respect to the subject matter hereof, and supersede and replace any and all prior or contemporaneous discussions, negotiations, proposals, understandings and agreements, written and oral, regarding such subject matter, as well as any industry custom. This Agreement will be effective only when signed by each Party. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Subject to the next sentence below, this Agreement may be amended only in writing by an instrument signed by each Party. For purposes of clarification, the prior sentence is not intended to modify or limit Equinix’s and Customer’s rights to (i) agree to Online Orders or Phone Orders pursuant to the terms of Section 9(f) below, (ii) amend Orders in accordance with the terms of a change order prepared by Equinix even where such change order does not require a writing executed by both parties to effect an amendment of such Orders, or (iii) enter into a Sales Order executed only by Customer and Equinix.

     e. No waiver of any breach of any provision of this Agreement will constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, and no waiver will be effective unless made in writing and signed by an authorized representative of the waiving Party.

     f. If Customer and Equinix execute multiple Orders, each additional Order will supplement rather than replace the prior Orders, unless otherwise stated by the parties in writing. Notwithstanding anything in this Agreement to the contrary, (i) Equinix has no obligation to execute, or to amend, any Order with Customer, (ii) no Sales Order will be effective unless executed by both parties, (iii) no Online Order or Phone Order will be effective unless made by Customer and agreed to by Equinix, which agreement by Equinix will be reflected either by Equinix’s written confirmation of such Online Order or Phone Order or by Equinix’s commencement of the provision of the Services ordered under the Online Order or Phone Order, and (iv) no amendment to an Order will be effective unless the change order that is amending such Order is prepared by Equinix, and expressly provides that it amends such Order.

     g. Each Party acknowledges and agrees that it has reviewed, and has had an opportunity to have reviewed, this Agreement (including the exhibits and the Policies), and it is the parties’ intent that this Agreement will not be construed against any Party. The section headings and captions throughout this Agreement are for convenience and reference only, and will not be used to construe this Agreement.

     h. If any provision of this Agreement, as applied to any Party or to any circumstance, is adjudged by a court to be invalid, illegal or unenforceable, the same will not affect the validity, legality, or enforceability of the portion of the provision, if any, that is not invalid, illegal or unenforceable, the application of such provision in any other circumstances, or the validity, legality, or enforceability of any other provision of this Agreement. All terms and conditions of this Agreement will be deemed enforceable to the fullest extent permissible under applicable law, and, when necessary, the court in any action between the Parties is requested to reform any and all terms or conditions to give them as much effect as possible.

     i. Sections 5, 6, 7, 8, 9(b), (c), (e), (g), (i), (j), (n), Exhibit A, and Section (g) of Exhibit B will survive the termination of this Agreement. In addition, all provisions of this Agreement that can only be given proper effect if they survive the termination of this Agreement will survive the termination of this Agreement. This Agreement will be valid as to any obligation incurred prior to termination of this Agreement. Without limiting the foregoing, Customer will pay all amounts owed to the Equinix Entitles under this Agreement, including any amounts that are not due until after the expiration or earlier termination of this Agreement. Each Party recognizes and agrees that the warranty disclaimers and liability and remedy limitations in this Agreement are material bargained for bases of this Agreement and that they have been taken into account and reflected in determining the consideration to be given by each Party under this Agreement and in the decision by each Party to enter into this Agreement. The parties agree that the warranty disclaimers and liability and remedy limitations in this Agreement will survive and apply even if found to have failed of their essential purpose.

     j. Except where otherwise expressly stated herein, and subject to the limitations set forth in Section 6, the rights and remedies provided for herein are cumulative and not exclusive of any rights or remedies that a Party would otherwise have.

     k. The Equinix Entities on the one hand, and Customer on the other hand, are independent contractors and this Agreement will not establish any relationship of partnership. joint venture, employment, franchise or agency between the Equinix Entities and Customer. Neither the Equinix Entities nor Customer will have the power to bind the other or incur obligations on the other’s behalf without the other’s prior written consent. Neither Customer nor the Equinix Entities grants the other the right to use its trademarks, service marks, trade names, logos, copyrights, or other intellectual property rights or other designations in any promotion, publication, or press release without the prior written consent of the other Party in each case.

     l. This Agreement, and the rights of customer hereunder, are, without any further action by any Party, subject and subordinate to the leases for the IBX Centers and all superior instruments to such leases (including, without limitation, mortgages or ground leases for the IBX Centers). This Agreement is a services agreement and is not intended to and will not constitute a lease of any real or personal property. Customer acknowledges and agrees that (i) it has been granted only a license (“License”) to use the Licensed Space in accordance with this Agreement; (ii) Customer has not been granted any real property interest under this Agreement; and (iii) Customer has no rights as a tenent or otherwise under any real property or landlord/tenant laws, regulations, or ordinances. The Equinix Entities hereby reserve, with respect to the IBX Centers, an rights not specifically granted to Customer in this Agreement, including, without limitation, the right (i) of access to and use of the IBX

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Centers for their own use or the use of others; (ii) to grant additional licenses to other persons or co-location customers for the use of portions of the IBX Centers; and (iii) to exercise or grant other rights not inconsistent with the rights granted in this Agreement.

     m. Any Equinix Entity (the “Applicable Equinix Entity”) may permit any other Equinix Entity, or any independent contractor or other third party, to perform any of the Applicable Equinix Entity’s obligations hereunder. Any Equinix Entity may assign or transfer any of its rights under this Agreement to any other Equinix Entity, and any Equinix Entity may assign, delegate or transfer its rights and obligations under this Agreement to an Equinix Affiliate, or to a party acquiring all or substantially all of an Equinix Entity’s business or assets, including through merger, and in the event of any such assignment, transfer or delegation, and the assumption by the transferee of the obligations of such Equinix Entity hereunder, such Equinix Entity will be released from any further liability or obligation under this Agreement Accordingly, the Equinix Entities may assign, delegate or transfer their rights and obligations under this Agreement to an Equinix Affiliate, or to a party acquiring all or substantially all of the Equinix Entities’ business or assets, including through merger, and in the event of any such assignment, transfer or delegation, and the assumption by the transferee of the obligations of the Equinix Entities hereunder, the Equinix Entities will be released from any further liability or obligation under this Agreement. Customer may assign this Agreement without the Equinix Entities’ consent only where the party to whom this Agreement is assigned by Customer is either an Affiliate of Customer, or is acquiring all or substantially all of Customer’s business or assets, including through merger. This Agreement will be binding upon and inure to the benefit of all successors and permitted assigns of the Equinix Entities and Customer, who will be bound by all of the obligations of their predecessors or assignors. Except as set forth in Exhibit B of this Agreement with respect to sublicensing only, and this Section 9(m) with respect to an assignment of the entire Agreement under the conditions specified above only, Customer will not assign, delegate, transfer or sublicense all or any part of the Licensed Space.

     n. The Equinix Entities will not be responsible or in any way liable, and Customer will not have any termination or other rights, arising out of or relating to any failure by any Equinix Entity to perform or any hindrance in the performance of its obligations under this Agreement if such failure or hindrance is caused by events or circumstances beyond such Equinix Entity’s control, including acts of God, war, labor strike, terrorist act, fire, flood, earthquake, any law, order, regulation or other action of any governing authority or agency thereof, or failure of the internet.

     o. All Orders are at all times subject to all of the terms and conditions of this Agreement. In the event of a conflict between the body of this Agreement and an Order, the body of this Agreement will control, unless the body of this Agreement or the Order states that the conflicting term in the Order controls.

     p. Unless otherwise expressly agreed to by the parties in writing, the applicable Equinix Entities will retain title to all parts and materials used or provided by any of the Equinix Entities or third parties acting on Equinix’s behalf in the performance and/or furnishing of the Services.

     q. The Parties agree that, with the exception of the applicable landlords of any of the Equinix Entities, there will be no third party beneficiaries to this Agreement, including, but not limited to, any Sublicensee, end user, customer or the insurance providers for either Party.

     r. The parties specifically exclude application of the United Nations Convention on Contracts for the International Sale of Goods to this Agreement.

10. Definitions.

Accompanying Person: Each person (other than an employee of an Equinix Entity) who is accompanied by an Authorized Person while at an IBX Center.

Affiliate: As to a party, means any entity controlling, controlled by, or under common control with such party, where the term “control” and its correlative meanings, “controlling,” “controlled by,” and “under common control with,” means the legal, beneficial or equitable ownership, directly or indirectly, of more than fifty percent (50%) of the aggregate of all voting equity interests in an entity. Without limiting the foregoing, but in addition thereto, any Affiliate of, or subsidiary of, Equinix, Inc. shall be deemed to be an Affiliate of Equinix.

Associated Entity: Each individual, company, partnership or other entity of any type which employs, contracts with, or is otherwise associated or affiliated with any of Customer’s Authorized Persons or Accompanying Persons. Without limiting the foregoing definition, each Sublicensee that has sublicensed Sublicensed Space at an IBX Center will be an Associated Entity at such IBX Center.

Authorized Person: Each person who is included on a list of Authorized Persons given to Equinix by Customer in accordance with the Policies.

Billing Commencement Date: For each Service, unless otherwise agreed to by the parties in writing, (i) for a Service ordered in a Sales Order, the date designated in the Sales Order as the date charges will begin to accrue, and (ii) for a Service ordered in an Online Order or Phone Order, the date Equinix begins providing the Service to Customer, unless otherwise agreed to by the parties in the Order.

Cross-Connect: A physical or wireless interconnection within an IBX Center that (i) exits Customer’s cage or (ii) connects Customer to another Equinix customer.

Customer Care Website: The customer care website accessible via the Internet at a location designated by Equinix, which it has the right to change from time to time.

Customer Cross-Connect: A physical interconnection, including cable, connections, and other wiring, that (i) does not exit Customer’s cage, (ii) does not connect Customer to another Equinix customer, and (iii) interconnects (a) Equipment belonging to the Customer or (b) POD Equipment that is provided by an Equinix Entity and that is in Customer’s cage with Customer’s Equipment.

Customer’s Equipment: All network and/or computer equipment (including wiring and Customer Cross-Connects between such equipment and Customer’s POD Equipment) that is located in the Licensed Space, regardless of whether such equipment is owned, leased, licensed or otherwise obtained for use by Customer, Customer’s Authorized Persons, Accompanying Persons, or Associated Entities (but this does not Include Cross-Connects or POD Equipment that is provided by an Equinix Entity and that is located in Customer’s Licensed Space).

Customer Parties: Customer and the Affiliates, owners, officers, directors, employees, contractors and agents of Customer or of the Affiliates of Customer.

Equinix: References to Equinix refer to the Equinix Service Provider(s) who will provide the applicable Service(s), although in any of those references an Equinix Entity selected by Equinix, Inc. may act on behalf of such applicable Equinix Service Provider(s)).

Equinix Entities: Equinix Operating Co., Equinix Inc. and Equinix Pacific, Inc., and each of which Individually is an Equinix Entity

Equinix Parties: Each of the Equinix Entities and the Affiliates, owners, officers, directors, employees, contractors and agents of one or more of the Equinix Entitles or of the Affiliates of one or more of the Equinix Entitles.

Equinix Service Providers: Each Equinix Entity that has agreed to one or more Orders with Customer. Notwithstanding the foregoing, If, on behalf of another Equinix Entity, an Equinix Entity agrees to an Order with Customer, it is the Equinix Entity that will provide the Services and on whose behalf the Order was entered into who will be deemed both (i) the Equinix Service Provider for such Order and (ii) the Party who executed or agreed to such Order for all purposes under this Agreement.

IBX Centers: The internet Business Exchange Centers leased or owned by an Equinix Entity in which Customer licenses Licensed Space or receives Services from Equinix pursuant to an Order.

Licensed Space: The areas licensed by Customer under this Agreement and the Orders and as identified in the Orders as to the amount of space. For each Licensed Space, Equinix will determine at all times during the Term the exact location in the IBX Centers where the Licensed Space will be located, and Equinix will notify Customer accordingly.

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Online Order: An Order for Services placed by Customer via the Customer Care Website and accepted by Equinix pursuant to Equinix’s then current ordering procedures (as well as any amendment to such Order reflected In a change order agreed to by the parties in accordance with the terms of the applicable change order, the Order and this Agreement).

Online/Phone Order Term: For each Service ordered by an Online Order or Phone Order, the period commencing on the Billing Commencement Date for such Service and ending (i) when the License (as defined in Section 9(i)) for the Licensed Space into which such Service is provided expires or terminates pursuant to this Agreement or (ii) one (1) year after the Billing Commencement Date if such Service is not provided in a Licensed Space.

Order: Any Sales Order, Online Order or Phone Orders between Customer and Equinix. A change order that amends an Order is not itself considered to be an Order under this Agreement, but is instead considered to be an amendment of an existing Order under this Agreement.

Order Confirmation: A document which confirms, among other things, the Services, the quantity of such Services and the prices of such Services ordered in an Online Order or Phone Order and which is issued by Equinix and returned to Equinix pursuant to the instructions set forth in such document.

Party: Customer and each of the Equinix Entities. References to “each Party” include Customer and each Equinix Entity. References to the “other Party,” means, as to Customer, each of the Equinix Entities, and as to each of the Equinix Entities, such references mean Customer. Where the Agreement provides that “either Party” has a right to take an action under certain circumstances, one or more Equinix Entities may take such action (i.e. if one or more Equinix Entities wishes to take such action, it is not necessary that all Equinix Entities take such action).

Phone Orders: An Order for Services placed by Customer via telephone and accepted by Equinix pursuant to Equinix’s then current ordering procedures (as well as any amendment to such Order reflected in a change order agreed to by the parties in accordance with the terms of the applicable change order, the Order and this Agreement).

POD Equipment: The (i) patch panels, DSX panels for category 5 twisted pair, co-axial, single and multi-mode fiber, or (ii) other appropriate (as reasonably determined by Equinix) point of demarcation equipment.

Policies: The procedures, rules, regulations, security practices and policies adopted by Equinix that are then in effect for the IBX Centers, and as they may be amended from time to time by Equinix and so notified to Customer.

Power Services: Power circuits ordered by Customer. For the avoidance of doubt, Power Services do not include power provided by Equinix as part of a bundled service.

Sales Orders: All written sales orders executed by Customer and Equinix that provide that such sales orders are governed by, and incorporated by reference Into, this Agreement (as well as any amendment to such Order reflected in a change order agreed to by the parties in accordance with the terms of the applicable change order, the Order and this Agreement).

Services: All services, goods and other offerings of any kind set forth in an Order to be provided by Equinix to Customer pursuant to this Agreement.

Service Fees: Charges and fees for Services charged to Customer by Equinix pursuant to this Agreement.

Service Term: Each Service in an Order will have a Service Term, which for each Service will be the length of time from the agreed to effective date for the Service Term until the last day Equinix is required to provide such Service pursuant to the terms and conditions set forth in this Agreement or as otherwise agreed to by the parties in the applicable Order.

Shipping Policies: The portion of the Policies entitled Shipping Policies.

Sublicensed Space: The portion of the Licensed Space sublicensed to a Sublicensee by Customer pursuant to the terms of this Agreement.

Sublicensee: A customer of Customer or other third party who sublicenses all or part of the Licensed Space from Customer.

Taxes: Sales, use, transfer, privilege, excise, VAT, GST, consumption tax, and other similar taxes and duties, whether foreign, national, state or local, however designated, now in force or enacted in the future, which are levied or imposed by reason of the performance by Equinix or Customer under this Agreement or by Customer with respect to its operations and use of the Services, but excluding taxes on Equinix’s net income.

Term: The term of this Agreement as determined in accordance with Section 8(a) of this Agreement.

This Master Service Agreement has been entered into between the parties as of the MSA Effective Date.

Customer to complete:

The person signing below hereby warrants and represents that he or she has full authority to execute this Agreement for the Party on whose behalf he or she is signing.

Customer Name:	Demand Tec
	(Complete Legal Name)
Authorized Signature:	/s/ Segan Maddox
Printed Name:	Segan Maddox
Title: Dir Customer Ops
Street address for notices:
1 Circle Star Way
San Carlos, CA 94070
Phone: 650.226 - 4600
Facsimile number: 650.556.1190
Electronic mail address: smaddox@demandtec.com

Equinix to complete:

The person signing below hereby warrants and represents that he or she has full authority to execute this Agreement for the Parties on whose behalf he or she is signing.

Authorized Signature:	/s/ Monica Brown Andrews
Printed Name: Monica Brown Andrews
Title: Director of Customer Contracts
Street addresses for notices:
301 Velocity Way, 5th Floor
Foster City, California 94404, USA
Phone: +1 650-513-7000
Facsimile number: +1 650-618-1857
Electronic mail address: contracts@Equinix.com

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Exhibit A
Confidentiality Provisions

The following provisions apply with respect to the treatment of confidential information disclosed by the Parties hereto. All capitalized terms not defined in this exhibit will have the respective meanings specified in the Master Service Agreement to which this Exhibit A is attached and incorporated by reference.

     a. Except as expressly permitted in this Exhibit A, no Party will, without the prior written consent of the other Party, disclose any Confidential Information of the other Party to any third party. Information will be considered Confidential Information of a Party if either (i) it is disclosed by the Party to the other Party in tangible form and is conspicuously marked “Confidential”, “Proprietary” or the like; or (5) (a) it is disclosed by a Party to the other Party in non-tangible form and is identified as confidential at the time of disclosure; and (b) it contains the disclosing Party’s customer lists, customer information, technical Information, pricing information, pricing methodologies, or information regarding the disclosing Party’s business planning or business operations. In addition, notwithstanding anything in this Agreement to the contrary, (i) the terms of this Agreement will be deemed Confidential Information of each Party; and (ii) the design of the IBX Centers, the Services provided and equipment used at the IBX Centers and the configuration, interconnection, switching and routing of telecommunication cables, networks and services at the IBX Centers will be considered Confidential Information of the Equinix Entities.

     b. Other than the terms and conditions of this Agreement, information will not be deemed Confidential Information hereunder if such Information (i) is known to the receiving Party prior to receipt from the disclosing Party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing Party; (ii) becomes known (independently of disclosure by the disclosing Party) to the receiving Party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing Party; (iii) becomes publicly known or otherwise ceases to be secret or confidential, except through a breach of this Agreement by the receiving Party; (iv) is disclosed after the end of the Term; or (v) is independently developed by the receiving Party. Notwithstanding the foregoing, the terms and conditions of this Agreement will cease being confidential if, and only to the extent that, they become publicly known, except through a breach of this Agreement by the receiving Party.

     c. Each Party will secure and protect the Confidential Information of the other Party (including, without limitation, the terms of this Agreement) in a manner consistent with the steps taken to protect its own trade secrets and confidential information, but not less than a reasonable degree of care. Each Party may disclose the other Party’s Confidential Information where (i) the disclosure is required by applicable law or regulation or by an order of a court or other governmental body having jurisdiction after giving reasonable notice to the other Party with adequate time for such other Party to seek a protective order; (ii) if in the opinion of counsel for such Party, disclosure is advisable under any applicable securities laws regarding public disclosure of business information; or (iii) the disclosure is reasonably necessary and is to that Party’s, or its Affiliates’, employees, officers, directors, attorneys, accountants and other advisors, or the disclosure is otherwise necessary for a Party to exercise its rights and perform its obligations under this Agreement, so long as in all cases the disclosure is no broader than necessary and the person or entity who receives the disclosure agrees prior to receiving the disclosure to keep the information confidential. Each Party is responsible for ensuring that any Confidential Information of the other Party that the first Party discloses pursuant to this Exhibit A (other than disclosures pursuant to clauses (i) and (ii) above that cannot be kept confidential by the first Party) is kept confidential by the person receiving the disclosure.

     d. Notwithstanding the restrictions set forth in this Exhibit A or Section 9(k), during the Term, (i) any Equinix Entity may issue a press release announcing Customer’s entry into the IBX Centers without obtaining Customer’s consent; and (ii) either Party may publicly refer to the other Party, orally and in writing, as a customer or vendor of services of or to the other Party, as the case may be, without obtaining consent from such Party.

EXHIBIT A
EQUINIX MSA UNITED STATES Equinix Proprietary and Confidential

Exhibit B
Sublicensing Provisions

The following provisions apply with respect to any sublicense of Licensed Space (all capitalized terms herein having the respective meanings specified in the Master Service Agreement to which this Exhibit B is attached and incorporated by reference).

     a. Customer may sublicense the Sublicensed Space to Sublicensees provided that (i) the terms and conditions of such Sublicense will be no less restrictive than this Agreement, (ii) Customer will not in its dealing with such Sublicensees act or purport to act on behalf of any Equinix Entity or landlords of any Equinix Entity, (iii) Customer will require the Sublicensees to abide by the rules set forth in the Policies, and (iv) Customer will cause all Sublicensees to agree in writing that in consideration for the sublicense, Sublicensees waive, to the maximum extent permitted under law, any and all claims of any and all types against the Equinix Entitles and the landlords of any Equinix Entity, at all times, and that in no event will any Equinix Entity, or landlords of any Equinix Entity, have any liability to such Sublicensees, including liability to such Sublicensees for any damages whatsoever, including direct damages.

     b. Notwithstanding anything in this Agreement to the contrary, Customer will remain responsible to the Equinix Entities for the performance of all of Customer’s obligations under this Agreement (including the payment of all amounts owed under this Agreement) and all other agreements between any Equinix Entity and Customer (“Related Agreements”). No sublicense agreement or arrangement between Customer and any Sublicensees will relieve Customer from any liability under this Agreement or any Related Agreements. Without limiting the foregoing, Customer is responsible for paying the Service Fees for all of the Licensed Space (including Sublicensed Space) and the charges for Services for, or relating to, any or all of the Licensed Space (including Sublicensed Space). In no event will any Equinix Entity be deemed to be providing any Services to any Sublicensee for, or relating to, the Sublicensed Space, as the provision of any such Services will be deemed to be to Customer for all purposes under this Agreement. In addition, notwithstanding anything in this Agreement to the contrary, under no circumstances shall any Equinix Entity be deemed to have any obligations to any Sublicensee.

     c. Customer must ensure that each and every sublicense agreement or other sublicense arrangement that Customer has with a Sublicensee does not have any terms and conditions that (i) are inconsistent with this Agreement, or (ii) seek to provide any Sublicensee with rights that Customer does not have under this Agreement Without limiting the foregoing or any other restrictions on Sublicensees, no Sublicensee will have any right to use its Sublicensed Space in any manner that Customer is not permitted to use the Licensed Space.

     d. Sublicensees do not have any rights, separate and apart from Customer’s rights, to access their Sublicensed Space, Accordingly, only Customer’s Authorized Persons at an IBX Center may access the Sublicensed Space of Sublicensees at such IBX Center. Furthermore, none of the Equinix Entities are responsible for restricting a Sublicensee’s access to Customer’s Licensed Space located in a cage or suite to which that Sublicensee has access.

     e. Notwithstanding anything in this Agreement to the contrary, a Sublicensee has no right to sublicense, delegate, assign or otherwise transfer its rights to use the Sublicensed Space to any other person or entity without Equinix’s written consent, which consent may be withheld for any reason whatsoever or no reason. Any such sublicense, delegation, assignment or transfer will be null and void.

     f. If the parties agree, Equinix and Customer will participate in a joint press announcement to announce when a Sublicensee sublicenses Sublicensed Space at an IBX Center.

     g. Without limiting Customer’s indemnification obligations under Section 5, Customer will indemnify and hold harmless the Equinix Parties from any and all liability, damages, costs and expenses (including reasonable attorneys’ fees and expenses) arising from or relating to (i) any claim from any person or entity, including any Sublicensee, arising from or relating to any breach by Customer of any provision of this Exhibit B; (ii) any claim from any person or entity, including any Sublicensee, arising from or relating to any sublicense or Sublicensed Space; (iii) any claim by a customer, vendor, third-party provider or end-user of any Sublicensee, or any person or entity acting on behalf, or at the direction, of any Sublicensee, relating to, or arising out of, a Sublicensee’s or any of its customers’ services, Customer’s or any of its customers’ services, or the Services provided under this Agreement (including claims relating to interruptions, suspensions, failures, defects, delays, impairments or inadequacies in any of the aforementioned services, including the Services from Equinix); and (iv) any claim by a Sublicensee to the extent that such claim, if sustained, would result in any greater obligation or liability of any Equinix Entity to such Sublicensee than such Equinix Entity has undertaken to Customer under this Agreement.

EXHIBIT B
EQUINIX MSA UNITED STATES Equinix Proprietary and Confidential

EX-10.17

Exhibit 10.17

AMENDED AND RESTATED OUTSOURCING SERVICES AGREEMENT

     THIS AMENDED AND RESTATED OUTSOURCING SERVICES AGREEMENT is made and entered into this May 1, 2006 (“Effective Date”), by and between DemandTec, Inc., a Delaware corporation with offices located at 1 Circle Star Way, Suite 200, San Carlos, California 94070 (“DemandTec”), and Sonata Services Limited, a BVI company, with offices located at Room 900-10, 9/F, MLC Millennia Plaza, 663 King’s Road, North Point Hong Kong (“Service Provider”).

Recitals

     A. DemandTec and Representative are parties to that certain Outsourcing Services Agreement dated August 20, 2004 (the “Original Agreement”), pursuant to which DemandTec engaged Service Provider to perform certain engineering and support services.

     B. The parties desire to terminate the Original Agreement and to restate their respective rights and obligations as set forth herein.

     NOW THEREFORE, in consideration of the terms and conditions set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agrees as follows:

     1. Services; Resources; Security.

     1.1 The specific services to be provided by Service Provider (the “Services”) shall be set forth in individual Statements of Work substantially in the form attached hereto as Exhibit A that may be executed from time to time by the parties (each a “SOW”) and attached to this Agreement. Service Provider shall be responsible to provide the tools and basic know-how used in each project. Upon the reasonable request of DemandTec, Service Provider agrees to prepare and submit progress reports to DemandTec/meet with DemandTec detailing the progress being made on each assigned project.

     1.2 The Services shall be performed by employees and/or consultants supplied by Service Provider (each a “Resource”). Service Provider shall be solely responsible for the compensation, withholdings and benefits for each such Resource. All Resources (a) will be skilled, experienced technicians capable of performing the Services in a professional, workmanlike manner; (b) are not, and will not be at any time while assigned to perform the Services, restricted by contract or otherwise in any way from performing the Services; and (c) if Resources perform Services in the U.S., will have at all times while assigned to perform the Services valid and legal work status under the regulations of the U.S.

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Immigration and Naturalization Service. Prior to commencing any work for DemandTec, each Resource shall execute a Proprietary Information and Inventions Agreement in the form of Exhibit B, and each such agreement shall be provided to DemandTec upon request. During the term of a particular SOW, Resources assigned to perform the Services under that SOW shall not be assigned to or perform any work on behalf of any entity other than DemandTec unless DemandTec consents thereto in writing.

     1.3 Before Service Provider assigns a Resource to perform Services under a SOW, DemandTec will have the opportunity to review such Resource’s qualifications and, within its reasonable discretion, approve the assignment of each such individual proposed by Service Provider. DemandTec may, in its reasonable discretion and at any time during the term of the relevant SOW, require Service Provider to remove a Resource from performing the Services. If DemandTec requests a replacement Resource, Service Provider will to the extent reasonably available, provide DemandTec with a suitable replacement at substantially the same level of experience and at the same billing rates as the individual being replaced. Service Provider will advise all Resources that perform Services under a SOW of the applicable terms of this Agreement and the relevant SOW and ensure each such individual’s compliance with such terms.

     1.4 At all times while performing Services under this Agreement, Service Provider shall comply with the security measures set forth on Exhibit C.

     2. Deliverables; Acceptance.

     2.1 Service Provider agrees to deliver the deliverables, if any, set forth in each SOW (“Deliverables”) in conformance with the specifications and schedule specified in the relevant SOW. Service Provider shall determine the time, place, methods, details and means of performing the Services.

     2.2 When Service Provider considers a Deliverable completed, Service Provider will deliver it to DemandTec for acceptance. DemandTec will accept or reject the Deliverable within ten working days after delivery, specifying any material failures of the Deliverable to meet the requirements therefore stated in the relevant SOW. If DemandTec rejects the Deliverable in accordance with the foregoing, Service Provider will use its best efforts to correct the failures specified in the rejection notice within five working days of the rejection notice and the provisions above shall be reapplied until the Deliverable is accepted. After the third or any subsequent rejection or if the corrections are not made within ten working days of the initial rejection, DemandTec may terminate this Agreement by giving notice to Service Provider.

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     3. Compensation; Billing Procedures.

     3.1 Subject to the terms of this Agreement, DemandTec will pay Service Provider for Services in accordance with the relevant SOW; provided that if no payment arrangement is so specified in the SOW, Service Provider shall submit monthly invoices to DemandTec at the end of the month detailing the Services performed and the fees incurred in the previous month. DemandTec shall pay Service Provider all undisputed fees within 30 days of its receipt of invoice.

     3.2 To reflect the exchange fluctuation of Ren-min-bi (RMB) for the Agreement, should fluctuations in the RMB – US$ exchange rate occur during the term hereof, the fees payable hereunder shall be adjusted by fifty percent (50%) of the total fluctuation, effective in the month following an official government announcement. An adjusting to the full exchange rate will be discussed and effective with the following contract and renewal period.

     4. Term and Termination.

     4.1 This Agreement shall commence on the Effective Date and, unless terminated earlier as described in this Section 4, shall continue for a term of three (3) years, subject to renewal by mutual agreement of the parties.

     4.2 If either party materially breaches this Agreement the other party may terminate this Agreement by giving the breaching party 30 days written notice of such breach, unless the breach is cured within the notice period. DemandTec also may terminate this Agreement at any time, with or without cause, upon providing six months’ advance written notice, over which time DemandTec may gradually scale back Services required so as to reduce required Resources a maximum of 15% per month. Any such termination may, at DemandTec’s option, be limited to one or more SOWs, in which case, the consequences of termination will be limited to the subject matter of those SOWs.

     4.3 In addition, this Agreement shall automatically terminate upon the closing of the business transfer outlined in Section 5 below.

     4.4 Upon termination of this Agreement (except if DemandTec terminates this Agreement for a material breach by Service Provider), DemandTec agrees to pay Service Provider all amounts due or accrued as of the date of such termination. Upon termination of this agreement for any reason, each party shall return to the other party all documents containing Confidential Information as well as all Work Product (as defined in Section 7.1) whether completed or not. Sections 6, 7, 8, 9 and 10 shall survive any termination or expiration of this Agreement for any reason.

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     5. Business Transfer Option. Service Provider hereby grants to DemandTec an irrevocable option to acquire the Resources and business assets of Service Provider that are used in connection with the performance of the Services on the general terms set forth herein. Such transfer shall be documented in a definitive transfer agreement in a form to be agreed by the parties, but which shall contain, at a minimum, usual and customary representations, warranties and indemnities of Service Provider. In order to exercise this option, DemandTec shall provide Service Provider with three (3) months’ advance written notice. Upon the closing of the transfer, DemandTec shall pay to Service Provider a transfer fee in an amount equal to eight times (8x) the total Service Fees paid by DemandTec to Service Provider in the three (3) months prior to the date on which DemandTec provides notice of its exercise of the transfer option.

     5.1 Employees. As part of the business transfer, DemandTec shall have the right, but not the obligation, to offer employment to any or all of Service Provider’s then-current employees who are involved in the provision of Services or who provide support to the operation of the business unit providing the Services (including, for example, administrative staff, security personnel, receptionists and accounting personnel), in each case at salary levels and on other terms and conditions to be determined in DemandTec’s sole discretion. Service Provider agrees to use its best efforts to cause such current employees to make available their employment services to DemandTec. Any employment arrangements between DemandTec and Service Provider’s current employees will be negotiated directly between such employees and DemandTec. Service Provider will remain responsible for any obligations towards its employees that accrue before the closing of the transfer, including, without limitation, claims for wages, benefits or severance pay.

     5.2 Purchased Assets. In connection with the exercise of this option, DemandTec shall have the right to acquire all of Service Provider’s tangible and fixed assets relating to or used or held for use primarily in connection with the performance of the Services, including, without limitation, computer hardware, equipment, and the books, documents, records and files relating to the performance of the Services. The parties will identify all such assets in a schedule to be prepared prior to the closing of the sale and will exercise a Bill of Sale or other appropriate transfer document at the time of transfer.

     5.3 Transferred Agreements. DemandTec also shall have the right, but not the obligation, to assume all agreements of Service Provider that relate to or are required in connection with the performance of the Services, including any equipment leases, security contracts, telephone, Internet or other infrastructure service agreements, to the extent permitted. In addition, DemandTec shall have the right to enter into a sublease agreement pursuant to which it will sublease the portion of Service Provider’s facilities that are used in connection with the provision of Services for the remainder of the term

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of this Agreement. Rent and other commercial terms of any such arrangements shall be agreed to by the parties in good faith.

     5.4 No Assumed Liabilities. Except for any obligations expressly assumed by DemandTec under transferred agreements, DemandTec shall not assume or be deemed to assume any other liabilities, obligations or commitments of Service Provider of any nature whatsoever, whether known or unknown, fixed or contingent, or accrued or unaccrued, including, without limitation, liabilities of Service Provider or which relate to the ownership or use of any of the assets purchased by DemandTec prior to the closing.

     6. Confidential Information. Service Provider understands that DemandTec possesses and will possess Confidential Information which is important to its business. For purposes of this Agreement, “Confidential Information” is information that was or will be developed, created, or discovered by or on behalf of DemandTec, or which became or will become known by, or was or is conveyed to DemandTec (including, without limitation, Results), which has commercial value in DemandTec’s business. “Confidential Information” includes, but is not limited to, information about DemandTec’s finances, operations and maintenance, algorithms, trade secrets, computer programs, design, technology, ideas, know-how, processes, formulas, compositions, data, techniques, improvements, inventions (whether patentable or not), works of authorship, business and product development plans, customers and other information concerning DemandTec’s actual or anticipated business, research or development, or which is received in confidence by or for DemandTec from any other person. Confidential Information does not include information that Service Provider demonstrates to DemandTec’s reasonable satisfaction, by written evidence, (a) is in the public domain by reason of prior publication not directly or indirectly resulting from any act or omission of Service Provider, or (b) was already properly known to Service Provider (other than in connection with this consulting arrangement) without restriction on use or disclosure at the time of DemandTec’s disclosure to Service Provider. At all times, both during the term of this Agreement and after its termination, Service Provider will (and will cause each Resource to) keep in confidence and trust and not use or disclose any Confidential Information without the prior written consent of an officer of DemandTec. Without limiting the foregoing, Service Provider shall not reverse engineer, decompile or otherwise attempt to derive any source (or the underlying ideas, algorithms, formulas, structure or organization) of any computer programs provided to Service Provider in object code form, and Service Provider shall not modify, create derivative works of or copy any computer program provided by DemandTec except only to the extent required by a SOW. Service Provider acknowledges that any disclosure or unauthorized use of Confidential Information will constitute a material breach of this Agreement and cause substantial harm to DemandTec for which damages would not be a fully adequate remedy, and, therefore, in the event of any such breach, in addition to other available remedies, DemandTec shall have the right to obtain injunctive relief. Service Provider understands that the consulting arrangement creates a relationship of confidence and trust between

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Service Provider and DemandTec with regard to Confidential Information and the breach thereof or of the obligations herein relating to Confidential Information shall be construed as a breach of trust for which all the civil and criminal consequences thereof shall follow.

     7. Intellectual Property Rights.

     7.1 Service Provider agrees that any all notes, records, drawings, designs, inventions, improvements, developments, discoveries and trade secrets conceived, made or discovered by Service Provider or under Service Provider’s direction in connection with this Agreement (collectively, the “Work Product”) are the sole property of DemandTec. To the extent any Work Product constitutes material subject to copyright protection, such Work Product have been specially commissioned by DemandTec and shall be deemed “work for hire” as such term is defined under U.S. copyright law. Service Provider agrees to take all reasonable steps under applicable law to ensure that title to Work Product produced by its employees vests in Service Provider.

     7.2 To the extent any such Work Product is not automatically assigned to DemandTec under applicable law, and to the extent they include material subject to copyright, patent, trade secret, or other proprietary rights protection, Service Provider hereby irrevocably and exclusively assigns to DemandTec, its successors, and assigns, all right, title, and interest in and to all such Work Product. This assignment shall not lapse in any circumstances including on the failure of DemandTec to exercise the rights assigned hereunder for any period of time. Service Provider agrees to perform, during and after the term of this Agreement, all acts deemed necessary or desirable by DemandTec to permit and assist it, at DemandTec’s expense, in evidencing, perfecting, obtaining, maintaining, defending and enforcing Rights and/or Service Provider’s assignment with respect to such Inventions in any and all countries. To the extent any of Service Provider’s rights in the same, including without limitation any moral rights, are not subject to assignment hereunder, Service Provider irrevocably and unconditionally waives all enforcement of such rights. Service Provider shall execute and deliver such instruments and take such other actions as may be required to carry out and confirm the assignments contemplated by this Agreement. All documents, magnetically or optically encoded media, and other tangible materials created by Service Provider as part of its Services under this Agreement shall be owned by DemandTec. Upon termination of this Agreement for any reason, Service Provider shall deliver to Client all tangible manifestations of Work Product, whether completed.

     7.3 Any assignment of copyright hereunder includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in

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the various countries where Moral Rights exist, Service Provider hereby waives such Moral Rights and consents to any action of DemandTec that would violate such Moral Rights in the absence of such consent. Service Provider will confirm any such waivers and consents from time to time as requested by DemandTec.

     7.4 If any Work Product is based on, or incorporate, or are improvements or derivatives of, or cannot be reasonably made, used, reproduced and distributed without using or violating technology or intellectual property rights owned or licensed by Service Provider and not assigned to DemandTec, Service Provider hereby grants DemandTec a perpetual, worldwide royalty-free, non-exclusive sublicensable right and license to exploit and exercise all intellectual property rights in support of DemandTec’s exercise or exploitation of any Work Product assigned to DemandTec (including any modifications, improvements and derivatives thereof). This license shall not lapse in any circumstances including for non-exercise of such license by DemandTec for any period of time.

     7.5 Service Provider further understands that DemandTec possesses or will possess “DemandTec Materials” which are important to its business. For purposes of this Agreement, “DemandTec Materials” are documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or plans of DemandTec, whether such documents have been prepared by Service Provider, by Resources or by others. “DemandTec Materials” include, but are not limited to, blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes or printouts, sound recordings and other printed, typewritten or handwritten documents, as well as samples, prototypes, models, products and the like. All DemandTec Materials shall be the sole property of DemandTec. Service Provider agrees that, immediately upon DemandTec’s request and in any event upon completion of the Services, Service Provider shall (and shall cause each Resource to) deliver to DemandTec all DemandTec Materials, any document or media which contains Results, apparatus, equipment and other physical property or any reproduction of such property, excepting only Service Provider’s copy of this Agreement.

     7.6 Service Provider shall not delete, alter or fail to reproduce in and on any computer programs owned by DemandTec, and shall incorporate into all deliverables, any copyright and other notices which may be provided by DemandTec or which may be required by DemandTec at any time.

     8. Warranty. Service Provider represents, warrants and agrees that: (a) it will perform the Services in a good and workmanlike professional manner by Resources having a level of skill commensurate with the requirements of this Agreement; (b) the Deliverables will perform substantially in accordance with the applicable specifications therefor; (c) the Deliverables shall not contain any code, programming instruction or set of instructions that can damage, disable, impair, or interfere with or otherwise adversely affect computer

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programs, data files, or hardware of DemandTec without the consent and intent of the computer user; (d) Service Provider has full power, right and authority to enter into this Agreement, to carry out its obligations under this Agreement, and to grant the rights granted to DemandTec herein, including without limitation, the rights to the Work Product developed under this Agreement; (e) its performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by it in confidence or in trust prior to the execution of this Agreement; (f) Service Provider has not entered into, and agrees not to enter into, any agreement either written or oral that conflicts or might conflict with its performances of the Services under this Agreement; (g) Service Provider has not previously or otherwise granted nor will in the future grant any rights to any third party which conflict with the rights herein granted by Service Provider; (h) neither this Agreement (or any term hereof) nor the performance of or exercise of rights under this Agreement, is restricted by, contrary to, in conflict with, ineffective under requires registration or approval, or affects Service Provider’s proprietary rights (or the duration thereof) under, or will require any compulsory licensing under, any law or regulation of any organization, country, or political or governmental entity where Service Provider is domiciled or where Service Provider will perform the Services; and (i) the Proprietary Information and Inventions Agreement will be valid, binding and enforceable in accordance with it terms when executed by Resources.

     9. Indemnification. Service Provider shall indemnify and hold harmless DemandTec, its officers, directors, members, partners, principals, agents, and employees, from any and all liabilities and expenses, including without limitation, reasonable attorneys’ fees, expenses, costs, judgments, settlements, contract losses, or other costs arising from claims by third parties: (a) based on acts or omissions of Service Provider or any of Resources, or breach of any term or condition of this Agreement including, but not limited to, any breach of the warranties set forth in Section 8 or any compensation, benefit, tax or withholding liability with respect to Service Provider; (b) for bodily injury, death or damage to real or tangible personal property, to the extent directly and proximately caused by the negligence or willful misconduct of Service Provider or any Resource while engaged in the performance of the Services; or (c) arising out of any claim that any Work Product infringes upon or violates any patent, copyright, trade secret, or other intellectual property right of any third party.

     10. General.

     10.1 Entire Agreement; Amendment. This Agreement, including any SOW executed and attached hereto, as to its subject matter, exclusively and completely states the rights, duties and obligations of the parties and supersedes all prior and contemporaneous representations, letters, proposals, discussions and understandings by or between the parties. This Agreement may only be amended in writing and signed by both parties. The parties, by their representatives signing below, agree with the terms of this

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Agreement and further certify that their respective signatories are duly authorized to execute this Agreement.

     10.2 Non-Solicitation. Service Provider shall not, directly or indirectly, solicit for employment any employee, agent, representative of DemandTec during the time any work is being performed hereunder or for one year after the completion of the performance of Services.

     10.3 Non-Compete. In order to protect DemandTec’s trade secrets and other Confidential Information, Service Provider agrees that it will not, whether directly or indirectly, whether for itself or as an agent, consultant or other interested party, develop or distribute any technology competitive with the products and services of DemandTec, or contract with or provide any services for the benefit or use by any direct competitor of DemandTec during the term of this Agreement. Without limiting the generality of the foregoing, the parties acknowledge that KhiMetrics, Inc. (now a part of SAP), JDA Software Group, Inc., IRI, AC Nielson, Retek Inc./ProfitLogic (now a part of Oracle), Inc., SAS Institute, Inc. and Manugistics Group, Inc. are deemed to be direct competitors of DemandTec.

     10.4 Publicity. Neither party shall issue a press release or other public statement regarding the relationship of the parties or this Agreement without the prior written consent of the other party, which may be withheld in its sole discretion.

     10.5 Excusable Delay. Neither party shall be liable to the other for any delay or failure to perform, which is due to causes beyond the reasonable control of said party, including, but not limited to, acts of God, acts of the public enemy, acts of any governmental authority in its sovereign capacity, fires, floods, power outages, hurricanes, earthquakes, epidemics, quarantine restrictions, strikes or other labor disputes and freight embargoes; provided, however, that failure to make any payments provided for herein shall not be excused for any of the foregoing reasons.

     10.6 Relationship of Parties. For all purposes under this Agreement each party shall be and act as an independent contractor and shall not bind nor attempt to bind the other to any contract. Service Provider will be solely responsible for all taxes, withholdings, benefits, insurance and other similar statutory obligations with respect to itself and the Resources.

     10.7 Assignment. Neither party shall have the right to assign this Agreement to another party, except that DemandTec may assign its rights and obligations to a successor to substantially all its relevant assets or business.

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     10.8 Governing Law; Attorney’s Fees; Choice of Forum. This Agreement and any dispute arising hereunder shall be governed by the laws of the State of California, USA, without regard to its conflicts of law provisions. In any action or proceeding to enforce rights under this Agreement, the prevailing party will be entitled to recover reasonable costs and attorneys’ fees. Any controversy, claim or dispute arising out of or relating to this Agreement or the relationship, either during the existence of the relationship or afterwards, between the parties hereto, their assignees, their affiliates, their attorneys, or agents, shall be subject to final arbitration conducted in English in San Mateo County, California pursuant to the JAMS Comprehensive Arbitration Rules and Procedures, provided that Service Provider may, at its option, bring any suit relating to intellectual property rights or confidential information in any court of competent jurisdiction. For such purposes, Service Provider (a) submits to the jurisdiction of the state and federal courts with jurisdiction over San Mateo County, California, (b) waives the defense of an inconvenient forum, (c) agrees that valid consent to service may be made by mailing or delivery of such service to the California Secretary of State (the “Agent”) or to the party at the party’s last known address, if personal service delivery can not be easily effected, and (d) authorizes and directs the Agent to accept such service in the event that personal service delivery can not easily be effected.

     10.9 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING ELSE HEREIN, IN NO EVENT WILL DEMANDTEC BE LIABLE TO SERVICE PROVIDER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE) OR ANY OTHER LEGAL OR EQUITABLE THEORY FOR ANY (A) SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES , OR (B) FOR ANY AMOUNT GREATER THAT THE AMOUNT ACTUALLY PAID TO DEMANDTEC UNDER THIS AGREEMENT.

     10.10 Miscellaneous. Any notices in connection with this Agreement will be in writing and sent by first class mail or major commercial rapid delivery courier service to the address specified on the cover sheet or such other address as may be properly specified by written notice hereunder. The parties acknowledge that each is entering into this Agreement solely on the basis of this Agreement and representations contained herein, and for its own purposes and not for the benefit of any third party. The parties agree that this Agreement may be signed by manual or facsimile signatures and in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In the event that any provision of this Agreement shall be determined to be illegal or unenforceable, that provision will be limited or eliminated so that this Agreement shall otherwise remain in full force and effect and enforceable.

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     IN WITNESS WHEREOF, the parties acknowledge that each has fully read and understood this Agreement, and, intending to be legally bound thereby, executed this Agreement on the date set forth above.

DemandTec, Inc.		Sonata Services Limited
By:	/s/ Mark Culhane	By:	/s/ Mark Y. Wang
Name:	Mark Culhane	Name:	Mark Y. Wang
Title:	EVP & CFO	Title:	CEO
Date:	5/1/06	Date:	5/1/06

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EXHIBIT A

STATEMENT OF WORK #2

This Statement of Work #2 is entered into between DemandTec, Inc. and Sonata Services Limited (“Service Provider”) and is subject to the terms and conditions in that certain Amended and Restated Outsourcing Services Agreement dated May 1, 2006 (the “Agreement”). By signing below, the parties agree to make this SOW a part of the Agreement. Capitalized terms used herein shall have the meanings ascribed to them in the Agreement. To the extent that this Statement of Work is inconsistent with or conflicts with the Agreement, this Statement of Work shall amend and supersede those inconsistent or conflicting terms of the Agreement.

Services:

Service Provider shall provide an offshore operations unit that includes dedicated Resources for software development, quality services, and support services to DemandTec related to: (a) development services of the DemandTec application, and (b) quality and support services for the DemandTec application.

Ø Service Provider shall provide a dedicated team of project managers that manage the engineering teams and productivity of the team.

Ø Service Provider shall provide a dedicated team of engineers who provide sustaining engineering services and product development services to DemandTec Inc.

Ø Service Provider shall provide a dedicated team of QA engineers who test and report on the quality of the product.

Ø Service Provider shall provide a dedicated team as needed of product support specialists that act on the behalf of DemandTec Inc.

Ø Service Provider may provide other services as agreed upon by DemandTec and the offshore service provider as addendum to this SOW.

Fees:

All Services described and performed by Service Provider for and/or on behalf of DemandTec pursuant to this SOW shall be at a monthly fee structure per Resource as follows:

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o Project Manager — US$4,550.00

o Sr. Engineer — US$4,050.00

o Engineer — US$3,650.00

o Support Engineer – US$4,000.00

On an annual basis, the parties shall review the PRC Government published NationalConsumer Price Index, and will discuss adjusting the above monthly rates to account for inflation; provided that in no event will any such adjustment exceed fifty percent (50%) of the published National Consumer Price Indexfor any given year.

Payment Terms:

Service Provider shall submit monthly invoices to DemandTec at the end of the month detailing the Services performed and the fees incurred in the previous month. DemandTec shall pay Service Provider all undisputed fees within 30 days of its receipt of invoice.

Principal DemandTec Contact:

David Turner
david.turner@demandtec.com
650-226-4687

Term:

See Agreement

Dated: May 1, 2006

DemandTec, Inc.		Sonata Services Limited
By:	/s/ Mark Culhane	By:	/s/ Mark Y. Wang
Name:	Mark Culhane	Name:	Mark Y. Wang
Title:	EVP & CFO	Title:	CEO
Date:	5/1/06	Date:	5/1/06

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EXHIBIT B

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

The following confirms and memorializes an agreement that DemandTec, Inc., a Delaware corporation (“DemandTec”), Sonata Services Limited, a BVI company (“Sonata”), and the undersigned have had since the commencement of my services on behalf of Sonata for DemandTec in any capacity and that is and has been a material part of the consideration for my employment by Sonata:

1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my services for Sonata. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Sonata and DemandTec in writing hereafter, use or disclose my own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Sonata. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me.

2. Sonata (and, by virtue of its agreement with Sonata, DemandTec) shall own all rights whether existing now or in the future including all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual and industrial property rights of any sort throughout the world and on a perpetual basis) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the period that I perform services on behalf of Sonata for DemandTec (collectively, “Inventions”). However, Inventions shall not include, any inventions (whether or not patentable), works of authorship that are made or, conceived and reduced to practice by me (i) entirely on my own time, (ii) without the use of Sonata’s or DemandTec’s resources or equipment, and (iii) that do not relate to Sonata’s or DemandTec’s actual or anticipated business, research or development. In consideration of the compensation payable to me under the terms of my employment by Sonata, I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Sonata and, as applicable, DemandTec, at Sonata’s and DemandTec’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. Except as otherwise provided under applicable law, this assignment shall not lapse in any circumstances including on the failure of Sonata or DemandTec to exercise the rights assigned hereunder for any period of time. I hereby irrevocably designate and appoint Sonata and, as the case may be, DemandTec as my agent and attorney-in-fact, coupled with an interest and

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with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my services for Sonata that relates to DemandTec’s actual or proposed business is not within the scope of the foregoing assignment, I have listed it on Appendix A in a manner that does not violate any third party rights. Without limiting Section 1 or Sonata’s or DemandTec’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Sonata , I use or disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Sonata and, as the case may be, DemandTec will have and I hereby grant Sonata and DemandTec a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. This license shall not lapse in any circumstances including for non-exercise of such license by Sonata or DemandTec for any period of time.

3.

To the extent allowed by law, Section 2 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Sonata and DemandTec and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Sonata or DemandTec.

4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment with Sonata that relate to DemandTec or the business or demonstrably anticipated business of DemandTec or that are received by or for DemandTec in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I shall not be obligated under this Section with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment with Sonata, I will promptly return to Sonata and, as applicable, DemandTec all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of my compensation records and this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Sonata’s or DemandTec’s telecommunications, networking or information processing

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systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. I agree that such Proprietary Information has been provided to me in trust and the breach thereof of the obligations herein relating to Proprietary Information shall be construed as a breach of trust for which all the civil and criminal consequences thereof shall follow.

5.

Until one year after the term of Sonata’s services for DemandTec has ended, I will not encourage or solicit any employee or consultant of DemandTec to leave DemandTec for any reason.

6. I agree that during the term of my services on behalf of Sonata for DemandTec (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of DemandTec, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of DemandTec.

7. I agree that (a) I am not an employee of DemandTec, and (b) this Agreement is not an employment contract or an obligation by DemandTec to obtain my services for any particular term. Notwithstanding any provision hereof, I am an employee of Sonata and not an employee, agent, partner or joint venturer of DemandTec and shall not bind nor attempt to bind DemandTec to any contract. I shall accept any directions issued by Sonata pertaining to the goals to be attained and the results to be achieved by me or Sonata, but I and Sonata shall be solely responsible for the manner and hours in which the services for DemandTec are performed. I agree that I shall not be eligible to participate in any of DemandTec’s employee benefit plans, fringe benefit programs, group insurance arrangements or similar programs. DemandTec shall not provide workers’ compensation, disability insurance, social security or unemployment compensation coverage or any other statutory benefit to me. Sonata (and not DemandTec) shall be solely responsible for complying with all applicable provisions of workers’ compensation laws, unemployment compensation laws, labor laws, federal, state and local income tax laws, and all other applicable laws, regulations and codes relating to terms and conditions of employment required to be fulfilled by employers. In addition, this Agreement does not purport to set forth all of the terms and conditions of my employment by Sonata, and, as an employee of Sonata, I have obligations to Sonata which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms of my obligations to Sonata and can only be changed by a subsequent written agreement by Sonata and DemandTec.

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8. I agree that my obligations under Sections 2, 3, 4 and 5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part. My obligations under Sections 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Sonata and DemandTec, and their subsidiaries, successors and assigns.

9. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of China without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable Chinese law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms. I also understand that any breach of this Agreement will cause irreparable harm to Sonata and, as the case may be, DemandTec for which damages would not be an adequate remedy, and, therefore, Sonata and DemandTec will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond.

I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT DEMANDTEC WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME.

                    , 200__

Signature

Name (Printed)

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Accepted and Agreed to:

DemandTec, Inc.		Sonata Services Limited
By:	/s/ Mark Culhane	By:	/s/ Mark Y. Wang
Name:	Mark Culhane	Name:	Mark Y. Wang
Title:	EVP & CFO	Title:	CEO
Date:	5/1/06	Date:	5/1/06

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EXHIBIT C

REQUIRED SECURITY MEASURES

Physical Security

	Physical access shall be controlled by security provisions in Service Provider’s facility.
	Removing any DemandTec related software from the Service Provider’s facility must be approved by the primary DemandTec contact

Network Security

	All DemandTec related computer systems shall reside on a secured network infrastructure
	All network operating systems and firmware shall be patched regularly to ensure stability and security
	All access to the DemandTec network shall be done via secured channel

Host Security

	User access to secure hosts will be limited to Resources of the dedicated DemandTec offshore team, unless specifically approved by DemandTec in writing
	Only DemandTec authorized services and applications shall be running on hosts associated with the DemandTec offshore team

Password Management

	Passwords shall not be written down or stored unencrypted
	Password shall not be electronically transmitted in unencrypted form

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EX-10.18

Exhibit 10.18

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective Date among SILICON VALLEY BANK, a California corporation (“Bank”), GOLD HILL VENTURE LENDING 03, LP (“Gold Hill”) (Bank and Gold Hill each individually a “Lender” and collectively the “Lenders”), Bank in its capacity as agent (the “Agent”) and DEMANDTEC, INC., a Delaware corporation (“Borrower”), provides the terms on which Lenders shall lend to Borrower and Borrower shall repay Lenders. The parties agree as follows:

     1      ACCOUNTING AND OTHER TERMS

     Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

     2      LOAN AND TERMS OF PAYMENT

     2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Lenders the outstanding principal amount of all Credit Extensions and accrued and unpaid interest and any fees thereon as and when due in accordance with this Agreement.

     2.1.1 Growth Capital Loan Facility.

               (a) Availability. Subject to the terms and conditions of this Agreement, Lenders agree, severally and not jointly, to lend to Borrower from time to time prior to the Growth Capital Commitment Termination Date, advances (each a “Growth Capital Advance” and collectively the “Growth Capital Advances”) in an aggregate amount not to exceed the Growth Capital Loan Commitment according to each Lender’s pro rata share of the Growth Capital Loan Commitment (based upon the respective Growth Capital Commitment Percentage of each Lender). When repaid, the Growth Capital Advances may not be re-borrowed. Lenders’ obligation to lend hereunder shall terminate on the earlier of (i) the occurrence and continuance of an Event of Default, or (ii) the Growth Capital Commitment Termination Date. For purposes of this Section, the minimum amount of each Growth Capital Advance is One Million Dollars ($1,000,000).

               (b) Repayment. For each Growth Capital Advance, Borrower shall make monthly payments of interest only commencing on the first day of the month following the month in which the Growth Capital Funding Date occurs with respect to such Growth Capital Advance and continuing thereafter on the first day of each successive calendar month (each a “Growth Capital Interest Only Payment Date”) during the Growth Capital Interest Only Period. Commencing on the Growth Capital Amortization Date, Borrower shall make thirty-six (36) equal monthly payments of principal and interest which would fully amortize the outstanding Growth Capital Advances as of the Growth Capital Amortization Date over the Growth Capital Repayment Period (individually, the “Growth Capital Scheduled Payment”, and collectively, “Growth Capital Scheduled Payments”) and on the first day of each successive month and continuing thereafter during the Growth Capital Repayment Period on the first day of each successive calendar month (each a “Growth Capital Scheduled Payment Date”). All unpaid principal and accrued interest is due and payable in full on the Growth Capital Maturity Date with respect to such Growth Capital Advance. A Growth Capital Advance may only be prepaid in accordance with Sections 2.1.1(d) and 2.1.1(e). Each Growth Capital Interest Only Payment Date and each Growth Capital Scheduled Payment Date are sometimes referred to as a “Growth Capital Payment Date.”

               (c) Final Payment. On the Growth Capital Maturity Date with respect to each Growth Capital Advance, Borrower shall pay, in addition to the unpaid principal and accrued interest and all other amounts due on such date with respect to such Growth Capital Advance, an amount equal to the Growth Capital Final Payment.

               (d) Mandatory Prepayment Upon an Acceleration. If the Growth Capital Advances are accelerated following the occurrence of an Event of Default or otherwise, Borrower shall immediately pay to Lenders an amount equal to the sum of: (i) all outstanding principal plus accrued interest, (ii) the Growth Capital Final Payment, plus (iii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

               (e) Permitted Prepayment of Loans. Borrower shall have the option to prepay all or any portion (but in any event at least $1,000,000), of each Growth Capital Advance advanced by Lenders under this Agreement, provided Borrower (i) provides written notice to Agent of its election to prepay such Growth Capital Advance at least ten (10) days prior to such prepayment, and (ii) pays, on the date of such prepayment (A) the outstanding principal being prepaid plus all accrued interest then due on such Growth Capital Advance, (B) a ratable portion of the Growth Capital Final Payment for such Growth Capital Advance (based upon the amount being pre-paid), plus (C) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

     2.2      Payment of Interest on the Credit Extensions.

               (a) Interest Rate.

                    (i) Growth Capital Advance. Subject to Section 2.2(b), the principal amount outstanding under each Growth Capital Advance shall accrue interest, which interest shall be payable monthly, at the per annum rate equal to the greater of (i) nine and one-half percent (9.50%) and (ii) the sum of (a) one hundred twenty five (125) basis points or 1.25%, plus the Prime Rate as determined by Agent on the applicable Growth Capital Funding Date.

               (b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percentage points above the rate effective immediately before the Event of Default (the “Default Rate”). Payment or acceptance of the increased interest rate provided in this Section 2.2(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Agent or Lenders.

               (c) Adjustment to Interest Rate. Interest on each Growth Capital Advance shall be fixed on the Growth Capital Funding Date with respect to such Growth Capital Advance. Prior to the date of such Growth Capital Advance, changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

               (d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed.

               (e) Debit of Accounts. Agent may debit any of Borrower’s deposit accounts , including the Designated Deposit Account, for: (i) the payments of principal and interest when due and the Growth Capital Final Payment when due and owing by Borrower to Lenders under this Agreement and the Loan Documents, or (ii) any other amounts due and owing when specifically approved in advance by Borrower. These debits shall not constitute a set-off.

               (f) Payments. Unless otherwise provided, interest is payable monthly on the first (1^st) calendar day of each month. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue to accrue.

     2.3      Fees. Borrower shall pay to Agent:

               (a) Loan Fee. The parties hereto acknowledge that Agent has received prior to the date hereof a fully earned, non-refundable loan fee of $25,000 (to be shared between Bank and the Gold Hill pursuant to their respective Growth Capital Commitment Percentages).

               (b) Agent Expenses; Lenders Expenses. All Agent Expenses and Lenders Expenses (including reasonable attorneys’ fees and expenses for the documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. Agent agrees to provide Borrower with prompt notice if Agent Expenses and Lenders Expenses through and as of the Effective Date are anticipated to exceed $10,000.

     3      CONDITIONS OF LOANS

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     3.1      Conditions Precedent to Initial Credit Extension. Lenders’ obligation to make the initial Credit Extension is subject to the condition precedent that Agent shall have received, in form and substance satisfactory to Agent, such documents, and completion of such other matters, as Agent may reasonably deem necessary or appropriate, including, without limitation:

               (a) Borrower shall have delivered duly executed original signatures to the Loan Documents to which it is a party;

               (b) Borrower shall have delivered a duly executed original signature to each of the Warrant to be issued to Bank and the Warrant to be issued to Gold Hill;

               (c) Borrower shall have delivered its Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of the States of Delaware and California as of a date no earlier than thirty (30) days prior to the Effective Date;

               (d) Borrower shall have delivered duly executed original signatures to the completed Borrowing Resolutions for Borrower;

               (e) Agent shall have received certified copies, dated as of a recent date, of financing statement searches, as Agent shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

               (f) Borrower shall have delivered the Perfection Certificate executed by Borrower;

               (g) Borrower shall have delivered the IP Agreement executed by Borrower;

               (h) Borrower shall have delivered the VC/OC Management Letter Agreement in favor of Gold Hill;

               (i) Borrower shall have delivered a copy of its Amended and Restated Investors’ Rights Agreement and any amendments thereto;

               (j) Borrower shall have delivered evidence satisfactory to Agent that the insurance policies required by Section 6. 5 hereof are in full force and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Agent or Lenders; and

               (k) Borrower shall have paid the fees, Agent Expenses and Lenders Expenses then due as specified in Section 2.3 hereof.

     3.2 Conditions Precedent to all Credit Extensions. Lenders’ obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:

               (a) except as otherwise provided in Section 3.4(a), timely receipt of an executed Payment/Advance Form;

               (b) the representations and warranties in Section 5 shall be true in all material respects on the date of the Payment/Advance Form and on the Growth Capital Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Default or Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in Section 5 remain true in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and

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               (c) in Lenders’ sole discretion, there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or there has not been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Agent prior to the Effective Date of this Agreement.

     3.3 Covenant to Deliver.

     Borrower agrees to deliver to Agent each item required to be delivered to Agent under this Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of a Credit Extension prior to the receipt by Agent of any such item shall not constitute a waiver by Agent or Lenders of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in Lenders’ sole discretion.

     3.4      Procedures for Borrowing.

               (a) Growth Capital Advances. To obtain a Growth Capital Advance, Borrower must notify Agent by facsimile or telephone by 12:00 p.m. Pacific Time two (2) Business Days prior to the date the Growth Capital Advance is to be made. If such notification is by telephone, Borrower must promptly confirm the notification by delivering to Agent a completed Payment/Advance Form in the form attached as Exhibit B. On the Growth Capital Funding Date, each Lender shall credit and/or transfer (as applicable) to Borrower’s deposit account, an amount equal to its Growth Capital Commitment Percentage multiplied by the amount of the Growth Capital Advance. Each Lender may make Growth Capital Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Growth Capital Advances are necessary to meet Obligations which have become due. Each Lender may rely on any telephone notice given by a person whom such Lender believes is a Responsible Officer or designee. Borrower shall indemnify each Lender for any loss Lender suffers due to such reliance.

     4 CREATION OF SECURITY INTEREST

     4.1 Grant of Security Interest. Borrower hereby grants Agent, for the ratable benefit of Lenders, and to each Lender, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Agent, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted to have superior priority to Agent’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Agent in a writing signed by Borrower of the general details thereof and grant to Agent and Lenders in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Agent.

     If this Agreement is terminated, Agent’s and Lenders’ Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations and at such time as Lenders’ obligation to make Credit Extensions has terminated, Agent shall, at Borrower’s sole cost and expense, release Agent’s and Lenders’ Liens in the Collateral.

     4.2 Authorization to File Financing Statements. Borrower hereby authorizes Agent to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Agent’s and Lenders’ interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Agent and Lenders under the Code.

     5 REPRESENTATIONS AND WARRANTIES

               Borrower represents and warrants to Agent and Lenders as follows:

     5.1      Due Organization and Authorization. Borrower and each of its Subsidiaries are duly existing and in good standing in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Agent a

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completed certificate signed by Borrower, entitled “Perfection Certificate.” Borrower represents and warrants to Agent and Lenders that as of the Effective Date, each Growth Capital Funding Date and as of the delivery date of any Compliance Certificate, except as disclosed to Agent in any Compliance Certificate: (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete. If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Agent of such occurrence and provide Agent with Borrower’s organizational identification number.

     The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s organizational documents, nor constitute an event of default under any material agreement by which Borrower is bound. As of the Effective Date, each Growth Capital Funding Date and as of the delivery date of any Compliance Certificate, except as disclosed to Agent in any Compliance Certificate, Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could have a material adverse effect on Borrower’s business.

     5.2 Collateral. Borrower has good title to, has rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Agent in connection herewith, or of which Borrower has given Agent notice and taken such actions as are necessary to give Agent a perfected security interest therein.

     The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate or as disclosed to Agent in any Compliance Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as Borrower has given Agent notice pursuant to Section 7.2. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee, then Borrower will first receive the written consent of Agent and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in its sole discretion.

     Borrower is the sole owner of its intellectual property material to the operation of its business, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each patent is valid and enforceable, and no part of the intellectual property has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower’s knowledge, no claim has been made that any part of the intellectual property violates the rights of any third party except to the extent that the foregoing would not reasonably be expected to have a material adverse effect on Borrower’s business. Except as noted on the Perfection Certificate or as disclosed to Agent in any Compliance Certificate, Borrower is not a party to, nor is bound by, any material license or other agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property. Borrower shall provide written notice to Agent within thirty (30) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower’s business or financial condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Agent reasonably requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for all such licenses or contract rights material to the Borrower’s business to be deemed “Collateral” and for Agent and Lenders to have a security interest in it that might otherwise be restricted or prohibited by the terms of any such license or agreement (such consent or authorization may include a licensor’s agreement to a contingent assignment of the license to Agent if Agent determines that is necessary in its good faith judgment), whether now existing or entered into in the future.

     5.3 Intentionally omitted.

     5.4 Litigation. As of the Effective Date, each Growth Capital Funding Date and as of the delivery date of any Compliance Certificate, except as disclosed to Agent in any Compliance Certificate, there are no actions

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or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than One Hundred Thousand Dollars ($100,000).

     5.5 No Material Deviation in Financial Statements. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Agent.

     5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

     5.7 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted.

     5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.

     5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Agent in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” As of the Effective Date, each Growth Capital Funding Date, and as of the delivery date of any Compliance Certificate, except as disclosed to Agent in any Compliance Certificate, Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower, except as disclosed in the Perfection Certificate. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

     5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital, and to fund its general business requirements and not for personal, family, household or agricultural purposes.

     5.11 Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Agent or Lenders, as of the date such representations, warranties, or other statements were made, taken together with all such written certificates and written statements given to Agent or Lenders, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Agent and Lenders that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

     6 AFFIRMATIVE COVENANTS

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     Borrower shall do all of the following:

     6.1 Government Compliance. Except where failure to do so would reasonably be expected to have a material adverse effect on Borrower’s business or operations, maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which Borrower or its Subsidiaries respectively, conducts business. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business.

     6.2      Financial Statements, Reports, Certificates.

               (a) Deliver to Agent: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Agent; (ii) as soon as available, but no later than one hundred eighty (180) days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Agent in its reasonable discretion; (iii) annual financial projections approved by Borrower’s Board of Directors consistent in form and detail with those provided to Borrower’s venture capital investors as soon as available, but no later than thirty (30) days after Board approval; (iv) within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt; (v) in the event that Borrower becomes subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, within five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or another website on the Internet (in the case of electronic links being provided to Agent, Borrower shall still be required to submitted Agent the applicable compliance certificate in the form of Exhibit C); (vi) a prompt report of any legal actions pending or threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of One Hundred Thousand Dollars ($100,000) or more; and (vii) other financial information reasonably requested by Agent.

               (b) Within thirty (30) days after the last day of each month, deliver to Agent with the monthly financial statements, a duly completed Compliance Certificate signed by a Responsible Officer.

               (c) Borrower shall deliver to Agent any redemption requests or notices from the requisite number of its preferred shareholders to redeem stock pursuant to Borrower’s Seventh Amended and Restated Certificate of Incorporation, as it may be amended from time to time), as soon as available, but no later than ten (10) days after Borrower has received such redemption request or notice.

               (d) Allow Agent to audit or inspect Borrower’s Collateral at Borrower’s expense. Such audits or inspections shall be conducted no more often than once every twelve (12) months unless a Default or an Event of Default has occurred and is continuing.

     6.3 Inventory; Returns. Keep the material portion of its Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Agent of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand Dollars ($100,000).

     6.4 Taxes; Pensions. Make, and cause each of its Subsidiaries to make, timely payment of all foreign, federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5.9 hereof) and shall deliver to Agent, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

     6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Agent may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Lenders and Agent. All property policies shall have a lender’s loss payable endorsement showing each Lender as an additional lender loss payee and waive subrogation against Lenders, and all liability policies shall show, or have endorsements showing, each Lender as an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurer must

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give Lenders at least twenty (20) days notice before canceling, amending, or declining to renew its policy (10 days in the case of cancellation for non-payment. At Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Agent’s option, be payable to Agent on behalf of Lenders on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to $250,000, in the aggregate for any one casualty, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Agent and Lenders have been granted a first priority security interest, and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Agent, be payable to Agent on behalf of Lenders on account of the Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Agent, Agent may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Agent deems prudent.

     6.6      Operating Accounts.

               (a) Maintain its primary depository and operating accounts and securities accounts with Agent and Agent’s affiliates, which accounts shall represent at least 80% of the dollar value of Borrower’s accounts at all financial institutions.

               (b) Provide Agent five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Agent or its Affiliates. In addition, for each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Agent) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Agent by Borrower as such.

     6.7 Protection and Registration of Intellectual Property Rights. Borrower shall: (a) protect, defend and maintain the validity and enforceability of its intellectual property material to the operation of its business; (b) promptly advise Agent in writing of material infringements of its intellectual property; and (c) not allow any intellectual property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Agent’s written consent, which shall not be unreasonably withheld. If Borrower decides to register any copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Agent with at least fifteen (15) days prior written notice of its intent to register such copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement or such other documents as Agent may reasonably request to maintain the perfection and priority of Agent’s security interest in the copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the copyright or mask work application(s) with the United States Copyright Office. Borrower shall promptly provide to Agent a copy of the application(s) filed with the United States Copyright Office together with evidence of the recording of the intellectual property security agreement necessary for Agent to maintain the perfection and priority of its security interest in such copyrights or mask works. Borrower shall provide written notice to Agent of any application filed by Borrower in the United States Patent and Trademark Office for a patent or to register a trademark or service mark within 30 days after any such filing.

     6.8 Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make reasonable efforts to make available to Agent, without expense to Agent, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Agent may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Agent or Lenders with respect to any Collateral or relating to Borrower.

     6.9 Right to Invest. Grant to Lenders or their Affiliates a right (but not an obligation) to purchase, within seven (7) days after the Effective Date, up to $64,500 of Borrower’s Series C Preferred Stock on the same terms, conditions and pricing offered to its investors in Borrower’s Series C financing round at the price of $2.58 per

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share. Borrower shall provide Lenders with the financing documentation for Borrower’s Series C financing round before the Effective Date. Grant to Lenders or their Affiliates a right (but not an obligation) to purchase, within seven (7) days after the Effective Date, up to $229,500 of Borrower’s Common Stock at the price of $1.35 per share.

     6.10 Further Assurances. Borrower shall execute any further instruments and take further action as Agent reasonably requests to perfect or continue Agent’s Lien (for the benefit of Lenders) in the Collateral or to effect the purposes of this Agreement.

     7 NEGATIVE COVENANTS

     Borrower shall not do any of the following without the Agent’s prior written consent:

     7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment; (c) in connection with Permitted Liens and Permitted Investments; and (d) of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business.

     7.2 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) without Lenders’ prior written consent (not to be unreasonably withheld and based on their capacities as lenders to Borrower), enter into any transaction or series of related transactions in which the stockholders of Borrower immediately prior to the first such transaction own less than 75% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital investors so long as Borrower identifies to Agent the venture capital investors prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days prior written notice to Agent: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Twenty Five Thousand Dollars ($25,000) in Borrower’s assets or property), (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization.

     7.3 Mergers or Acquisitions. Without Lenders’ prior written consent (not to be unreasonably withheld and based on their capacities as lenders to Borrower), merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) such transaction is an acquisition by Borrower which would not result in a decrease of more than 25% of Borrower’s Tangible Net Worth, and (ii) no Event of Default has occurred and is continuing or would result from such transaction during the term of this Agreement. Notwithstanding the foregoing, a Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

     7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

     7.5 Encumbrance. Except for Permitted Liens: (i) create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, or permit any Collateral not to be subject to the first priority security interest granted herein, or (ii) enter into any agreement, document, instrument or other arrangement (except with or in favor of Agent or Lenders) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s intellectual property, except as is otherwise permitted in Section 7.1 hereof.

     7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6 hereof.

     7.7 Investments; Distributions. (a) Directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock provided that (i) Borrower may convert any of its convertible

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securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of $250,000 per fiscal year.

     7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

     7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Lenders.

     7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

     8 EVENTS OF DEFAULT

     Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

     8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable. During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period);

     8.2      Covenant Default.

               (a) Borrower fails or neglects to perform any obligation in Sections 6.2 or 6.7 or violates any covenant in Section 7; or

               (b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Grace periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above;

     8.3 Senior Management. Either of Dan Fishback or Mark Culhane shall cease to hold a position with Borrower as a Senior Officer and, within ninety (90) days thereafter, Borrower has not replaced such person’s services with services of a person or persons reasonably satisfactory to Lenders.

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     8.4 Attachment. (a) Any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process upon Bank seeking to attach, by trustee or similar process, any funds of Borrower, or of any entity under control of Borrower (including a subsidiary) on deposit with Bank; (c) Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (d) a judgment or other claim in excess of One Hundred Thousand Dollars ($100,000) becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure period);

     8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

     8.6 Other Agreements. There is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or that could have a material adverse effect on Borrower’s business or there is a defined “Event of Default” that exists after any period of grace under the SVB Working Capital Facility;

     8.7 Judgments. A judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment);

     8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Agent or a Lender or to induce Agent or a Lender to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

     8.9 Subordinated Debt. A default or breach occurs and continues after any period of grace under any agreement between Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Agent or a Lender; or

     8.10 Lien Priority. There is a material impairment in the priority of Agent’s or any Lender’s security interest in the Collateral.

     9      RIGHTS AND REMEDIES

     9.1      Rights and Remedies. While an Event of Default occurs and continues Agent may, without notice or demand, do any or all of the following:

               (a) declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Agent or Lenders);

               (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Agent or any Lender;

               (c) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Agent considers advisable, notify any Person owing Borrower money of Agent’s and Lenders’ security interest in such funds, and verify the amount of such account;

               (d) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Agent requests and make it available as Agent designates. Agent may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be

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prior or superior to its security interest and pay all expenses incurred. Borrower grants Agent a license to enter and occupy any of its premises, without charge, to exercise any of Agent’s or Lenders’ rights or remedies;

               (e) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Agent owing to or for the credit or the account of Borrower;

               (f) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Agent is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Agent’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Agent’s benefit (for the benefit of Lenders);

               (g) place a “hold” on any account maintained with Agent and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

               (h) demand and receive possession of Borrower’s Books; and

               (i) exercise all rights and remedies available to Agent or Lenders under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

     9.2 Power of Attorney. Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Agent for the benefit of Lenders or a third party as the Code permits. Borrower hereby appoints Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Lender are under no further obligation to make Credit Extensions hereunder. Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Lenders’ obligation to provide Credit Extensions terminates.

     9.3 Accounts Verification; Collection. If an Event of Default has occurred and is continuing, Agent may notify any Person owing Borrower money of Agent’s and Lenders’ security interest in such funds and verify the amount of such account. After the occurrence of an Event of Default, any amounts received by Borrower shall be held in trust by Borrower for Agent, and, if requested by Agent, Borrower shall immediately deliver such receipts to Agent in the form received from the Account Debtor, with proper endorsements for deposit.

     9.4 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are Agent Expenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Agent are deemed an agreement to make similar payments in the future or Agent’s or Lenders’ waiver of any Event of Default.

     9.5 Application of Payments and Proceeds. If an Event of Default has occurred and is continuing, Lenders may apply any funds in their possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Lenders shall determine in their sole discretion. Any surplus shall be paid to Borrower

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or other Persons legally entitled thereto; Borrower shall remain liable to Agent and Lenders for any deficiency. If Agent or Lenders, in their good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Agent and Lenders shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Agent or Lenders of cash therefor.

     9.6 Agent’s and Lenders’ Liability for Collateral. So long as Agent and Lenders comply with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Agent and/or Lenders, the Agent and Lenders shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

     9.7 No Waiver; Remedies Cumulative. Agent’s or Lenders’ failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Agent or Lenders thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by Agent and Lenders and then is only effective for the specific instance and purpose for which it is given. Agent’s and Lenders’ rights and remedies under this Agreement and the other Loan Documents are cumulative. Agent and Lenders have all rights and remedies provided under the Code, by law, or in equity. Agent’s or Lenders’ exercise of one right or remedy is not an election, and Agent’s or Lenders’ waiver of any Event of Default is not a continuing waiver. Agent’s or Lenders’ delay in exercising any remedy is not a waiver, election, or acquiescence.

     9.8 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Agent or Lenders on which Borrower is liable.

     10 NOTICES

     All notices, consents, requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (c) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, or facsimile number indicated below. Any party may change its address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.

If to Borrower:	DemandTec, Inc. 1 Circle Way, Suite 200 San Carlos, CA 94070 Attn: Chief Financial Officer Fax: (650) 556-1223
If to Agent or Bank:	Silicon Valley Bank 2400 Geng Road, Suite 200 Palo Alto, California 94303 Attn: Albert Martinez Fax: (650) 320-0016
If to Gold Hill:	Gold Hill Venture Lending Partners One Almaden Blvd., Suite 630 San Jose, California 95113 Attn: Tim McDonough Fax: (408) 200-7841

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     11 CHOICE OF LAW, VENUE AND JUDICIAL REFERENCE

     California law governs the Loan Documents without regard to principles of conflicts of law. Borrower, Agent and Lenders each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Agent or Lenders from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Agent or Lenders. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, AGENT AND LENDERS EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

     WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

     12 GENERAL PROVISIONS

     12.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Except as permitted pursuant to Section 7.3, Borrower may not assign this Agreement or any rights or obligations under it without Agent’s prior written consent (which may be granted or withheld in Agent’s discretion). Each of Agent and Lenders has the right, without the consent of or notice to

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Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, its obligations, rights, and benefits under this Agreement and the other Loan Documents.

     12.2 Indemnification. Borrower agrees to indemnify, defend and hold Agent and Lenders and their respective directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing them harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Agent Expenses or Lender Expenses incurred, or paid by Agent or Lenders from, following, or arising from transactions between Agent, Lenders and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by Agent’s or a Lender’s gross negligence or willful misconduct.

     12.3 Limitation of Actions. Any claim or cause of action by Borrower against Agent or Lenders, their respective directors, officers, employees, agents, accountants, attorneys, or any other Person affiliated with or representing them based upon, arising from, or relating to this Loan Agreement or any other Loan Document, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Agent or a Lender, its respective directors, officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by (a) the filing of a complaint within one year from the earlier of (i) the date any of Borrower’s officers or directors had knowledge of the first act, the occurrence or omission upon which such claim or cause of action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and (b) the service of a summons and complaint on an officer of Agent or a Lender, or on any other person authorized to accept service on behalf of Agent or a Lender, within thirty (30) days thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of Lenders in their sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document.

     12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

     12.5 Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

     12.6 Amendments in Writing; Integration. All amendments to this Agreement must be in writing signed by each of Agent, Lenders and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.

     12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement.

     12.8 Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to indemnify Agent and Lenders shall survive until the statute of limitations with respect to such claim or cause of action shall have run.

     12.9 Confidentiality. In handling any confidential information, Agent and Lenders shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Lenders’ or Agent’s Subsidiaries or Affiliates (which shall be bound by this Section 12.9 as to such disclosures); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Lenders and Agent shall use commercially reasonable efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Lenders’ or Agent’s regulators or as otherwise required in connection with its examination or audit; and (e) as Lenders and Agent consider appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (i) is in the public domain or in Agent’s or a Lender’s possession when

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disclosed to it, or becomes part of the public domain after disclosure to Agent or a Lender, in each case other than as a consequence of a breach of this Section 12.9; or (ii) is disclosed to Agent or a Lender by a third party, if Agent or Lender does not know that the third party is prohibited from disclosing the information.

     12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and Agent and/or Lenders arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.

     12.11 SVB Working Capital Facility.

     Bank hereby consents to the incurrence of Indebtedness by Borrower pursuant to this Agreement and to the grant of a security interest in the Collateral to Lenders, notwithstanding anything to the contrary contained in the SVB Working Capital Facility and agrees that the incurrence of the Indebtedness hereunder and the grant of the security interest hereunder shall not result in or constitute a breach or violation of any covenant contained in the SVB Working Capital Facility.

     13 DEFINITIONS

     13.1 Definitions. As used in this Agreement, the following terms have the following meanings:

     “Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

     “Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

     “Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

     “Agent Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

     “Agreement” is defined in the preamble hereof.

     “Bank” is defined in the preamble hereof.

     “Borrower” is defined in the preamble hereof

     “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

     “Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s Board of Directors and delivered by such Person to Agent approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying that (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Agent and Lenders may conclusively rely on such certificate unless and until such Person shall have delivered to Agent a further certificate canceling or amending such prior certificate.

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     “Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.

     “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue.

     “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Agent’s or Lenders’ Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

     “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

     “Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.

     “Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

     “Communication” is defined in Section 10.

     “Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit C.

     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

     “Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity account, Borrower, and Agent pursuant to which Agent obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

     “Credit Extension” is any Growth Capital Advance, or any other extension of credit by either Lender for Borrower’s benefit.

     “Default” means any event which with notice or passage of time or both, would constitute an Event of Default.

     “Default Rate” is defined in Section 2.2(b).

     “Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

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     “Designated Deposit Account” is Borrower’s deposit account, account number 3300337567, maintained with Agent.

     “Dollars,” “dollars” and “$” each mean lawful money of the United States.

     “Effective Date” is the date Lenders execute and deliver this Agreement and as indicated on the signature page hereof.

     “Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

     “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.

     “Event of Default” is defined in Section 8.

     “GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

     “General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

     “Growth Capital Advance” or “Growth Capital Advances” is defined in Section 2.1.1.

     “Growth Capital Amortization Date” means, for each Growth Capital Advance, the day twelve (12) months after its Growth Capital Funding Date, or if such date is not the first day of the month, then the first day of the calendar month immediately following such date.

     “Growth Capital Commitment Percentage” means: (i) 30% with respect to Bank, and (ii) 70% with respect to Gold Hill.

     “Growth Capital Commitment Termination Date” is the day three (3) months after the Effective Date.

     “Growth Capital Final Payment” is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) for each Growth Capital Advance due on the earlier of (a) the Growth Capital Maturity Date for such Growth Capital Advance or (b) the acceleration of such Growth Capital Advance, equal to the Growth Capital Loan Amount for such Growth Capital Advance multiplied by the Growth Capital Final Payment Percentage.

     “Growth Capital Final Payment Percentage” is, for each Growth Capital Advance, four percent (4.0%).

     “Growth Capital Funding Date” is any date on which a Growth Capital Advance is made to or on account of Borrower which shall be a Business Day.

     “Growth Capital Interest Only Period” means, for each Growth Capital Advance, the period of time commencing on its Growth Capital Funding Date through the day before the Growth Capital Amortization Date.

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     “Growth Capital Loan Amount” in respect of each Growth Capital Advance is the original principal amount of such Growth Capital Advance.

     “Growth Capital Loan Commitment” is Ten Million Dollars ($10,000,000).

     “Growth Capital Maturity Date” is, for each Growth Capital Advance, the earliest of: (a) the 36^th Growth Capital Scheduled Payment Date for such Growth Capital Advance, (b) the date on which all Obligations become immediately due and payable pursuant to Section 9.1(a), and (c) at Lenders’ election, seven (7) days before a Redemption Date (as defined in section 5 of Borrower’s Seventh Amended and Restated Certificate of Incorporation, as amended from time to time).

     “Growth Capital Payment Date” is defined in Section 2.1.1.

     “Growth Capital Scheduled Payment Date” is defined in Section 2.1.1.

     “Growth Capital Repayment Period” is a period of time equal to thirty-six (36) consecutive months commencing on the Growth Capital Amortization Date.

     “Guarantor” is any present or future guarantor of the Obligations.

     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

     “Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

     “Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

     “Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

     “IP Agreement” is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Agent dated as of Effective Date.

     “Lenders Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings).

     “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

     “Loan Documents” are, collectively, this Agreement, the Warrants, the Perfection Certificate, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of Agent or any Lender in connection with this Agreement, all as amended, restated, or otherwise modified.

     “Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Agent Expenses, Lender Expenses and other amounts Borrower owes Agent or Lenders now or later, whether under this Agreement or the other Loan Documents, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Agent or Lenders, and the performance of Borrower’s duties under the Loan Documents.

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     “Operating Documents” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of such Person’s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

     “Payment/Advance Form” is that certain form attached hereto as Exhibit B.

     “Perfection Certificate” is defined in Section 5.1.

     “Permitted Indebtedness” is:

     (a) Borrower’s Indebtedness to Agent and Lenders under this Agreement and the other Loan Documents;

     (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate, including Indebtedness to Bank under the SVB Working Capital Facility;

     (c) Subordinated Debt;

     (d) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

     (e) Indebtedness in an aggregate principal amount not to exceed Three Million Dollars ($3,000,000) secured by Permitted Liens; and

     (f) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (e) above, provided that the then outstanding principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

     “Permitted Investments” are:

     (a) Investments shown on the Perfection Certificate and existing on the Effective Date;

     (b) Cash Equivalents; and

     (c) Investments made pursuant to Borrower’s Investment Guidelines.

     “Permitted Liens” are:

     (a) Liens existing on the Effective Date and shown on the Perfection Certificate, including Liens to Bank under the SVB Working Capital Facility, or arising under this Agreement and the other Loan Documents;

     (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Agent’s or Lenders’ Liens;

     (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Two Million Dollars ($2,000,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

     (d) statutory Liens securing claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other Persons imposed without action of such parties, provided, they have no priority over any of Agent’s or Lenders’ Lien and the aggregate amount of such Liens does not at any time exceed $250,000;

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     (e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business, provided, they have no priority over any of Agent’s or Lenders’ Liens and the aggregate amount of the Indebtedness secured by such Liens does not at any time exceed $250,000;

     (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the then outstanding principal amount of the indebtedness may not increase;

     (g) leases or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit granting Agent or Lenders a security interest;

     (h) (1) non-exclusive licenses of intellectual property in the ordinary course of business, where Borrower is the licensor if the licenses do not prohibit granting Agent or Lenders a security interest, (2) non-exclusive licenses of intellectual property in the ordinary course of business, where Borrower is the licensee, and (3) intellectual property source code escrow arrangements to support any of the intellectual property licensing described in this clause (h);

     (i) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7; and

     (j) Liens in favor of other financial institutions securing the customary fees and expenses of such institutions arising in connection with Borrower’s deposit accounts or investment accounts held at such institutions.

     “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate.

     “Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made

     “Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.

     “Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

     “Senior Officer” is any of the Chief Executive Officer, Executive Vice President, and Chief Financial Officer of Borrower.

     “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Agent or Lenders (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Agent entered into between Agent and the other creditor), on terms acceptable to Agent.

     “Subsidiary” means, with respect to any Person, any Person of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by such Person or one or more Affiliates of such Person.

     “SVB Working Capital Facility” is the Third Amended and Restated Loan and Security Agreement dated as of May 23, 2006 between Bank and Borrower, as it may be amended from time to time.

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     “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (a) any amounts attributable to (i) goodwill, (ii) intangible items including unamortized debt discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, (iii) notes, accounts receivable and other obligations owing to Borrower from its officers or other Affiliates, and (iv) reserves not already deducted from assets, and (b) Total Liabilities.

     “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt.

     “Transfer” is defined in Section 7.1.

     “Warrants” are that certain Warrant to Purchase Stock dated as of the Effective Date executed by Borrower in favor of Bank and that certain Warrant to Purchase Stock dated as of the Effective Date executed by Borrower in favor of Gold Hill.

[Signature page follows.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

BORROWER:
DEMANDTEC, INC.
By: Name:	/s/ Mark Culhane Mark Culhane
Title:	EVP & CFO
AGENT:
SILICON VALLEY BANK
By:	/s/ Jeffrey Javier
Name:	Jeffrey Javier
Title:	RM
LENDERS:
GOLD HILL VENTURE LENDING 03, LP By: Gold Hill Venture Lending Partners 03, LLC, General Partner
By:	/s/ Sean Lyden
Name:	Sean Lyden
Manager	Partner, Gold Hill
SILICON VALLEY BANK
By:	/s/ Jeffrey Javier
Name:	Jeffrey Javier
Title:	RM
Effective as of July 25, 2006

[Signature page to Loan and Security Agreement]

EXHIBIT A

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

     All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

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EXHIBIT B

Loan Payment/Advance Request Form

Deadline for same day processing is Noon P.S.T.

Fax To: Date:

LOAN PAYMENT :
		DEMANDTEC, INC.
From Account #		To Account #
	(Deposit Account #)		(Loan Account #)
Principal $		and/or Interest $

Authorized Signature:	Phone Number:
Print Name/Title:

Loan Advance:
Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.
From Account #		To Account #
	(Loan Account #)		(Deposit Account #)
Amount of Advance $
All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:

Authorized Signature:	Phone Number:
Print Name/Title:

Outgoing Wire Request: Complete only if all or a portion of funds from the loan advance above is to be wired. Deadline for same day processing is noon, P.S.T.
Beneficiary Name:	Amount of Wire: $
Beneficiary Bank:	Account Number:
City and State:

Beneficiary Bank Transit (ABA) #:	Beneficiary Bank Code (Swift, Sort, Chip, etc.):
	(For International Wire Only)
Intermediary Bank:	Transit (ABA) #:
For Further Credit to:
Special Instruction:
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature:	2nd Signature (if required):
Print Name/Title:	Print Name/Title:
Telephone #:	Telephone #:

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EXHIBIT C

COMPLIANCE CERTIFICATE

TO:	SILICON VALLEY BANK, as Agent	Date:
FROM:	DEMANDTEC, INC.

     The undersigned authorized officer of DemandTec, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement among Borrower, Agent and Lenders (the “Agreement”), (1) Borrower is in complete compliance for the period ending                                          with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, have timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Agent. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes No
Annual financial statement (CPA Audited) + CC	FYE within 180 days	Yes No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
Annual projections	FYE within 30 days of Board approval	Yes No

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     The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

DEMANDTEC, INC.	BANK USE ONLY
	Received by:
By:		AUTHORIZED SIGNER
Name:	Date:
Title:	Verified:
		AUTHORIZED SIGNER
	Date:
	Compliance Status:            Yes      No

2

SCHEDULE 1 (FOR LOAN ADMINISTRATION PURPOSES ONLY)

GROWTH CAPITAL LOAN COMMITMENT: $10,000,000.00

	Commitment		Commitment Percentage
Gold Hill Venture Lending 03, LP:	$	7,000,000		70	%
Silicon Valley Bank:	$	3,000,000		30	%

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EX-10.19

Exhibit 10.19

AMENDED AND RESTATED VOTING AGREEMENT

     THIS AMENDED AND RESTATED VOTING AGREEMENT (the “Agreement”) is made and entered into as of September 20, 2002, by and among DemandTec, Inc., a Delaware corporation (the “Company”), the holders of the Company’s Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the “Preferred Stock”) listed on the Schedule of Investors attached as Schedule A hereto (the “Investors”), and the holders of Common Stock of the Company (the “Common Holders”) listed on the Schedule of Common Holders attached as Schedule B hereto. The Company, the Common Holders and the Investors are individually each referred to herein as a “Party” and are collectively referred to herein as the “Parties.” The Company’s Board of Directors is referred to herein as the “Board.”

WITNESSETH:

     WHEREAS, the Company and certain of the Investors have entered into that certain Supplemental Series C Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”), which provides for, among other things, the purchase by certain of the Investors of shares of the Company’s Series C Preferred Stock (the “Series C Stock”);

     WHEREAS, the Company’s Certificate of Incorporation provides that (a) holders of shares of Common Stock, voting together as a class, shall elect two (2) members of the Board (the “Common Directors”), (b) holders of shares of the Company’s Series B Preferred Stock (“Series B Stock”), voting together as a class, shall elect one (1) member of the Board (the “Series B Director”), (c) holders of shares of the Company’s Series C Stock, voting together as a class, shall elect one (1) member of the Board (the “Series C Director”; together with the Series B Director, the “Preferred Directors”) and (d) holders of shares of Common Stock and holders of shares of Preferred Stock, voting together as a class, shall be entitled to elect the two (2) remaining members of the Board (the “Industry Directors”); and

     WHEREAS, the Company, the Common Holders and certain of the Investors are parties to that certain Amended and Restated Voting Agreement dated as of November 16, 2001 (the “Previous Agreement”); and

     WHEREAS, to induce certain Investors to enter into the Purchase Agreement and purchase shares of Series C Stock thereunder, the Company, the holders of shares of the Company’s Series A Preferred Stock, Series B Stock, Series C Stock and the Common Holders desire to enter into this Agreement with such Investors, which Agreement shall amend and restate the Previous Agreement in its entirety;

     NOW, THEREFORE, in consideration of the foregoing premises and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

     1. Agreement to Vote. Each Investor, as a holder of Preferred Stock, hereby agrees on behalf of itself and any transferee or assignee of any such shares of the Preferred Stock, to hold all of the shares of Preferred Stock registered in its name (and any securities of the

Company issued with respect to, upon conversion of, or in exchange or substitution of the Preferred Stock, and any other voting securities of the Company subsequently acquired by such Investor) (hereinafter collectively referred to as the “Investor Shares”) subject to, and to vote the Investor Shares at a regular or special meeting of stockholders (or by written consent) in accordance with, the provisions of this Agreement. Each Common Holder, as a holder of Common Stock of the Company, hereby agrees on behalf of itself and any transferee or assignee of any such shares of Common Stock, to hold all of such shares of Common Stock and any other securities of the Company acquired by such Common Holder in the future (and any securities of the Company issued with respect to, upon conversion of, or in exchange or substitution for such securities) (hereinafter collectively referred to as the “Common Holder Shares”) subject to, and to vote the Common Holder Shares at a regular or special meeting of stockholders (or by written consent) in accordance with, the provisions of this Agreement.

     2. Election of Directors.

          (a) In any election of directors of the Company to elect the Common Directors, the Parties holding shares of Common Stock shall each vote at any regular or special meeting of stockholders (or by written consent) such number of shares of Common Stock then owned by them (or as to which they then have voting power) as may be necessary to elect two (2) directors, one of which directors shall be the Company’s chief executive officer. Initially, such directors shall be Dan Fishback and Mike Neal.

          (b) In any election of directors of the Company to elect the Series B Director, the Parties holding shares of Series B Stock shall each vote at any regular or special meeting of stockholders (or by written consent) such number of shares of Series B Stock then owned by them (or as to which they then have voting power) as may be necessary to elect one (1) director nominated by Crosspoint Venture Partners (“Crosspoint”). Initially, the director nominated by Crosspoint shall be James Dorrian.

          (c) In any election of directors of the Company to elect the Series C Director, the Parties holding shares of Series C Stock shall each vote at any regular or special meeting of stockholders (or by written consent) such number of shares of Series C Stock then owned by them (or as to which they then have voting power) as may be necessary to elect one (1) director nominated by Cargill eVentures (“Cargill”). Initially, the director nominated by Cargill shall be James D. Sayre.

          (d) In any election of directors of the Company to elect the Industry Directors, the Investors and the Common Holders shall each vote at any regular or special meeting of stockholders (or by written consent) such number of shares of capital stock then owned by them (or as to which they have voting power) as may be necessary to elect two (2) independent outside directors nominated and approved by the holders of a majority of Preferred Stock then outstanding. Initially, the directors nominated as the Industry Directors shall be Larry Lowry and Han Kim.

          (e) In the event of the resignation, death, removal or disqualification of a director selected by Crosspoint or Cargill, as the case may be, Crosspoint or Cargill shall promptly nominate a new director, and, after written notice of the nomination has been given by

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Crosspoint or Cargill, as the case may be, to the other parties, each Investor and Common Holder shall promptly vote its shares of capital stock of the Company to elect such nominee to the Board of Directors.

     3. Removal. Any director of the Company may be removed from the Board in the manner allowed by law and the Company’s Certificate of Incorporation and Bylaws, but with respect to a director designated pursuant to subsections 2(a), 2(b), 2(c) and 2(d) above, only upon the vote or written consent of the stockholders entitled to designate such director.

     4. Legend on Share Certificates. Each certificate representing any Investor Shares or Common Holder Shares shall be endorsed by the Company with a legend reading substantially as follows:

“The Shares evidenced hereby are subject to a Voting Agreement (a copy of which may be obtained upon written request from the issuer), and by accepting any interest in such shares the person accepting such interest shall be deemed to agree to and shall become bound by all the provisions of said Voting Agreement.”

     5. Covenants of the Company. The Company agrees to use its reasonable efforts to ensure that the rights granted hereunder are effective and that the Parties hereto enjoy the benefits thereof. Such actions include, without limitation, the use of the Company’s reasonable efforts to cause the nomination and election of the directors as provided above. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all of the provisions of this Agreement and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Parties hereunder against impairment.

     6. No Liability for Election of Recommended Directors. Neither the Company, the Common Holders, the Investors, nor any officer, director, stockholder, partner, employee or agent of such Party, makes any representation or warranty as to the fitness or competence of the nominee of any Party hereunder to serve on the Company’s Board by virtue of such Party’s execution of this Agreement or by the act of such Party in voting for such nominee pursuant to this Agreement.

     7. No Revocation. The voting agreements contained herein are coupled with an interest and may not be revoked during the term of this Agreement (or until as amended according to the terms of this Agreement).

     8. Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured Party for the breach of this Agreement by any Party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each Party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

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     9. Execution by the Company. The Company, by its execution in the space provided below, agrees that it will cause the certificates evidencing the shares of Common Stock and Preferred Stock to bear the legend required by Section 4 herein, and it shall supply, free of charge, a copy of this Agreement to any holder of a certificate evidencing shares of capital stock of the Company upon written request from such holder to the Company at its principal office. The parties hereto do hereby agree that the failure to cause the certificates evidencing the shares of Common Stock and Preferred Stock to bear the legend required by Section 4 herein and/or failure of the Company to supply, free of charge, a copy of this Agreement as provided under this Section 9 shall not affect the validity or enforceability of this Agreement.

     10. Captions. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way limit or modify the terms and provisions hereof.

     11. Notices. Any notice required or permitted by this Agreement shall be in writing and shall be sent prepaid registered or certified mail, return receipt requested, addressed to the other Party at the address shown below or at such other address for which such Party gives notice hereunder. Such notice shall be deemed to have been given three (3) days after deposit in the mail.

     12. Term. This Agreement shall terminate and be of no further force or effect upon the earlier of (a) the consummation of the Company’s sale of its Common Stock or other securities pursuant to a bona fide, firmly underwritten public offering of such shares of Common Stock pursuant to a registration filed on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended, (b) the closing of the Company’s sale of all or substantially all of its assets, or (c) the acquisition of the Company by another entity by means of merger, consolidation or other transaction or series of related transactions resulting in (x) the transfer of fifty percent (50%) or more of the outstanding voting power of the Company or (y) the stockholders of the Company immediately prior to such transaction or series of related transactions owning less than fifty percent (50%) of the outstanding voting power of the Company immediately after such transaction or series of related transactions.

     13. Manner of Voting. The voting of shares pursuant to this Agreement may be effected in person, by proxy, by written consent, or in any other manner permitted by applicable law.

     14. Amendments and Waivers. Any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (a) the holders of a majority of the shares of Common Stock (not including shares of Common Stock issued upon conversion of Preferred Stock) held by parties to this Agreement and (b) the holders of a majority of the shares of Common Stock issuable or issued upon conversion of Preferred Stock held by parties to this Agreement; provided, however, that the written consent of Crosspoint shall be necessary for any amendment or waiver of Section 2(b) regarding Crosspoint, and the written consent of Cargill shall be necessary for any amendment or waiver of Section 2(c) regarding Cargill. Any amendment or waiver so effected shall be binding upon all the Parties hereto.

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     15. Stock Splits, Stock Dividends, etc. In the event of any issuance of shares of the Company’s voting securities hereafter to any of the Parties hereto (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such shares shall become subject to this Agreement and shall be endorsed with the legend set forth in Section 4.

     16. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

     17. Binding Effect. In addition to any restriction on transfer that may be imposed by any other agreement by which any Party hereto may be bound, this Agreement shall be binding upon the Parties, their respective heirs, successors and assigns and to such additional individuals or entities that may become stockholders of the Company and that desire to become Parties hereto; provided that for any such transfer to be deemed effective, the transferee shall have executed and delivered an Adoption Agreement substantially in the form attached hereto as Exhibit A. Upon the execution and delivery of an Adoption Agreement by any transferee reasonably acceptable to the Company, such transferee shall be deemed to be a Party hereto as if such transferee’s signature appeared on the signature pages hereto. By their execution hereof or any Adoption Agreement, each of the Parties hereto appoints the Company as its attorney-in-fact for the purpose of executing any Adoption Agreement that may be required to be delivered hereunder.

     18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof.

     19. Entire Agreement. This Agreement is intended to be the sole agreement of the Parties as it relates to this subject matter and does hereby supersede all other agreements of the Parties relating to the subject matter hereof.

     20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature Page Next]

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     IN WITNESS WHEREOF, the Parties have executed this Amended and Restated Voting Agreement as of the date first above written.

DEMANDTEC, INC.
By:	/s/ Dan Fishback
	Dan Fishback, President and Chief
	Executive Officer

Address: One Circle Star Way, Suite 200
San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	CROSSPOINT VENTURE PARTNERS 2000, L.P. By: Crosspoint Associates 2000, L.L.C. Its: General Partner
	By:/s/ James Dorrian
Address:	2925 Woodside Road Woodside, California 94062
	CROSSPOINT VENTURE PARTNERS 2000 (Q), L.P. By: Crosspoint Associates 2000, L.L.C. Its: General Partner
	By:/s/ James Dorrian
Address:	2925 Woodside Road Woodside, California 94062

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR: CARGILL, INCORPORATED
By:	/s/ James Sayre
	President, Cargill Ventures

Address: 1500 Fashion Island Blvd, Suite 209
San Mateo, Ca 94404

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR: ALTOS VENTURES
By:	/s/ Han J. Kim
	General Partner

Address: 2882 Sand Hill Road, Suite 100
Menlo Park, California 94025

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR: ATHENA VENTURE FUND LP
By:	/s/ Steven Lee
	Principal

Address: 310 University Avenue, Suite 202
Palo Alto, California 94301

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR:


Homer and Marcia Dunn
 

/s/ Homer Dunn  

Address: 1190 Sacramento Street
San Francisco, CA 94108

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Moldaw Variable Fund
	By: /s/ Stuart G. Moldaw
	General Partner
Address:	c/o Gymboree Attn: Stuart Moldaw 700 Airport Blvd., Suite# 200 Burlingame, CA 94010

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	GC&H Investments
	By: /s/ Andrei M. Manoliu
	Executive Partner
Address:	c/o Cooley Godward 5 Palo Alto Square 3000 El Camino Real Palo Alto, CA 94306

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	WS Investments Co 99B
	By: /s/ Aaron Alter
Address:	c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Storm Duncan
	/s/ Storm Duncan
Address:	21 Mallorca Way San Francisco, CA 94123

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Howard Park
	/s/ Howard Park
Address:	289 29th Avenue San Francisco, CA 94121

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Gerard Cunningham
	/s/ Gerard Cunningham
Address:	208 Third Street Sausalito, CA 94965

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Richard Arnold
	/s/ Richard Arnold, Jr.
Address:	c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Aaron Alter
	/s/ Aaron Alter
Address:	c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Jamie Stewart
	/s/ Jamie Stewart
Address:	c/o Wilson Sonsini Goodrich & Rosati
	650 Page Mill Road
	Palo Alto, CA 94304

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Larry Lowry
	/s/ Larry Lowry
Address:	137 Stockbridge Avenue
	Atherton, CA 94027

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Hartwig Huemer
	/s/ Hartwig Huemer
Address:	7945 Almor Drive
	Verona, WI 53593

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Gary Davis
	/s/ Gary Davis
Address:	263 29th Avenue
	San Francisco, CA 94121

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	G&H Partners
	By:	/s/ Jonathan Gleason
Address:	c/o Gunderson Dettmer
	155 Constitution Drive
	Menlo Park, CA 94025

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Dan Fishback
	/s/ Dan Fishback
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Andy Moss
	/s/ Andy Moss
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	John Shap
	/s/ John Shap
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Mark A. Culhane and Michele L. Culhane
	Trustees UTA dtd, 12/16/99
	By:	/s/ Mark Culhane
		Trustee
	USB Piper Jaffray as custodian FBO
	Mark Culhane IRA 120 224946
	By:	/s/ Mark Culhane
		Trustee
	Maxwell A.R. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
	Monica G. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
	Michael D. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	INVESTOR:
	Phil Mahoney
	/s/ Phil Mahoney
Address:	12100 Foothill Lane
	Los Altos Hills, CA 94022

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR:
Eleven Rings, LLC
By:	/s/ Harris Barton
	Managing Member

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

INVESTOR:
NONSTOP Solutions, Inc.
By:	/s/ [illegible]

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	COMMON HOLDERS:
	By:	/s/ Michael Neal
		Michael Neal
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070
	By:	/s/ Hau Lee
		Hau Lee
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070
	By:	/s/ Scott Molinaroli
		Scott Molinaroli
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	COMMON HOLDERS:
	By:	/s/ Dan Fishback
		Dan Fishback
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070
	By:	/s/ Phil Delurgio
		Phil Delurgio
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	COMMON HOLDERS:
	Mark A. Culhane and Michele L. Culhane
	Trustees UTA dtd, 12/16/99
	By:	/s/ Mark Culhane
		Trustee
	USB Piper Jaffray as custodian FBO
	Mark Culhane IRA 120 224946
	By:	/s/ Mark Culhane
		Trustee
	Maxwell A.R. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
	Monica G. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
	Michael D. Culhane 1999 Irrevocable Trust
	By:	/s/ Mark Culhane
		Trustee
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

	COMMON HOLDERS:
	By:	/s/ Andy Moss
		Andy Moss
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070
	By:	/s/ John Shap
		John Shap
Address:	c/o DemandTec, Inc.
	One Circle Star Way, #200
	San Carlos, CA 94070

SIGNATURE PAGE TO THE DEMANDTEC, INC. AMENDED AND RESTATED
VOTING AGREEMENT

SCHEDULE A

LIST OF INVESTORS

Aaron J. Alter
Altos Ventures
Altos Ventures II, LP
Andy Moss
Athena Technology Ventures
Athena Venture Fund, L.P.
Cargill, Incorporated
Crosspoint Venture Partners 2000 (Q), L.P.
Crosspoint Venture Partners 2000, L.P.
Dan Fishback
Eleven Rings, LLC
G&H Partners
Gary S. Davis
GC&H Investments
Gerard Cunningham
Hartwig Huemer
Homer and Marcia Dunn
Howard C. Park
John Shap
Jamie Stewart
Larry Lowry
Moldaw Variable Fund
Mark A. Culhane and Michele L. Culhane, Trustees UTA dated 12/16/99
USB Piper Jaffray as custodian FBO Mark Culhane IRA 120 224946
Maxwell A. R. Culhane 1999 Irrevocable Trust
Monica G. Culhane 1999 Irrevocable Trust
Michael D. Culhane 1999 Irrevocable Trust
NONSTOP Solutions, Inc.
Phil Mahoney
Richard S. Arnold, Jr.
Storm Duncan
WS Investment Company 99B

SCHEDULE B

LIST OF COMMON HOLDERS:

Michael Neal
Hau Lee
Scott Molinaroli
Philip Delurgio
Dan Fishback
Mark Culhane
Andy Moss
John Shap

EXHIBIT A

ADOPTION AGREEMENT

          This Adoption Agreement (“Adoption Agreement”) is executed by the undersigned (the “Transferee”) pursuant to the terms of that certain Amended and Restated Voting Agreement dated as of September 20, 2002 (the “Agreement”) by and among the Company and certain of its Stockholders. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Transferee agrees as follows:

          (a) Acknowledgment. Transferee acknowledges that Transferee is acquiring certain shares of the capital stock of the Company (the “Stock”), subject to the terms and conditions of the Agreement.

          (b) Agreement. Transferee (i) agrees that the Stock acquired by Transferee shall be bound by and subject to the terms of the Agreement, and (ii) hereby adopts the Agreement with the same force and effect as if Transferee were originally a Party thereto.

          (c) Notice. Any notice required or permitted by the Agreement shall be given to Transferee at the address listed beside Transferee’s signature below.

          EXECUTED AND DATED this                      day of                     ,                   .

TRANSFEREE:
By:
	Name and Title

Address:

Fax:

Accepted and Agreed:

DEMANDTEC, INC.

By:

Title:

EX-10.22

Exhibit 10.22

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

between

SILICON VALLEY BANK

and

DEMANDTEC, INC.

May 23, 2006

TABLE OF CONTENTS

			Page
1.	ACCOUNTING AND OTHER TERMS		1
2.	LOAN AND TERMS OF PAYMENT		2
	2.1	Promise to Pay	2
		2.1.1 Revolving Advances	2
		2.1.2 Cash Management Services Sublimit	3
		2.1.3 Letters of Credit Sublimit	3
		2.1.4 Foreign Exchange Sublimit	3
		2.1.5 International Services Sublimit	3
	2.2	Overadvances	3
	2.3	Interest Rate, Payments	4
	2.4	Fees	4
3.	CONDITIONS OF LOANS		5
	3.1	Conditions Precedent to Initial Credit Extension	5
	3.2	Conditions Precedent to all Credit Extensions	5
4.	CREATION OF SECURITY INTEREST		5
	4.1	Grant of Security Interest	5
	4.2	Authorization to File	5
5.	REPRESENTATIONS AND WARRANTIES		5
	5.1	Due Organization and Authorization	5
	5.2	Collateral	6
	5.3	Litigation	6
	5.4	No Material Adverse Change in Financial Statements	6
	5.5	Solvency	7
	5.6	Regulatory Compliance	7
	5.7	Subsidiaries	7
	5.8	Full Disclosure	7
6.	AFFIRMATIVE COVENANTS		7
	6.1	Government Compliance	8
	6.2	Financial Statements, Reports, Certificates	8

TABLE OF CONTENTS

			Page
	6.3	Inventory; Returns	9
	6.4	Taxes	9
	6.5	Insurance	9
	6.6	Primary Accounts	9
	6.7	Registration of Intellectual Property Rights	9
	6.8	Use of Proceeds	10
	6.9	Further Assurances	10
7.	NEGATIVE COVENANTS		10
	7.1	Dispositions	10
	7.2	Changes in Business, Ownership, Management	10
		or Locations of Collateral
	7.3	Mergers or Acquisitions	11
	7.4	Indebtedness	11
	7.5	Encumbrance	11
	7.6	Distributions; Investments	11
	7.7	Transactions with Affiliates	11
	7.8	Subordinated Debt	12
	7.9	Compliance	12
8.	EVENTS OF DEFAULT		12
	8.1	Payment Default	12
	8.2	Covenant Default	12
	8.3	Material Adverse Change	13
	8.4	Attachment	13
	8.5	Insolvency	13
	8.6	Other Agreements	13
	8.7	Judgments	13
	8.8	Misrepresentations	13
9.	BANK’S RIGHTS AND REMEDIES		14
	9.1	Rights and Remedies	14
	9.2	Power of Attorney	14
	9.3	Bank Expenses	15

TABLE OF CONTENTS

			Page
	9.4	Bank’s Liability for Collateral	15
	9.5	Remedies Cumulative	15
	9.6	Demand Waiver	15
10.	NOTICES		15
11.	CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER		16
12.	GENERAL PROVISIONS		16
	12.1	Successors and Assigns	16
	12.2	Indemnification	16
	12.3	Time of Essence	16
	12.4	Severability of Provision	16
	12.5	Amendments in Writing, Integration	17
	12.6	Counterparts	17
	12.7	Survival	17
	12.8	Confidentiality	17
	12.9	Attorneys’ Fees, Costs and Expenses	17
13.	DEFINITIONS		18
	13.1	Definitions	18

This THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of the Effective Date, between SILICON VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and DEMANDTEC, INC. (“Borrower”), whose address is One Circle Star Way, Suite 200, San Carlos, California 94070, provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows:

RECITALS:

     A. The Bank and the Borrower have previously entered into that certain Loan and Security Agreement dated as of October 23, 2001, which was amended and restated in its entirety pursuant to that certain Amended and Restated Loan and Security Agreement dated as of July 25, 2003, as amended by that certain Loan Modification Agreement dated as of November 2003, which was amended and restated in its entirety pursuant to that certain Second Amended and Restated Loan and Security Agreement dated as of May 2, 2005 (as such agreement was further amended from time to time, the “Original Credit Agreement”).

     B. The Original Credit Agreement provided for the making of a term loan in the amount of $3,000,000 (the “Original Term Loan”) and a revolving credit loan in the amount of up to $2,500,000 (the “Original Revolving Loan”).

     C. Immediately prior to the amendment and restatement of the Original Credit Agreement in accordance with the terms and conditions hereof, the following original loans remain outstanding under the Original Credit Agreement; (i) with respect to the Original Term Loan, $1,979,037.61 in aggregate principal and $8,311.96 of interest and (ii) with respect to the Original Revolving Loan, $0 in aggregate principal and $0 of interest.

     D. Advances (as defined below) made on the date hereof pursuant to this Agreement will be applied to pay off the Original Term Loan in full.

     E. It is not the intention of the Bank or the Borrower that this Agreement constitute a novation of the indebtedness governed by the Original Credit Agreement, and from and after the Effective Date, the Original Credit Agreement shall be amended and restated in its entirety in accordance with the terms and provisions hereof.

     E. The Bank and the Borrower desire to amend the terms and conditions of the Original Credit Agreement to, among other things, reflect an increase in the Committed Revolving Line (as defined below).

1. ACCOUNTING AND OTHER TERMS.

     Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP. The term “financial statements” includes the notes and schedules. The terms “including” and “includes” always mean “including (or includes) without limitation,” in this or any Loan Document.

2.LOAN AND TERMS OF PAYMENT.

2.1 Promise to Pay.

     Borrower will pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1 Revolving Advances.

     (a) Bank will make Advances to Borrower not exceeding the lesser of: (x) the Committed Revolving Line or (y) an amount equal to the sum of:

(i) up to 80% of Eligible Receivables, plus

(ii)(I) if Adjusted Quick Ratio is greater than 1.50:1.00, $3,000,000 or (2) if Adjusted Quick Ratio is equal to or less than 1.50:1,00, $0, minus

(iii) the aggregate amount outstanding under the Cash Management Services Sublimit, International Services Sublimit, FX Reserve and Letters of Credit, and minus

(iv) such reserves as Bank may deem proper and necessary from time to time (the “Borrowing Base”).

     Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement.

     (b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 noon Pacific time on the Business Day the Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Payment/Advance Form attached as Exhibit B. Bank will credit Advances to Borrower’s deposit account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance.

     (c) The Committed Revolving Line terminates on the Revolving Maturity Date, when all Advances are immediately payable.

     (d) Notwithstanding anything contained herein, Borrower acknowledges and agrees that on and as of the Closing Date, the outstanding principal amount and accrued interest of the Original Revolving Loan then outstanding shall be refinanced and converted into Advances contemplated hereby.

     (e) Amounts borrowed pursuant to this Section 2 may be prepaid without premium or penalty and the Committed Revolving Line closed without premium or penalty.

2.1.2 Cash Management Services Sublimit.

     Borrower may use up to $1,000,000 of the Committed Revolving Line, minus the amounts outstanding under the International Services Sublimit, FX Reserve and Letters of Credit for Bank’s cash management services, which may include merchant services, direct deposit of payroll, business credit card, check cashing services identified in various cash management services agreements related to such services (the “Cash Management Services”). All amounts Bank pays for any Cash Management Services will be treated as Advances under the Committed Revolving Line.

2.1.3 Letters of Credit Sublimit.

     Bank may issue Letters of Credit for Borrower’s account not exceeding $1,000,000 minus the amounts outstanding under the Cash Management Sublimit, International Services Sublimit and FX Reserve. Each Letter of Credit will have an expiry date of no later than thirty days prior to the Revolving Maturity Date, but Borrower’s reimbursement obligation will be secured by unencumbered cash on terms acceptable to Bank at any time upon the Revolving Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request.

2.1.4 Foreign Exchange Sublimit.

     Borrower may enter in foreign exchange forward contracts with the Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one business day after the contract date (the “FX Forward Contract”). Bank will subtract 10% of each outstanding FX Forward Contract from the foreign exchange sublimit which is a maximum of $1,000,000, minus the amounts outstanding under the Cash Management Services Sublimit, International Services Sublimit and Letters of Credit (the “FX Reserve”). The total FX Forward Contracts at any one time may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs.

2.1.5 International Services Sublimit.

     Borrower may use up to $1,000,000 of the Committed Revolving Line, minus the amounts outstanding under the Cash Management Services Sublimit, FX Reserve and Letters of Credit (the “International Services Sublimit”), for Bank’s international management services, which may include foreign exchange contracts and export letters of credit.

2.2 Overadvances.

     If at any time (i) Borrower’s Obligations under Sections 2.1.1, 2.1.2, 2.1.3, 2.1.4 and 2.1.5 exceed the Committed Revolving Line or the Borrowing Base, (ii) Borrower’s Obligations

under Sections 2.1.2, 2.1.3, 2.1.4 and 2.1.5 exceed $1,000,000 or (iii) Advances made on Foreign Eligible Accounts exceed $1,500,000, then Borrower must immediately pay Bank the excess.

2.3 Interest Rate, Payments.

     (a) Interest Kate. Advances accrue interest on the outstanding principal balance at a per annum rate equal to the greater of (i) 0.50 percentage points above the Prime Rate or (ii) 8%. During the Trigger Period, Advances will accrue interest on the outstanding principal balance at a per annum rate equal to 2 percentage points above the Prime Kate. After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of days elapsed.

     (b) Payments, Interest due on the Committed Revolving Line is payable on the last day of each month. Bank may debit any of Borrower’s deposit accounts including Account Number 3300337567 for principal and interest payments or any amounts Borrower owes Bank when due. Bank will notify Borrower when it debits Borrower’s accounts. These debits are not a set-off. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest accrue.

     (c) Minimum Monthly Interest. If the aggregate amount of all interest earned by Bank in any month is less than the amount of interest Bank would have earned if the outstanding principal balance of Advances were $2,000,000 for any such month in the first year of this Agreement (the “Minimum Monthly Interest”), Borrower shall pay Bank an amount, payable on the last day of such month, in an amount equal to the (i) Minimum Monthly Interest minus (ii) the aggregate amount of all interest earned by Bank (exclusive of any collateral monitoring fees, unused line fees, or any other fees and charges hereunder) in such month.

     (d) Trigger Period. During a Trigger Period, (i) all proceeds of Accounts and other cash collections shall be deposited by Borrower into a lockbox account as Bank may specify and (ii) Bank will sweep all accounts of Borrower on a daily basis and apply all such cash to repay the Advances.

2.4 Fees. Borrower will pay:

     (a) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and reasonable expenses) incurred through and after the date of this Agreement, are payable when due.

     (b) Loan Fee. Borrower will pay to Bank a loan fee in the amount of $35,000 (the “Loan Fee”); provided however, if no Credit Extensions are made due to the sole fault of the Bank, Bank will refund the Loan Fee to Borrower.

     (c) Anniversary Fee. On the first anniversary of this Agreement, Borrower will pay to bank an anniversary fee of $30,000.

3. CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension.

     Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees it requires.

3.2 Conditions Precedent to all Credit Extensions.

     Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:

     (a) timely receipt of any Payment/Advance Form;

     (b) timely receipt of a Transaction Report; and

     (c) the representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties of Section 5 remain materially true.

4. CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest.

     Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. If this Agreement is terminated, Bank’s lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations.

4.2 Authorization to File.

     Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank’s interest in the Collateral.

5. REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants as follows:

5.1 Due Organization and Authorization.

     Borrower and each Subsidiary is duly existing and in good standing in its state of

formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause: a Material Adverse Change, Borrower has not changed its state of formation or its organizational structure or type or any organizational number (if any) assigned by its jurisdiction of formation.

     The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change.

5.2 Collateral.

     Borrower has good title to the Collateral, free of Liens except Permitted Liens or Borrower has Rights to each asset that is Collateral. Borrower has no other deposit account, other than the deposit accounts described in the Schedule. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. Except for certain computer hardware installed off-site at the facilities of Borrower’s customers, the Collateral is not in the possession of any third party bailee (such as at a warehouse). In the event that Borrower, after the date hereof, intends to store or otherwise deliver the Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. Borrower has no notice of any actual or imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All Inventory is in all material respects of good and marketable quality, free from material defects. Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. To the Borrower’s knowledge, each Patent is valid and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the extent such claim could not reasonably be expected to cause a Material Adverse Change.

5.3 Litigation.

     Except as shown to the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers and legal counsel, threatened by or against Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change.

5.4 No Material Adverse Change in Financial Statements.

     All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in

Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.5 Solvency.

     The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

5.6 Regulatory Compliance.

     Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with, the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change, None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP, Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change.

5.7 Subsidiaries.

     Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.

5.8 Full Disclosure.

     No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. It being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted results.

6. AFFIRMATIVE COVENANTS

     Borrower will do all of the following for so long as Bank has an obligation to lend, or

there are outstanding Obligations:

6.1 Government Compliance.

     Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction to which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on: Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change.

6.2 Financial Statements, Reports, Certificates.

     (a) Borrower will deliver to Bank: (i) as soon as available, but no later than 30 days after the last day of each month, a company prepared consolidated balance sheet and income statement and statement of cash flows covering Borrower’s consolidated operations during the period, certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than 180 days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (lit) if applicable, within 5 days of filing, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt and all reports on Form 10-&, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $100,000 or more; (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests; and (vi) prompt notice of any material change in the composition of the Intellectual Property, including any subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark not shown in any intellectual property security agreement between Borrower and Bank or knowledge of an event that materially adversely affects the value of the Intellectual Property.

     (b) Within 30 days after the last day of each month and at each time Borrower requests an Advance, Borrower will deliver to Bank a Transaction Report signed by a Responsible Officer, together with aged listings of accounts receivable, accounts payable, deferred revenue and such other schedules as Bank may request During a Trigger Period, Borrower will deliver to Bank a Transaction Report with all schedules on a weekly basis.

     (c) Within 30 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of Exhibit D.

     (d) Within 30 days after the last day of each quarter, Borrower will deliver to Bank a quarterly bookings statement.

     (e) Within 30 days after the last day of each fiscal year, Borrower will deliver to Bank financial projections approved by Borrower’s Board of Directors and commensurate with those provided to venture capital investors.

     (f) Borrower will allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits will be conducted semi-annually, and more frequently as Bank may require at such times as an Event of Default has occurred and is continuing or during a Trigger Period.

6.3 Inventory; Returns.

     Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns arid allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than $50,000.

6.4 Taxes.

     Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on demand, appropriate certificates attesting to the payment

6.5 Insurance.

     Borrower will keep its business and the Collateral insured for risks and in amounts, as are normal and customary for Borrower’s industry. Insurance policies will be in a form and with companies that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy (10 days in_: the case of cancellation for non-payment), At Bank’s request, Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the Obligations.

6.6 Primary; Accounts.

     Borrower will maintain its primary depository, investment and operating accounts with Bank, which relationship shall include Borrower maintaining account balances in any accounts at or tough Bank representing at least 80% of its unrestricted cash and cash equivalents.

6.7 Registration of Intellectual Property Rights.

     Borrower shall not register any Copyrights or Mask Works with the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto);

(ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application’s) with the United States Copyright Office. Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works. Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within 30 days of any such filing.

     Borrower will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property unless Borrower, in the exercise of its business judgment, determines otherwise, and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without Bank’s written consent, which shall not be unreasonably withheld.

6.8 Use of Proceeds. Borrower will use the Advances to pay the Original Term Loan and for working capital needs.

6.9 Further Assurances.

     Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest in the Collateral or to effect the purposes of this Agreement.

7. NEGATIVE COVENANTS

Borrower will not do any of the following without Bank’s prior written consent, which will not be unreasonably withheld, for so long as Bank has an obligation to lend and there are any outstanding Obligations:

7.1 Dispositions.

     Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any material part of its business or property, other than Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (iii) of worn-out or obsolete Equipment.

7.2 Changes in Business, Ownership, Management or Locations of Collateral.

     Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership or management of greater than 25% (other than by the sale of Borrower’s equity securities in a public offering or to strategic, corporate or venture capital

investors so long as Borrower identifies the venture capital investors prior to the closing of the investment). Borrower will not, without at least 30 days prior written notice, relocate its chief executive office, change its state of formation (including reincorporation), change its organizational number or name or add any new offices or business locations (such as warehouses) in which Borrower maintains or stores over $25,000 in Collateral.

7.3 Mergers or Acquisitions.

Without the express written consent of Bank (which consent shall not be unreasonably withheld), merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) no Event of Default has occurred and is continuing or would result from such action during the term of this Agreement and (ii) such transaction would not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

7.4 Indebtedness.

     Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance.

     Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted here, subject to Permitted Liens subject to Permitted Liens and except for Liens for ad valorem Taxes not yet due and payable and such imperfections of title and encumbrances, ifany, which are not material in character, amount or extent, and which do not materially detract from the value, or materially interfere with the present use, of the property subject thereto or affected thereby.

7.6 Distributions; Investments.

     Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, except for repurchases of stock from former employees or directors of Borrower under the terms of applicable repurchase agreements in an aggregate amount not to exceed $250,000 in the aggregate in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases.

7.7 Transactions with Affiliates.

     Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be

obtained in an arm’s length transaction with a nonaffiliated Person.

7.8 Subordinated Debt.

     Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent.

7.9 Compliance.

     Become an “Investment company” or a company controlled by an “investment company,” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so.

8. EVENTS OF DEFAULT

     Any one of the following is an Event of Default:

8.1 Payment Default.

     If Borrower fails to pay any of the Obligations within 3 days after their due date, however, during such period no Credit Extensions will be made;

8.2 Covenant Default.

     (a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7 or violates any of the covenants contained in Article 7 of this Agreement, or

     (b) If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be made during such cure period);

8.3 Material Adverse Change.

     If there (i) occurs a material adverse change in the business operations, or condition (financial or otherwise) of the Borrower; or (ii) is a material impairment of the prospect of repayment of any portion of the Obligations; or (iii) is a material impairment of the value or priority of Bank’s security interests in the Collateral (the foregoing being defined as a “Material Adverse Change”).

8.4 Attachment.

     If any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions will be made during the cure period);

8.5 Insolvency.

     If Borrower becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 30 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed);

8.6 Other Agreements.

     If there is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding $250,000 or that could cause a Material Adverse Change;

8.7 Judgments.

     If a money judgment(s) in the aggregate of at least $250,000 is rendered against Borrower and is unsatisfied and unstayed for 10 days (but no Credit Extensions will be made before the judgment is stayed or satisfied); or

8.8 Misrepresentations.

     If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document.

9. BANK’S RIGHTS AND REMEDIES

9.1 Rights and Remedies.

     When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:

     (a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

     (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

     (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable; notify any Person owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit;

     (d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

     (e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;

     (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and

     (g) Dispose of the Collateral according to the Code.

9.2 Power of Attorney.

     Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

9.3 Bank Expenses.

     If Borrower falls to pay any amount or furnish any required proof of payment to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

9.4 Bank’s Liability for Collateral.

     If Bank complies with reasonable banking practices and Section 9-207 of the Code, it is not liable for; (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.5 Remedies Cumulative.

     Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given.

9.6 Demand Waiver.

     Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

10. NOTICES

     All notices or demands by any party about this Agreement or any other related agreement must be in writing; and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at the beginning of this Agreement. A party may change its notice address by giving the other party written notice.

11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

     California law governs the Loan Documents without regard to principles of conflicts of law, Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12. GENERAL PROVISIONS

12.1 Successors and Assigns.

     This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the right without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement.

12.2 Indemnification.

     Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

12.3 Time of Essence.

     Time is of the essence for the performance of all obligations in this Agreement.

12.4 Severability of Provision.

     Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.5 Amendments in Writing, Integration.

     All amendments to this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements, including the Original Credit Agreement. The Original Credit Agreement and all prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement merge into this Agreement and the Loan Documents.

12.6 Counterparts.

     This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement.

12.7 Survival.

     All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run.

12.8 Confidentiality.

     In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made (i) to Bank’s subsidiaries or affiliates in connection with their business with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank considers appropriate exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

12.9 Attorneys’ Fees, Costs and Expenses.

     In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled.

13. DEFINITIONS

13.1 Definitions.

     In this Agreement:

     “Accounts” are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code.

     “Advance” or “Advances” is an advance made under the Committed Revolving Line.

     “Adjusted Quick Ratio” is the ratio of Quick Assets to Current Liabilities minus the current portion of Deferred Revenue plus the long term portion of the Obligations.

     “Affiliate” of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

     “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings).

     “Borrower’s Books” are all Borrower’s books and records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information.

     “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is closed.

     “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc, (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; corporate bonds and asset-backed securities having maturities of not more than one (1) year from the date of acquisition; and (e) money market instruments (money market funds, CDs, and repurchase agreements) at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.

     “Cash Management Services” are defined in Section 2.1.2.

     “Closing Date” means the date that this Agreement is executed by Borrower and Bank.

     “Code” is the California Uniform Commercial Code, as applicable.

     “Collateral” is the property described on Exhibit A.

     “Committed Revolving Line” is $5,000,000.

     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement.

     “Copyrights” are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held.

     “Credit Extension” is each Advance, exchange contract, or any other extension of credit by Bank for Borrower’s benefit.

     “Current Liabilities” are the aggregate amount of Borrower’s Total Liabilities which mature within one (1) year.

     “Deferred Revenue” is all amounts received in advance of performance and not yet recognized as revenue.

     “Eligible Accounts” are Accounts in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5; but Bank may change eligibility standards by giving Borrower notice. Unless Bank agrees otherwise in writing, Eligible Accounts will not include:

     (a) Accounts that the account debtor has not paid within 90 days of invoice date;

     (b) Accounts for an account debtor 50% or more of whose Accounts have not been paid within 90 days of invoice date;

     (c) Credit balances over 90 days from invoice date;

     (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Bank otherwise approves in writing or the Accounts are Special Accounts, for which the percentage may be up to 50%;

     (e) Accounts for which the account debtor does not have its principal place of business in the United States other than the Eligible Foreign Accounts;

     (f) Accounts for which the account debtor is a federal, state or local government entity or any department, agency, or instrumentality;

     (g) Accounts for which Borrower owes the account debtor, but only up to the amount owed (sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

     (h) Accounts for demonstration or promotional equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account debtor’s payment may be conditional;

     (i) Accounts for which the account debtor is Borrower’s Affiliate, officer, employee, or agent;

     (j) Accounts in which the account debtor disputes liability or makes any claim and Bank believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

     (k) Accounts for which Bank reasonably determines collection to be doubtful.

     “Equipment” is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

     “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.

     “Foreign Eligible Accounts” are Accounts with each of the following account debtors: Sainsbury’s Supermarkets Limited (or JSD Information Systems Limited, a wholly-owned subsidiary of Sainsbury’s), B&Q plc., IBM France/Monoprix, and any other account debtor who does not have its principal place of business in the United States and is approved by Bank in writing.

     “GAAP” is generally accepted accounting principles.

     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations.

     “Insolvency Proceeding” are proceedings by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

     “Intellectual Property” is all of Borrower’s:

     (a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and royalties from the use;

     (b) Any trade secrets and any intellectual property rights in computer software and computer software products now or later existing, created, acquired or held;

     (c) All design rights which may be available to Borrower now or later created, acquired or held;

     (d) Any claims for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above;

     All proceeds and products of the foregoing, including all insurance, indemnity or warranty payments.

     “Inventory” is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title.

     “Investment” is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

     “Investment Guidelines” is that certain Investment Guidelines document, as reviewed and accepted by Bank as of the date of the Prior Agreement.

     “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance,

     “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated.

     “Mask Works” are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired.

     “Material Adverse Change” is defined in Section 8.3.

     “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including Cash Management Services, letters of credit and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank.

     “Original Revolving Loan” has the meaning set forth in the recitals.

     “Original Term Loan” has the meaning set forth in the recitals.

     “Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

     “Permitted Indebtedness” is:

     (a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document;

     (b) Indebtedness existing on the Effective Date and shown on the Schedule;

     (c) Subordinated Debt;

     (d) Indebtedness to trade creditors incurred in the ordinary course of business; and

     (e) Indebtedness secured by Permitted Liens.

      “Permitted Investments” are:

     (a) Investments shown on the Schedule and existing on the Effective Date;

     (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest

rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more than 1 year after issue; and

     (c) Investments made pursuant to Borrower’s Investment Guidelines.

     “Permitted Liens” are:

     (a) Liens existing on the Effective Date and shown on the Schedule or arising under this Agreement or other Loan Documents;

     (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests;

     (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries incurred for financing the acquisition of the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment;

     (d) Licenses or sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest;

     (e) Leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property;

     (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.

     “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate.

     “Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash, cash equivalents, and net billed domestic accounts receivable, determined according to GAAP.

     “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief Financial Officer and the Controller of Borrower.

     “Revolving Maturity Date” is May __, 2008.

     “Rights” as applied to the Collateral, means the Borrower’s rights and interests in, and powers with respect to, that Collateral, whatever the nature of those rights, interests and powers and, in any event, including Borrower’s power to transfer rights in such Collateral to Bank.

     “Schedule” is any attached schedule of exceptions.

     “Special Accounts” are Accounts with each of the following account debtors: Salisbury’s, B&Q, Best Buy, Long Drug Stores, RadioShack, Safeway, Proctor and Gamble, Advance Stores Company (dba Advance Auto Parts), Ahold Information Services, Anheuser-Busch, Circle K Stores, Duane Reade, Foodlion, 20th Century Fox, Giant Eagle, Hannaford Bros., HEB Grocery Company, Office Depot, Piggly Wiggly, and Tyson Foods.

     “Subordinated Debt” is debt incurred by Borrower subordinated to Borrower’s indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in writing.

     “Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person.

     “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt discount and expense, Patents, trade and service marks and names, Copyrights and research and development expenses except prepaid expenses, and (c) reserves not already deducted from assets, and (ii) Total Liabilities less Deferred Revenue,

     “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt,

     “Trademarks” are trademark and servicemark rights, registered or not, applications to register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks.

     “Transaction Report” is that certain Transaction Report in the form of Exhibit C.

     “Trigger Period” is the period commencing on the first day of the month after any month end where Borrower’s Adjusted Quick Ratio is equal to or less than 1.50 and ending on the month end where Borrower’s Adjusted Quick Ratio is greater than 1.50 for two consecutive months.

BORROWER: DEMANDTEC, INC.
By:	/s/ Mark Culhane
		Title: EVP & CFO
BANK: SILICON VALLEY BANK
By:	/s/ Illegible
		Title: RM

EXHIBIT A

     The Collateral consists of all of Borrower’s right, title and interest in and to the following whether owned now or hereafter arising and whether the Borrower has rights now or hereafter has rights therein and wherever located:

     All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor, vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

     All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is held for sale or lease, or to be furnished under a contract of service or is temporarily out of Borrower’s custody or possession or in transit and including any returns or repossession upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above;

     All contract rights and general intangibles now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance, payment intangibles, and rights to payment of any kind;

     All now existing and hereafter arising accounts (including health-care insurance receivables), contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, insurance (including refunds) claims and proceeds, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower,

     All documents (including negotiable documents), cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, letter of credit rights, money, certificates of deposit, instruments (including promissory notes) and chattel paper (including tangible and electronic chattel paper) now owned or hereafter acquired and Borrower’s Books relating to the foregoing;

     All copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or hereafter acquired; all claims for damages by way of any past, present and future

infringement of any of the foregoing; and

     All Borrower’s Books relating to the foregoing, and the computers and equipment containing said books and records, and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof.

EXHIBIT B

LOAN PAYMENT / ADVANCE TELEPHONE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 12:00 NOON., P.S.T.

TO:	CENTRAL CLIENT SERVICE DIVISION	DATE:	5/23/2006
FAX#:	(408) 496-2426	TIME:

FROM:                                                                                             DEMANDTEC, INC.

CLIENT NAME (BORROWER) 

REQUESTED BY:  Mark Culhane

AUTHORISED SIGNER’S NAME

AUTHORISED SIGNATURE: /s/ Mark Culhane

PHONE NUMBER: 650-226-4800

FROM ACCOUNT # TO ACCOUNT # 3300337567  

REQUESTED TRANSACTION TYPE	REQUESTED DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE)	$	3,000,000
PRINCIPAL PAYMENT (ONLY)	$
PRINCIPAL PAYMENT (ONLY)	$
PRINCIPAL AND INTEREST (PAYMENT)	$

OTHER INSTRUCTIONS:

All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the telephone request for and Advance confirmed by this Borrowing Certificate; but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date.

1

BANK USE ONLY

TELEPHONE REQUEST:

The following person is authorized to request the loan payment transfer/loan advance on the advance designated account and is known to me.

Authorized Requester	Phone #
Received By (Bank)	Phone #

Authorized Signature (Bank)

2

EXHIBIT C

TRANSACTION REPORT

See attached.

EXHIBIT D

COMPLIANCE CERTIFICATE

TO:	SILICON VALLEY BANK
FROM:	DEMANDTEC, INC

     The undersigned authorized officer of DEMANDTEC, INC. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending                      with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned authorized officer of Borrower certifies that Borrower and each Subsidiary (i) has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP and (ii) does not have any legal actions pending or threatened against Borrower or any Subsidiary which Borrower has not previously notified in writing to Bank. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.

Please Indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant	Required	Complies
Monthly financial statements + CC	Monthly within 30 days	Yes	No
Annual (Audited)	FYB within 180 days	Yes	No
A/R, A/P Agings & Deferred Rev.	Monthly within 30 days	Yes	No
A/R Audit	Semi-annual	Yes	No
Transaction Report	Monthly within 30 days*	Yes	No
Bookings Report	Quarterly within 30 days	Yes	No
Projections	Annually within 30 days

* During the Trigger Period, the Transaction Report is due weekly

Revolving Advance Limit and
Interest Rate Determination	Required	Actual	Complies
Quick Ratio (Adjusted)*	1.50: 1.00	: 1.00	Yes	No

*	If greater than 1.50:1.00, the Borrowing Base includes the $3,000,000 non-formula limit.
	If less than 1,50; 1.00, interest shall accrue at 2 percentage points above the Prime Rate.

Borrower only has deposit accounts located at the following institutions:                                         .

Has Borrower filed any new Trademark, Patent or Copyright applications? Yes /No (If “yes”, please list below and complete the attached Addendum to Intellectual Property Security Agreement)

Trademarks:	BANK USE ONLY
Patents:	Received by:
		AUTHORIZED SIGNER
Copyrights:
	Date:
	Verified:
		AUTHORIZED SIGNER
	Date:
	Compliance Status:	Yes No

Comments Regarding Exceptions: See Attached.

Sincerely,

DEMANDTEC, INC.
 

Signature 

Title  

Date 

EX-23.1

Exhibit 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 15, 2007 in the Registration Statement (Form S-1) and related Prospectus of DemandTec, Inc. for the registration of shares of its common stock.

San Francisco, California	/s/ ERNST & YOUNG LLP
May 24, 2007

EX-23.2

Exhibit 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

     We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 15, 2007 in the Registration Statement (Form S-1) and related Prospectus of DemandTec, Inc. for the registration of shares of its common stock.

San Francisco, California	/s/ ERNST & YOUNG LLP
May 24, 2007