CHORDIANT SOFTWARE INC
S-1/A, 2000-02-14
PREPACKAGED SOFTWARE
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<PAGE>


 As filed with the Securities and Exchange Commission on February 14, 2000
                                                      Registration No. 333-92187
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                             ---------------------

                              AMENDMENT NO. 4
                                       TO
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     Under
                           The Securities Act of 1933

                             ---------------------
                            CHORDIANT SOFTWARE, INC.
             (Exact Name of Registrant as Specified in Its Charter)
                             ---------------------
<TABLE>
 <S>                            <C>                           <C>
           Delaware                         7372                       93-1051328
<CAPTION>
 (State or other jurisdiction    Primary Standard Industrial        (I.R.S. Employer
     of incorporation or
        organization)            Classification Code Number        Identification No.)
</TABLE>

                     20400 Stevens Creek Blvd., Suite #400
                              Cupertino, CA 95014
                                 (408) 517-6100
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)
                             ---------------------
                              Samuel T. Spadafora
                            Chordiant Software, Inc.
          President, Chief Executive Officer and Chairman of the Board
                      20400 Stevens Creek Blvd., Suite 400
                              Cupertino, CA 95014
                                 (408) 517-6100
 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                             of Agent for Service)

                             ---------------------
                                   Copies to:
<TABLE>
<S>                                            <C>
            Craig E. Dauchy, Esq.                            Curtis L. Mo, Esq.
            Eric C. Jensen, Esq.                           Richard C. Leska, Esq.
             Cooley Godward LLP                              Julie Freese, Esq.
            Five Palo Alto Square                     Brobeck, Phleger & Harrison LLP
             3000 El Camino Real                           Two Embarcadero Place
             Palo Alto, CA 94306                               2200 Geng Road
                                                            Palo Alto, CA 94303
</TABLE>
                             ---------------------
    Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.

    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 of
1933 (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(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. [_]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

    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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the     +
+Securities and Exchange Commission is effective. This prospectus is not an    +
+offer to sell securities, and we are not soliciting offers to buy these       +
+securities, in any state where the offer or sale is not permitted.            +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

              SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000

PRELIMINARY PROSPECTUS

[LOGO OF CHORDIANT SOFTWARE, INC.]


                                4,500,000 Shares

                                  Common Stock

  Chordiant Software, Inc. is offering 4,500,000 shares of its common stock.
This is our initial public offering, and no public market currently exists for
our shares. Our common stock has been approved for quotation on the Nasdaq
National Market under the symbol CHRD. We anticipate that the initial public
offering price will be between $14.00 and $16.00 per share.

                                --------------

  Investing in our common stock involves risks. See "Risk Factors" beginning on
page 8.

                                --------------

<TABLE>
<CAPTION>
                                                                 Per Share Total
                                                                 --------- -----
<S>                                                              <C>       <C>
Public Offering Price...........................................   $       $
Underwriting Discounts and Commissions..........................   $       $
Proceeds to Chordiant...........................................   $       $
</TABLE>

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

  We have granted the underwriters a 30-day option to purchase up to an
additional 425,000 shares of our common stock to cover over-allotments. Two of
our stockholders, who are identified on page 67, have granted the underwriters
a 30-day option to purchase up to an additional 250,000 shares of our common
stock to cover over-allotments.

                                --------------

Robertson Stephens
                 Dain Rauscher Wessels
                                                      Thomas Weisel Partners LLC

                  The date of this prospectus is        , 2000
<PAGE>

                       [INSIDE FRONT COVER OF PROSPECTUS]

    The inside front cover graphic for Chordiant will be a single page (not
gate folded):

    On the top center of the inside front cover there will be the Chordiant
    logo. Below the logo the page will read e-Business Infrastructure Software.

    In the middle of the page the following graphic will appear:

    The graphic is circular in shape with two layers. The inside layer contains
    images of 3 men and women who are on the telephone and working with
    computers. Five words are written (equal distant apart) inside the outside
    circular layer: FAX, INTERNET, PHONE, EMAIL, INTERACTIVE TV. The outer
    layer has a shadow of a woman on the bottom left of the outer circle and a
    vertical view of 3 skyscrapers. Eight words are written in oval blocks
    (equal distant apart) inside the outer layer of the circle: CUSTOMER
    DATABASE, SALES, MARKETING, CUSTOMER SERVICE, FIELD SERVICE, PRODUCT
    OFFERING, BILLING, FULFILLMENT.

    At the bottom of the page the inside front cover will read:

    Chordiant provides e-business infrastructure software that it believes
    enables companies to offer their customers personalized marketing, sales
    programs, e-business services, and customer support across multiple
    communication channels.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Summary..................................................................   4
Risk Factors.............................................................   8
Forward-Looking Statements...............................................  15
Use of Proceeds..........................................................  15
Dividend Policy..........................................................  15
Capitalization...........................................................  16
Dilution.................................................................  17
Selected Consolidated Financial Data.....................................  18
Management's Discussion and Analysis of Financial Condition and Results
  of Operations..........................................................  19
Business.................................................................  28
Management...............................................................  42
Related Party Transactions...............................................  55
Principal Stockholders...................................................  58
Description of Capital Stock.............................................  62
Shares Eligible for Future Sale..........................................  65
Underwriting.............................................................  67
Legal Matters............................................................  69
Experts..................................................................  69
Where You Can Find More Information......................................  70
Index to Financial Statements............................................ F-1
</TABLE>

                             ---------------------


                     Dealer Prospectus Delivery Obligation

    Until     , 2000, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and for their unsold
allotments or subscriptions.

                                       3
<PAGE>

                                    SUMMARY

    This summary highlights information contained in this prospectus. This
summary does not contain all the information you should consider before buying
shares in the offering. You should read the entire prospectus carefully. In
this prospectus, the terms Chordiant, we, us, and our refer to Chordiant
Software, Inc. and its wholly owned subsidiary Chordiant International, Inc..

    Except as otherwise indicated, information in this prospectus is based on
the following assumptions:

  .  the conversion of all our outstanding shares of preferred stock and
     convertible debentures into shares of common stock upon the closing of
     this offering;

  .  no exercise of the underwriters' over-allotment options; and

  .  the filing of our amended and restated certificate of incorporation
     before the closing of this offering.

    Chordiant and the Chordiant logo are registered trademarks of Chordiant.
WSOP, CCS-Customer Communications Solution and One Click, One Call, One
Customer are trademarks of Chordiant. This prospectus also includes trademarks
owned by other parties. All other trademarks mentioned are the property of
their owners.

    You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. 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 contained in this prospectus is accurate only as
of the date of this prospectus.

                            Chordiant Software, Inc.

    Chordiant provides e-business infrastructure software that it believes
enables companies to offer their customers personalized marketing, sales
programs, e-business services and customer support across multiple
communication channels. These channels include the internet, e-mail systems,
automated telephony self-service systems, and customer service representatives
in call centers and retail outlets. We believe that companies that use
organization-wide customer information to provide consistent customer support
through all channels of customer contact will be able to compete more
successfully in the rapidly changing internet economy.

    Our Customer Communications Solution, or CCS, software product, is
comprised of a suite of applications. It includes standard business services, a
workflow engine and enterprise integration services supporting network,
telephony, and data management connections. It also connects with existing
databases and computer systems. Our product is licensed to our customers as a
complete e-business infrastructure system. CCS includes a customer service
representative application, a web communications application and an e-mail
communications application. Our software is designed to enable companies to:

  .  develop a comprehensive single view of the customer;

  .  use automated, sophisticated decision making processes;

  .  offer their customers consistent experiences across multiple
     communications channels; and

  .  utilize standard and customizable business services.

    We license our product and provide related services primarily through our
direct sales organization, complemented by the selling and support efforts of
systems integrators. We license our product to multinational market leaders in
business-to-consumer industries. Our customers include Bank One International,
Cable & Wireless Communications, Canadian Tire Acceptance Limited, Chase
Manhattan Mortgage Corporation,

                                       4
<PAGE>

Metropolitan Life Insurance Company, Direct Line Group Services Limited, First
USA Bank, General Motors' OnStar division, KLM Royal Dutch Airlines and Thomas
Cook Global Services.

    Our objective is to continue to provide innovative e-business
infrastructure software that enables a company to offer its customers
personalized interactions across multiple communication channels.

    Our principal executive offices are located at 20400 Stevens Creek Blvd.,
Suite 400, Cupertino, CA 95014, and our telephone number is (408) 517-6100. Our
internet address is www.chordiant.com. The information on our web site is not
incorporated by reference into this prospectus and does not constitute a part
of this prospectus.

                                       5
<PAGE>

                                  The Offering

<TABLE>
 <C>                                                  <S>
 Common stock offered................................ 4,500,000 shares

 Common stock to be outstanding after this offering.. 34,818,295 shares

 Use of proceeds..................................... General corporate
                                                      purposes, including
                                                      working capital and
                                                      capital expenditures. See
                                                      "Use of Proceeds."

 Proposed Nasdaq National Market symbol.............. CHRD
</TABLE>

                              --------------------

    The number of shares of common stock to be outstanding after this offering
assumes no exercise of the underwriters' over-allotment options. The number of
shares of common stock to be outstanding after this offering is based on the
number of shares outstanding as of December 31, 1999, and excludes:

  .   7,773,658 shares subject to options outstanding as of December 31,
      1999, at a weighted average exercise price of $1.82 per share;

  .   898,276 additional shares that we could issue under our equity
      incentive stock option plan;

  .   700,000 shares that we could issue under our non-employee directors'
      stock option plan; and

  .   2,000,000 shares that we could issue under our employee stock purchase
      plan.

                                       6
<PAGE>

                      Summary Consolidated Financial Data
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
                                                  (in thousands, except per
                                                         share data)
<S>                                               <C>       <C>       <C>
Consolidated Statement of Operations Data:
Net revenues:
 License......................................... $  1,142  $  4,360  $  8,007
 Service.........................................    1,766     8,105     9,581
                                                  --------  --------  --------
     Total net revenues..........................    2,908    12,465    17,588
Cost of net revenues.............................    1,535     9,372    14,749
                                                  --------  --------  --------
Gross profit ....................................    1,373     3,093     2,839
Loss from operations.............................  (11,923)  (17,880)  (22,351)
Net loss......................................... $(11,593) $(17,440) $(23,137)
                                                  ========  ========  ========

Net loss per share:
 Basic and diluted............................... $  (2.31) $  (3.44) $  (4.34)
                                                  ========  ========  ========
 Weighted average shares.........................    5,009     5,075     5,327
                                                  ========  ========  ========
Pro forma net loss per share (unaudited):
 Basic and diluted...............................                     $  (0.93)
                                                                      ========
 Weighted average shares.........................                       24,805
                                                                      ========
</TABLE>

<TABLE>
<CAPTION>
                                                       December 31, 1999
                                                 -------------------------------
                                                  Actual   Pro Forma As Adjusted
                                                 --------  --------- -----------
                                                          (unaudited)
<S>                                              <C>       <C>       <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents....................... $  6,719   $ 6,719    $68,394
Working capital.................................    1,833     1,833     63,508
Total assets....................................   22,086    22,086     83,761
Borrowings......................................   13,225     3,225      3,225
Deferred revenues...............................   10,196    10,196     10,196
Mandatorily redeemable preferred stock..........   51,609       --         --
Stockholders' equity (deficit)..................  (57,782)    3,827     65,502
</TABLE>

    See note 2 of notes to our consolidated financial statements for an
explanation of the determination of the number of shares used in computing per
share data.

    The pro forma consolidated balance sheet data reflects the conversion of
outstanding shares of preferred stock and convertible debt that will be
effective upon the closing of this offering. The as adjusted balance sheet data
reflects the net proceeds from the sale by us of shares of common stock in this
offering at an assumed initial public offering price of $15.00 per share, after
deducting underwriting discounts and commissions and offering expenses, and our
estimated offering expenses.

                                       7
<PAGE>

                                  RISK FACTORS

    This offering and an investment in our common stock involve a high degree
of risk. Please carefully consider the following risk factors before deciding
to purchase shares of our common stock. Any of the following risks could
seriously harm our business and results of operations. As a result, the trading
price of our common stock could decline, and you could lose part or all of your
investment.

                           Risks Related to Chordiant

Because our short operating history makes it difficult to evaluate our
prospects, our future financial performance may disappoint investors and result
in a decline in our stock price.

    You must consider our prospects given the risks, expenses and challenges we
might encounter because we are at an early stage of development in a new and
rapidly evolving market. Until September 1997, we were engaged primarily in the
research and development of our CCS software product. We licensed our first
product in September 1997 and our sales and service organizations are
relatively new and still growing. Due to our short operating history, our
future financial performance is not predictable and may disappoint investors
and result in a decline in our stock price. The revenue and income potential of
our product is unproven.

We expect to continue to incur losses and we may not achieve or maintain
profitability, which may cause our stock price to decline.

    We incurred net losses of $11.6 million for 1997, $17.4 million for 1998
and $23.1 million for 1999. As of December 31, 1999, we had an accumulated
deficit of $62.6 million. We expect to continue to incur losses on both a
quarterly and annual basis at least through 2000. Moreover, we expect to
continue to incur significant sales and marketing and research and development
expenses and to establish additional sales offices domestically and
internationally, and, as a result, we will need to generate significant
revenues to achieve and maintain profitability. We cannot be certain that we
can sustain this growth or that we will generate sufficient revenues to achieve
profitability.

Our operating results fluctuate significantly and an unanticipated decline in
revenues may disappoint investors and result in a decline in our stock price.

    Our quarterly revenues will depend primarily upon product implementation by
our customers. We have historically recognized most of our license and services
revenue using the percentage-of-completion method using labor hours incurred as
the measure of progress towards completion of implementation of our product and
we expect this practice to continue. Thus, delays in implementation by our
customers will reduce our quarterly revenue. Historically, a substantial
portion of new customer orders have been booked in the third month of the
calendar quarter, with a concentration of these bookings in the last two weeks
of the third month. We expect this trend to continue and, therefore, any
failure or delay in bookings would decrease our quarterly deferred revenue. If
our revenues or operating margins are below the expectations of any securities
analysts that may analyze us, or investors, our stock price is likely to
decline.

We have limited experience with large-scale deployments and if our product does
not successfully operate in a company-wide environment, we may lose sales and
suffer decreased revenues.

    If existing customers have difficulty deploying our product, particularly
in large-scale deployments, it could damage our reputation and reduce our
revenues. Our success requires that our product be highly scalable, or able to
accommodate substantial increases in the number of users. To date, no large-
scale deployment has been operating at any customer site and our product is
currently being used by only a limited number of users. Our product is expected
to be deployed on a variety of computer hardware platforms and to be used in
connection with a number of third-party software applications by personnel who
may have not previously used application software systems or our product. These
deployments present very significant technical challenges, which are difficult
or impossible to predict.

                                       8
<PAGE>

Failure to successfully customize or implement our product for a customer could
prevent recognition of revenues, collection of amounts due or cause legal
claims by the customer.

    If a customer is not able to customize or deploy our product successfully,
the customer may not complete expected product deployment, which would prevent
recognition of revenues and collection of amounts due, and could result in
claims against Chordiant. We have in the past had disputes with customers
concerning product performance. One dispute, from a 1995 consulting agreement,
resulted in a settlement following contractually-required mediation. One, from
a 1997 CCS product license, resulted in a settlement following litigation. In a
letter dated January 25, 2000, Chase Manhattan Mortgage Corporation claimed
that we breached our license and related services agreements with them and
provided notice of Chase's intent to terminate the agreements. Chase alleged
that we failed to meet product specifications and development-related
milestones and requested that we either cure the alleged breaches, or if unable
to do so, refund Chase's past payments. In later correspondence, Chase has
maintained that our product does not have the requested functionality and that
we misrepresented potential scalability. Chase and Chordiant are discussing
deliverables requested by Chase to cure the alleged breaches. We do not believe
that we have breached our agreements with Chase and intend to continue to
satisfy our obligations to Chase. Chordiant intends to defend itself vigorously
if an action is bought by Chase. During the years ended December 31, 1999 and
1998, we recognized $5.3 million and $1.5 million of revenue from Chase. At
December 31, 1999, our outstanding receivables balance from Chase was
$1.7 million. This or any customer disputes, with or without merit, could be
costly and time-consuming to defend, reduce our revenues, and harm our
reputation. An unfavorable outcome in the dispute with Chase could harm our
business.

Our product has a long sales and implementation cycle, which makes it difficult
to predict our quarterly results and may cause operating results to vary
significantly.

    The period between initial contact with a prospective customer and the
implementation of our product is unpredictable and often lengthy, ranging to
date from three to twenty-four months. Thus, deferred revenue could vary
significantly from quarter to quarter. Any delays in the implementation of our
product could cause reductions in our revenues. The licensing of our CCS
product is often an enterprise-wide decision that generally requires us to
provide a significant level of education to prospective customers about the use
and benefits of our product. The implementation of our products involves
significant commitment of resources and is commonly associated with substantial
implementation efforts that may be performed by us, the customer or third-party
system integrators. Customers generally consider a wide range of issues before
committing to purchase our product, including product benefits, ability to
operate with existing and future computer systems, ability to accommodate
increased transaction volume and product reliability.

Because a small number of customers account for a substantial portion of our
software license revenues, our revenues could decline if we lose a major
customer.

    We derive a significant portion of our software license revenues in each
quarter from a limited number of customers. Loss of a major customer in a
particular quarter could cause a decrease in revenue, deferred revenues and net
income. In 1998, sales to our four largest customers, KLM Royal Dutch Airlines,
Thomas Cook Global Services, Canadian Tire Acceptance Limited and Chase
Manhattan Mortgage Corporation accounted for 36%, 19%, 14% and 12% of our total
net revenues. For the year ended December 31, 1999, revenues from Chase
Manhattan Mortgage Corporation and First USA Bank accounted for 30% and 19% of
our total net revenues. We expect that a limited number of customers will
continue to account for a substantial portion of our revenues. As a result, if
we lose a major customer, if a contract is delayed or cancelled, our revenues
would be adversely affected. In addition, customers that have accounted for
significant revenues in the past may not generate revenues in any future period
causing our failure to obtain new significant customers or additional orders
from existing customers to materially affect our operating results.

                                       9
<PAGE>

Defects in our product could diminish demand for our products and result in
loss of revenues, decreased market acceptance and injury to our reputation.

    Errors may be found from time to time in our new or enhanced products after
commencement of commercial shipments resulting in loss of revenues, decreased
sales, injury to our reputation or increased warranty and repair costs.
Although we conduct extensive product-testing during product development, we
have in the past discovered software errors in our products and as a result
have experienced delays in shipment of products. The latest version of our CCS
product was introduced in October, 1999.

Our failure to maintain strong relationships with system integrators would harm
our ability to market and implement our product and reduce future revenues.

    Failure to establish or maintain relationships with systems integrators
would significantly harm our ability to license our software product. System
integrators install and deploy our product, in addition to those of our
competitors, and perform custom integration of systems and applications. Some
system integrators also engage in joint marketing and sales efforts with us. If
these relationships fail, we will have to devote substantially more resources
to the sales and marketing, implementation and support of our product than we
would otherwise. Our efforts may also not be as effective as those of the
system integrators which could reduce revenues. In many cases, these parties
have extensive relationships with our existing and potential customers and
influence the decisions of these customers. A number of our competitors have
stronger relationships with these system integrators and, as a result, these
system integrators may be more likely to recommend competitors' products and
services.

    In particular, we have established a non-exclusive relationship with
Electronic Data Systems Corporation, or EDS, a large system integrator and one
of our principal stockholders. In each of 1998 and 1999, over 30% of our
revenues were derived from customers for whom Electronic Data Systems has been
engaged to provide system integration services. Deterioration of our
relationship with Electronic Data Systems could have a material adverse effect
on sales of our product.

To date, our sales have been concentrated in the financial services, travel,
automotive and telecommunications markets and if we are unable to continue
sales in these markets or successfully penetrate new markets, our revenues may
decline.

    Sales of our products and services in four markets--financial services,
travel and leisure, automotive and telecommunications--accounted for 98% of
total net revenues in 1998 and 87% of our total net revenues in 1999. We expect
that revenues from these four markets will continue to account for a
substantial portion of our total net revenues in 2000. If we are unable to
successfully increase penetration of our existing markets or achieve sales in
additional markets, or if the overall economic climate of our target markets
deteriorates, our revenues may decline.

Continued negative gross margin in service revenues could adversely impact our
overall gross margin and income.

    Our services revenues have historically had lower gross margins than our
license revenues. As a result, an increase in the percentage of total net
revenues represented by services revenues, or an unexpected decrease in license
revenues, could have a detrimental impact on our overall gross margins. We
anticipate that service revenues will continue to represent over 30% of total
net revenues. To increase services revenues, we must expand our services
organization, successfully recruit and train a sufficient number of qualified
services personnel, and obtain renewals of current maintenance contracts by our
customers. This expansion could further reduce gross margins in our service
revenues.

                                       10
<PAGE>

We depend on technology licensed to us by third parties, and the loss or
inability to maintain these licenses could prevent or delay sales of our
product.

    We license technology from several software providers that is incorporated
in our product. In particular, we license Forte Tool and related Forte products
from Forte Software, a Sun Microsystems, Inc. company. Our license agreement
with Forte expires in September 2001, and can be extended upon agreement of the
parties. We anticipate that we will continue to license technology from Forte
and other third parties in the future. This software may not continue to be
available on commercially reasonable terms, if at all. The loss of the Forte
technology or other technology licenses could result in delays in the license
of our product until equivalent technology, if available, is developed or
identified, licensed and integrated into our product.

Defects in third party products associated with our CCS product could impair
our CCS products' functionality and injure our reputation.

    The effective implementation of our products depends upon the successful
operation of third-party products in conjunction with our products. Any
undetected errors in these products could prevent the implementation or impair
the functionality of our product, delay new product introductions or injure our
reputation. In the past, while our business has not been materially harmed,
product releases have been delayed as a result of errors in third-party
software and we have incurred expenses in investigating the cause of these
errors.

Our customers have the ability to alter our source code and inappropriate
alterations could adversely affect the performance of our product, cause injury
to our reputation and increase operating expenses.

    Customers have access to our computer source code when they license our
product and may alter the source code. Alteration may lead to implementation,
operation and upgrade problems for our customers. This could adversely affect
the market acceptance of our products, and any necessary investigative work and
repairs could cause us to incur significant expenses and delays in
implementation.

If we fail to introduce new versions and releases of our CCS product in a
timely manner customers may license competing products and our revenues may
decline.

    If we are unable to ship or implement enhancements to our CCS product when
planned, or fail to achieve timely market acceptance of these enhancements, we
may suffer lost sales and could fail to achieve anticipated revenues. A
majority of our total revenues have been, and are expected to be, derived from
the license of our CCS product. Our future operating results will depend on the
demand for this product by future customers, including new and enhanced
releases that are subsequently introduced. If our competitors release new
products that are superior to our product in performance or price, or we fail
to enhance our product and introduce new features and functionality in a timely
manner, demand for our product may decline. We have in the past experienced
delays in the planned release dates of new versions of our software product and
upgrades. New versions may not be released on schedule or may contain defects
when released.

If our product does not operate with the hardware and software platforms used
by our customers, customers may license competing products and our revenues
will decline.

    If our product fails to satisfy advancing technological requirements, the
market acceptance of our product could be reduced. We currently serve a
customer base with a wide variety of constantly changing hardware, software
applications and networking platforms. Customer acceptance of our product
depends on many factors such as:

  .  our ability to integrate our product with multiple platforms and
     existing, or legacy systems;

  .  our ability to anticipate and support new standards, especially
     internet standards; and

  .  the integration of additional software modules under development with
     our existing product.

                                       11
<PAGE>

Our reliance on international operations may cause increased operating expenses
and cause our net income to decline.

    In 1998, international revenues were 78% of our total net revenues.
International revenues were 38% of total net revenues in 1999. We expect
international revenues will continue to represent a significant portion of our
total net revenues in future periods.

    We have faced, and will continue to face, risks associated with:

  .  difficulties in managing our widespread operations;

  .  difficulties in hiring qualified local personnel;

  .  seasonal fluctuations in customer orders;

  .  longer accounts receivable collection cycles; and

  .  expenses associated with products used in foreign markets.

Any of these factors could have a significant impact on our ability to deliver
products on a competitive and timely basis and adversely affect our operating
expenses and net income.

    Our international sales are currently U.S. dollar-denominated. As a result,
an increase in the value of the U.S. dollar relative to foreign currencies
could make our products less competitive in international markets. In the
future, we may elect to invoice some of our international customers in local
currencies. Doing so will subject us to fluctuations in exchange rates between
the U.S. dollar and the particular local currency.

International expansion could be difficult and we may not achieve sales growth.

    If we are unable to expand our international operations and sales, and
build relationships with third parties outside the United States on a timely
basis, we may not achieve anticipated sales growth. We have expanded, and
intend to continue expanding, our international operations and enter additional
international markets. In October 1997, we opened an office in London, England
and in January, 2000 we opened an office in the Netherlands. As of December 31,
1999 we had 40 employees based internationally. To increase our international
sales opportunities, we will need to further develop our international sales,
professional services and support organizations, and we will need to form
additional relationships with system integration partners worldwide.

                                 Industry Risks

Competition in our markets is intense and could reduce our sales and prevent us
from achieving profitability.

    Increased competition is likely to result in price reductions, reduced
gross margins and loss of market share, any one of which could reduce our
future revenues. The market for our product is intensely competitive, evolving
and subject to rapid technological change. The intensity of competition is
expected to increase in the future. Our current competitors include:

    .Internal information technology departments. In-house information
technology departments of potential customers have developed or may develop
systems that provide some or all of the functionality of our product. We expect
that internally developed application integration and process automation
efforts will continue to be a significant source of competition.

    .Point application vendors. We compete with providers of stand-alone point
solutions for web-based customer relationship management and traditional
client/server-based, call-center service customer and salesforce automation
solution providers.

                                       12
<PAGE>

    Many of our competitors have greater resources and broader customer
relationships than we do. In addition, many of these competitors have extensive
knowledge of our industry. Current and potential competitors have established,
or may establish, cooperative relationships among themselves or with third
parties to offer a single solution and increase the ability of their products
to address customer needs.

Because competition for qualified personnel is intense, we may not be able to
retain or recruit personnel, which could impact the development and sales of
our product.

    If we are unable to hire or retain qualified personnel, or if newly hired
personnel fail to develop the necessary skills or to reach expected levels of
productivity, our ability to develop and market our product will be weakened.
Our success depends largely on the continued contributions of our key
management, engineering, sales and marketing and professional services
personnel, including Samuel T. Spadafora, our chairman, president and chief
executive officer. Except for our chief executive officer, we do not have
employment agreements with any of our key personnel. We have experienced
significant turnover in our key personnel in the recent past.

    In particular, our ability to increase our sales will depend on our ability
to recruit, train and retain top quality sales people who are able to target
prospective customers' senior management, and who can productively generate and
service large accounts. There is a shortage of sales personnel and competition
for qualified personnel is intense, particularly in Silicon Valley.

If we are unable to protect our intellectual property we may lose a valuable
asset or incur costly litigation to protect our rights.

    Our success and ability to compete depend upon our proprietary technology.
We rely on trademark, trade secret and copyright laws to protect our
intellectual property. We have no patents or patent applications. We ship
source code to our customers and third-party integrators are given access to
it. Despite our efforts to protect our intellectual property, a third party
could copy or obtain the source code to our software or other proprietary
information without authorization, or could develop software competitive to
ours. Our means of protecting our proprietary rights may not be adequate and
our competitors may independently develop similar technology or duplicate our
products.

    We may have to litigate to enforce our intellectual property rights, to
protect our trade secrets or know-how or to determine their scope, validity or
enforceability. Enforcing or defending our proprietary technology is expensive,
could cause the diversion of our resources and may not prove successful. Our
protective measures may prove inadequate to protect our proprietary rights. If
we are unable to protect our intellectual property, we may lose a valuable
asset or incur costly litigation to protect our rights.

If we become subject to intellectual property infringement claims, these claims
could be costly and time-consuming to defend, divert management attention and
cause product delays, and have an adverse effect on our revenues and net
income.

    We expect that software product developers and providers of e-business
software will increasingly be subject to infringement claims as the number of
products and competitors in our industry grows and the functionality of
products overlaps. Any claims, with or without merit, could be costly and time-
consuming to defend, divert our management's attention, or cause product
delays. We have no patents or patent applications that we could use defensively
against any company bringing such a claim. If our product was found to infringe
a third party's proprietary rights, we could be required to enter into royalty
or licensing agreements to be able to sell our product. Royalty and licensing
agreements, if required, may not be available on terms acceptable to us or at
all.

                                       13
<PAGE>

                                 Offering Risks

We may spend the proceeds from this offering in ways in which our stockholders
may not agree.

    Our management has complete discretion on how to spend the proceeds to us
from this offering and may spend these proceeds in ways with which our
stockholders may not agree. We do not have a specific plan for use of the
proceeds of this offering but will use the proceeds for additional working
capital and other general corporate purposes.

Our directors and executive officers will retain significant control over
Chordiant after the offering, which may lead to conflicts with other
stockholders over corporate governance.

    Following the completion of this offering, our directors, executive
officers, and holders of 5% or more of our outstanding common stock will
beneficially own approximately 79.9% of our outstanding common stock. These
stockholders, acting together, will be able to significantly influence all
matters requiring approval by our stockholders, including the election of
directors and significant corporate transactions, such as mergers or other
business combination transactions. This control may delay or prevent a third
party from acquiring or merging with us.

Our stock price may be volatile because our shares have not been publicly
traded before, and, as a result, you may lose all or a part of your investment.

    The market price of our common stock may fluctuate significantly in
response to factors including the following, most of which are beyond our
control:

  .  variations in our quarterly operating results;

  .  changes in market valuations of similar companies; and

  .  departures of key personnel.

    Before this offering, you could not buy or sell our common stock publicly.
The price of our common stock that will prevail in the market after this
offering may be higher or lower than the price you pay.

    An active public market for our common stock may not develop or be
sustained after the offering. We negotiated and determined the initial public
offering price with the representatives of the underwriters and this price may
not be indicative of prices that will prevail in the trading market. As a
result you may be unable to sell your shares of common stock at or above the
offering price.

The substantial number of shares that will be eligible for sale in the near
future may cause the market price for our common stock to drop significantly,
even if our business is doing well.

    Sales of a substantial number of shares of our common stock in the public
market following this offering could reduce the market price for our common
stock. The number of shares of common stock available for sale in the public
market is limited by restrictions under federal securities law, and under
agreements that our stockholders have entered into with the underwriters. These
agreements generally restrict our stockholders from selling shares for a period
of 180 days after the date of this prospectus. The following table indicates
when the shares of our common stock that were outstanding as of December 31,
1999 will be eligible for sale into the public market:

<TABLE>
<CAPTION>
                                                       Eligibility of Shares
                                                     for Sale in Public Market
                                                     -------------------------
   <S>                                               <C>
   For the first 180 days after the date of this
    prospectus......................................                --
   180 days after date of this prospectus...........        24,355,140
   At various times after 180 days after date of
    this prospectus.................................         5,963,155
</TABLE>

    Additionally, of the 7,773,658 shares issuable upon exercise of options to
purchase our common stock outstanding as of December 31, 1999, approximately
2,109,283 shares will be vested and eligible for sale 180 days after the
completion of this offering.

                                       14
<PAGE>

                           FORWARD-LOOKING STATEMENTS

    This prospectus contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as anticipates,
believes, continue, could, estimates, expects, intends, may, plans, potential,
predicts, should or will, or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and
unknown risks and uncertainties including the risks outlined under the Risk
Factors section. These risks may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed
or implied by forward-looking statements.

    Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform to actual results,
unless required by law.

                                USE OF PROCEEDS

    We estimate that the net proceeds to us from the sale of 4,500,000 shares
of our common stock in this offering are approximately $61.7 million,
approximately $67.6 million if the underwriters' over-allotment options are
exercised in full. This assumes an initial public offering price of $15.00 per
share and the deduction of underwriting discounts and commissions and estimated
offering expenses.

    We intend to use the net proceeds from the sale of shares in this offering
for additional working capital and other general corporate purposes, including
the payment of our outstanding bank lines of credit. As of December 31, 1999,
the outstanding balance of our lines of credit was $2.4 million. We have not
yet determined our expected use of the remaining portion of these proceeds, but
we currently estimate that we will incur at least $32.6 million in operating
expenses during the next twelve months as we increase our investments in our
business. These operating expenses will be partially offset by revenues
received from the licensing of our product.

    The amounts and timing of expenditures will vary depending on factors
including the amount of cash generated by our operations, competitive and
technological developments and the rate of growth, if any, of our business. We
will retain broad discretion in the allocation of our net proceeds from the
sale of shares in this offering. Pending the uses described above, we will
invest the net proceeds of this offering in short term interest bearing,
investment-grade securities. We cannot predict whether the proceeds will be
invested to yield a favorable return. We believe that our available cash,
together with our net proceeds of this offering, will be sufficient to meet our
capital requirements for at least the next twelve months.

    We will not receive any proceeds from the sale of shares by the selling
stockholders in the over-allotment portion of this offering.

                                DIVIDEND POLICY

    We have never declared or paid dividends on our capital stock. We do not
anticipate paying any cash dividends . We currently intend to retain our
earnings, if any, for the development of our business.

                                       15
<PAGE>

                                 CAPITALIZATION

    The following table provides our capitalization as of December 31, 1999:

  .  on an actual basis;

  .  on a pro forma basis after giving effect to:

    .  the conversion of all of our outstanding shares of preferred stock
       and convertible debentures into shares of common stock upon the
       closing of this offering;

    .  no exercise of the underwriters' over-allotment options;

    .  the filing of our amended and restated certificate of incorporation
       before the closing of this offering; and

    .  a 1 for 2 reverse stock split.

  .  on the same pro forma basis as described above, as adjusted to give
     effect to the sale of shares of common stock in this offering at an
     assumed initial public offering price of $15.00 per share and after
     deducting the underwriting discounts and commissions, and estimated
     offering expenses.

<TABLE>
<CAPTION>
                                                    As of December 31, 1999
                                                 --------------------------------
                                                                       Pro Forma
                                                  Actual   Pro forma  As Adjusted
                                                 --------  ---------  -----------
                                                         (in thousands)
                                                          (unaudited)
<S>                                              <C>       <C>        <C>
Long-term borrowings...........................  $ 10,617  $    617    $    617
                                                 --------  --------    --------
Mandatorily redeemable preferred stock:
 25,027,985 shares authorized, 22,412,194
 shares issued and outstanding, actual; no
 issued and outstanding, pro forma and pro
 forma as adjusted.............................    51,609        --          --
                                                 --------  --------    --------
Stockholders' equity (deficit):
  Preferred stock, 51,000,000 shares
   authorized; no shares issued and outstanding
  Common stock: 300,000,000 shares authorized,
   5,906,101 shares issued and outstanding,
   actual; 30,318,295 shares issued and
   outstanding, pro forma; and 34,818,295
    shares issued and outstanding, pro forma as
   adjusted....................................         6        30          35
  Additional paid-in capital...................    14,652    76,237     137,907
  Note receivable from stockholder.............      (406)     (406)       (406)
  Unearned compensation........................    (9,470)   (9,470)     (9,470)
  Accumulated deficit..........................   (62,564)  (62,564)    (62,564)
                                                 --------  --------    --------
   Total stockholders' equity (deficit)........   (57,782)    3,827      65,502
                                                 --------  --------    --------
   Total capitalization........................  $  4,444  $  4,444    $ 66,119
                                                 ========  ========    ========
</TABLE>

    The number of shares of common stock to be outstanding after this offering
assumes no exercise of the underwriters' over-allotment options. The number of
shares of common stock to be outstanding after this offering is based upon the
number of shares outstanding as of December 31, 1999, and excludes:

  .  7,773,658 shares subject to options outstanding as of December 31, 1999
     at a weighted average exercise price of $1.82 per share;

  .  898,276 additional shares that we could issue under our equity
     incentive stock option plan;

  .  700,000 shares that we could issue under our non-employee directors'
     stock option plan; and

  .  2,000,000 additional shares that we could issue under our employee
     stock purchase plan.

    Of the total shares outstanding, 161,384 shares are subject to our right of
repurchase as of December 31, 1999. Please read the above information in
conjunction with the Management's Discussion and Analysis of Financial
Condition and Results of Operations section and our consolidated financial
statements and related notes beginning on page F-1 of this prospectus.

                                       16
<PAGE>

                                    DILUTION

    As of December 31, 1999, we had a pro forma net tangible book value of $3.8
million, or $0.13 per share.

    Pro forma net tangible book deficit per share is equal to:

  .  our total tangible assets minus total liabilities, divided by

  .  the number of outstanding shares of our common stock,

    If we assume we have sold 4,500,000 shares of common stock in this offering
at an offering price of $15.00 per share, and we deduct the underwriting
discounts and commissions and the estimated related expenses, our net tangible
book value as of December 31, 1999 would have been $65.5 million, or $1.88 per
share. This is an immediate increase in net tangible book value of $1.75 per
share to existing stockholders and an immediate dilution of $13.12 per share to
new investors. The following table illustrates this per share dilution.

<TABLE>
   <S>                                                             <C>   <C>
   Assumed initial public offering price per share...............        $15.00
   Pro forma net tangible book value per share as of December 31,
     1999........................................................  $0.13
   Increase per share attributable to new investors..............   1.75
                                                                   -----
   Pro forma net tangible book value after this offering.........          1.88
                                                                         ------
   Dilution per share to new investors...........................        $13.12
                                                                         ======
</TABLE>

    The following table summarizes, as of December 31, 1999, on the pro forma
basis described above, the differences between the number of shares of common
stock purchased from us, the total consideration paid and the average price per
share paid by existing stockholders and by the new investors purchasing shares
in this offering. We used an assumed initial public offering price of $15.00
per share and we have not deducted underwriting discounts and commissions and
estimated offering expenses in our calculations.

<TABLE>
<CAPTION>
                                Shares Purchased  Total Consideration   Average
                               ------------------ -------------------- Price Per
                                 Number   Percent    Amount    Percent   Share
                               ---------- ------- ------------ ------- ---------
<S>                            <C>        <C>     <C>          <C>     <C>
Existing stockholders........  30,318,295  87.1%  $ 58,143,845  46.3%   $ 1.92
New investors................   4,500,000  12.9%    67,500,000  53.7%    15.00
                               ----------  ----   ------------  ----
  Total......................  34,818,295   100%  $125,643,845   100%
                               ==========  ====   ============  ====
</TABLE>

    If we issue additional shares of common stock in the future, purchasers of
common stock in this offering may experience further dilution.

    This discussion and these tables assume no exercise of any outstanding
stock options. The exercise of options outstanding under our stock option plans
having an exercise price less than the offering price would increase the
dilution to new investors.

    If the underwriters exercise their over-allotment options in full, the
following will occur:

  .  the number of shares of common stock held by existing stockholders will
     decrease to 30,068,295, or 86.4% of the total number of shares of our
     common stock outstanding; and

  .  the number of shares held by new investors will increase to 4,750,000,
     or 13.6% of the total number of our common stock outstanding.

                                       17
<PAGE>

                     SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data are from our
consolidated financial statements. The following data are from our audited
consolidated financial statements presented elsewhere in this prospectus:

   .  consolidated statements of operations for 1997, 1998 and 1999; and

   .  consolidated balance sheets at December 31, 1998 and 1999.

    The following data are from our audited combined financial statements not
included in this prospectus:

   .  consolidated statements of operations for 1995 and 1996; and

   .  consolidated balance sheets at December 31, 1995, 1996 and 1997.

    When you read this selected consolidated financial data, it is important
that you also read the consolidated financial statements and related notes
included in this prospectus, as well as the Management's Discussion and
Analysis of Financial Condition and Results of Operations section of this
prospectus. The historical results are not necessarily indicative of the
operating results to be expected in the future.


<TABLE>
<CAPTION>
                                        Year Ended December 31,
                               ----------------------------------------------
                                1995     1996      1997      1998      1999
                               -------  -------  --------  --------  --------
                                 (in thousands, except per share data)
<S>                            <C>      <C>      <C>       <C>       <C>
Consolidated Statement of
  Operations Data:
Net revenues:
 License...................... $    --  $    --  $  1,142  $  4,360  $  8,007
 Service......................   7,328    2,312     1,766     8,105     9,581
                               -------  -------  --------  --------  --------
     Total net revenues.......   7,328    2,312     2,908    12,465    17,588
                               -------  -------  --------  --------  --------
Cost of net revenues:
 License......................      --       --        73       425       397
 Service......................   5,634    2,353     1,462     8,947    14,352
                               -------  -------  --------  --------  --------
     Total cost of net
       revenues...............   5,634    2,353     1,535     9,372    14,749
                               -------  -------  --------  --------  --------
Gross profit (loss)...........   1,694      (41)    1,373     3,093     2,839
                               -------  -------  --------  --------  --------
Operating expenses:
 Sales and marketing..........     780    1,140     5,142    12,580    13,368
 Research and development.....   2,741    4,598     6,240     5,858     6,494
 General and administrative...   1,019    1,860     1,416     2,046     2,668
 Stock-based compensation.....      --        3       498       489     2,660
                               -------  -------  --------  --------  --------
     Total operating
       expenses...............   4,540    7,601    13,296    20,973    25,190
                               -------  -------  --------  --------  --------
Loss from operations..........  (2,846)  (7,642)  (11,923)  (17,880)  (22,351)
Interest expense..............      --      (55)     (112)     (121)   (1,067)
Other income (expense), net...     (44)     135       442       561       281
                               -------  -------  --------  --------  --------
Net loss...................... $(2,890) $(7,562) $(11,593) $(17,440) $(23,137)
                               =======  =======  ========  ========  ========
Net loss per share:
 Basic and diluted............ $ (0.58) $ (1.51) $  (2.31) $  (3.44) $  (4.34)
                               =======  =======  ========  ========  ========
 Weighted average shares......   5,000    5,002     5,009     5,075     5,327
                               =======  =======  ========  ========  ========
Proforma net loss per share:
 Basic and diluted............                                       $  (0.93)
                                                                     ========
 Weighted average shares......                                         24,805
                                                                     ========
</TABLE>

<TABLE>
<CAPTION>
                                              December 31,
                               ----------------------------------------------
                                1995     1996      1997      1998      1999
                               -------  -------  --------  --------  --------
                                             (in thousands)
<S>                            <C>      <C>      <C>       <C>       <C>
Consolidated Balance Sheet
  Data:
Cash and cash equivalents..... $ 2,053  $ 2,678  $ 18,916  $  1,713  $  6,719
Working capital (deficit).....    (852)  (1,368)    7,767   (10,162)    1,833
Total assets..................   6,113    7,282    21,360    11,521    22,086
Borrowings....................     483    1,045     1,268     1,687    13,225
Deferred revenues.............   1,950    4,179     4,402     5,719    10,196
Mandatorily redeemable
  convertible preferred
  stock.......................   2,014    9,047    28,949    28,949    51,609
Stockholders' equity
  (deficit)...................  (2,024)  (9,586)  (20,682)  (37,604)  (57,782)
</TABLE>

                                      18
<PAGE>

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

Overview

    Chordiant provides e-business infrastructure software that it believes
enables companies to offer their customers personalized marketing, sales
programs, e-business services and customer support across multiple
communication channels. Our product, Customer Communications Solution, or CCS,
is a suite of applications designed to integrate customer information from
different data sources, automate business processes dependent on a customer's
specific profile and request, and provide consistent service to customers
across communications channels including the internet, telephone, e-mail and
branch offices.

    Chordiant was incorporated in California in March 1991 and was
reincorporated in Delaware in October 1997. Before 1997, we were primarily
engaged in custom consulting services. We released the first version of our CCS
product in September 1997. With the release of this product, we accelerated the
development of our sales and marketing organizations.

    We derive revenues primarily from licenses of our CCS product and from
related services, which include implementation, consulting, customization and
integration, post-contract customer support and training. Our product is
typically licensed directly to customers for a perpetual term, with pricing
based on the number of servers and the number of users.

    On contracts involving significant implementation or customization
essential to the functioning of our product, license and service revenues are
recognized using the percentage-of-completion method using labor hours worked
as the measure of progress towards completion. We classify revenues from these
arrangements as license and services revenues based upon the estimated fair
value of each element. Provisions for estimated contract losses are recognized
in the period in which the loss becomes probable and can be reasonably
estimated. We expect that a majority of our license and service revenues will
be recognized using this percentage-of-completion methodology.

    On contracts that do not involve significant implementation or
customization essential to the functioning of our product, license revenues are
recognized when there is persuasive evidence of an arrangement for a fixed and
determinable fee that is probable of collection and when delivery has occurred.
For arrangements with multiple elements, we recognize revenues for the
delivered elements based upon the residual contract value as prescribed by
Statement of Position No. 98-9, Modification of SOP No. 97-2 with Respect to
Certain Transactions.

    Service revenues from consulting and training services are recognized as
these services are performed. Service revenues from post-contract customer
support are recognized over the contractual support term, generally one year.

    In the future, we expect to derive revenues from contracts that provide for
implementation services at a fixed hourly rate. On other contracts we expect to
derive revenues from the licensing of the installed product on a per
transaction basis. In connection with these types of arrangements, we will
recognize the fair value of the implementation services as the services are
delivered and will recognize license fees on a monthly basis at the contractual
rate.

    We bill customers according to contract terms. Amounts billed to customers
in excess of revenues recognized are recorded as deferred revenues.

    Service revenues as a percentage of total revenues were 61% in 1997, 65% in
1998 and 54% in 1999. To help ensure the success of early product deployments
by customers, in early 1998 we began establishing a significant service
organization. The organization assists customers, and third parties such as
system integrators,

                                       19
<PAGE>

in the design and implementation of our product. Since service revenues have a
lower gross margin than license revenues, this service activity resulted in
reduced overall gross margins. In addition, in the fourth quarter of 1998 and
through 1999, we engaged third parties to provide services to customers, who
then billed us for their services. As a result of using third party resources,
revenues from these contracts generated very small gross margins. As a result
of expansion of our service organization and use of system integrators that
bill our customers directly for services, we believe that our use of third
party service providers will decline substantially in future periods. We expect
that service revenue will continue to represent over 30% of total revenues.

    We sell our product through our direct sales force, and augment our sales
efforts through relationships with system integrators, application service
providers and technology vendors. Our revenues to date have been derived from
customer accounts in the United States, United Kingdom, Netherlands, Canada and
South Africa. In October 1997, we opened an office in London, England and in
January, 2000 we opened an office in the Netherlands. In 1998, international
revenues were $9.7 million or approximately 78% of our total net revenues and
in 1999, international revenues were $6.6 million or approximately 38% of our
total revenues. We believe international revenues will continue to represent a
significant portion of our total revenues in future periods.

    A small number of customers account for a significant portion of our total
revenues. As a result, the loss or delay of individual orders or delays in the
product implementations for a customer can have a large impact on our revenues.
In 1997, revenues from Pagenet and Visa accounted for 53% and 28% of our total
net revenues. In 1998, revenues from KLM Royal Dutch Airlines, Thomas Cook
Global Services, Canadian Tire Acceptance Limited and Chase Manhattan Mortgage
Corporation accounted for 36%, 19%, 14% and 12% of our total net revenues. In
1999, revenues from Chase Manhattan Mortgage Corporation and First USA
accounted for 30% and 19% of our total net revenues. We expect that revenues
from a small number of customers will continue to account for a majority of our
total net revenues in the future as historical implementations are completed
and replaced with new projects from new and existing customers.

    Since our inception, we have incurred substantial research and development
costs and have invested heavily in the expansion of our product development,
sales, marketing and professional services organizations. This was done to
build an infrastructure to support our long-term growth strategy. The number of
our full-time employees increased from 70 as of September 30, 1997 to 144 as of
December 31, 1999, representing an increase of 206%. Generally as a result of
start-up costs, development and increasing sales and marketing expenses, we
have incurred net losses in each quarter since our inception and, as of
December 31, 1999, had an accumulated deficit of $62.6 million. We anticipate
that our operating expenses will continue to increase as we expand our product
development, sales and marketing and professional services organization. We
expect to incur net losses in the future.

    We believe that period-to-period comparisons of our operating results are
not meaningful and should not be relied upon as indicative of future
performance. Our prospects must be considered given the risks, expenses and
difficulties frequently encountered by companies in early stages of
development, particularly companies in new and rapidly evolving businesses.
There can be no assurance we will be successful in addressing these risks and
difficulties. In addition, although we have experienced revenue growth
recently, this trend may not continue. In addition, we may not achieve or
maintain profitability in the future.

                                       20
<PAGE>

Results of Operations

    The following tables provide the consolidated statement of operations data
for each of the years ended December 31, 1997, 1998 and 1999, as well as the
percentage of our total net revenues represented by each item. This information
has been derived from the consolidated financial statements included in this
prospectus.

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                                ------------------------------
                                                  1997       1998       1999
                                                --------   --------   --------
                                                      (in thousands)
<S>                                             <C>        <C>        <C>
Consolidated Statement of Operations Data:
Net revenues:
 License....................................... $  1,142   $  4,360   $  8,007
 Service.......................................    1,766      8,105      9,581
                                                --------   --------   --------
     Total net revenues........................    2,908     12,465     17,588
                                                --------   --------   --------
Cost of net revenues:
 License.......................................       73        425        397
 Service.......................................    1,462      8,947     14,352
                                                --------   --------   --------
     Total cost of net revenues................    1,535      9,372     14,749
                                                --------   --------   --------
Gross profit...................................    1,373      3,093      2,839
                                                --------   --------   --------
Operating expenses:
 Sales and marketing...........................    5,142     12,580     13,368
 Research and development......................    6,240      5,858      6,494
 General and administrative....................    1,416      2,046      2,668
 Stock-based compensation......................      498        489      2,660
                                                --------   --------   --------
     Total operating expenses..................   13,296     20,973     25,190
                                                --------   --------   --------
Loss from operations...........................  (11,923)   (17,880)   (22,351)
 Interest expense..............................     (112)      (121)    (1,067)
 Other income (expense), net...................      442        561        281
                                                --------   --------   --------
Net loss....................................... $(11,593)  $(17,440)  $(23,137)
                                                ========   ========   ========
<CAPTION>
                                                 Year Ended December 31,
                                                ------------------------------
                                                  1997       1998       1999
                                                --------   --------   --------
<S>                                             <C>        <C>        <C>
As a Percentage of Total Net Revenues:
Net revenues:
 License.......................................       39 %       35 %       46 %
 Service.......................................       61         65         54
                                                --------   --------   --------
     Total net revenues........................      100        100        100
                                                --------   --------   --------
Cost of net revenues:
 License.......................................        3          3          2
 Service.......................................       50         72         82
                                                --------   --------   --------
     Total cost of net revenues................       53         75         84
                                                --------   --------   --------
Gross profit...................................       47         25         16
                                                --------   --------   --------
Operating expenses:
 Sales and marketing...........................      177        101         76
 Research and development......................      214         47         37
 General and administrative....................       49         16         15
 Stock-based compensation......................       17          4         15
                                                --------   --------   --------
     Total operating expenses..................      457        168        143
                                                --------   --------   --------
Loss from operations...........................     (410)      (143)      (127)
 Interest expense..............................       (4)        (1)        (6)
 Other income (expense), net...................       15          4          1
                                                --------   --------   --------
Net loss.......................................     (399)%     (140)%     (132)%
                                                ========   ========   ========
</TABLE>


                                       21
<PAGE>

Net Revenues

    License. License revenues consist of licenses of our CCS software. License
revenues increased from $1.1 million in 1997 to $4.4 million in 1998 to $8.0
million in 1999 due to the growth in the number of product implementations by
new customers and higher average transaction size. Our average transaction size
has increased due to deployments by our customers to larger numbers of users.

    Service. Service revenues consist of consulting assistance and
implementation, customization and integration, and post-contract customer
support and training. Service revenues increased from $1.8 million in 1997 to
$8.1 million in 1998 to $9.6 million in 1999. The 1997 to 1998 increase in
service revenues was due to consulting work performed in connection with
several large customer implementations. The revenue increase in 1999 was
primarily due to a continuation in large customer implementations as well as
maintenance, support and consulting revenues associated with license agreements
signed in earlier periods.

Cost of Net Revenues

    License. Cost of license revenues consist primarily of royalty payments to
third parties for technology incorporated in our product. We began paying
royalties in 1997.

    Service. Cost of service revenues consist primarily of salaries, facility
costs and payments to third-party consultants incurred in providing customer
support, training and implementation services. Cost of service revenue was $1.5
million in 1997, $8.9 million in 1998 and $14.4 million in 1999. Our cost of
service revenue increased significantly in 1998 compared to 1997 due to our use
of a third-party service provider to provide implementation services to our
customers and our hiring of additional service personnel. During the year ended
December 31, 1999, we hired a number of additional service personnel in
anticipation of supporting a larger customer base in future periods. These
increased investment efforts to meet anticipated customer demand resulted in
negative gross margins from service revenues for the years ended December 31,
1998 and 1999. We expect that the cost of services revenues will continue to
increase in dollar amount as we continue to expand our professional services
organization to meet anticipated customer demand.

Operating Expenses

    Sales and marketing. Sales and marketing expenses consist of salaries,
commissions, field office expenses, travel and entertainment, promotional
expenses and facility costs. Sales and marketing expenses increased from $5.1
million in 1997 to $12.6 million in 1998, and were $13.4 million in 1999. The
increase in these expenses for 1998 compared to 1997 was attributable to
increases of $5.2 million in personnel expenses, $1.6 million in allocated
depreciation and overhead costs, and $600,000 in marketing and advertising
costs. The increase of $788,000 for 1999 compared to 1998 was attributable to
$1.4 million increase in personnel expenses, offset by a decrease in $612,000
of advertising cost. We expect that sales and marketing expenses will continue
to increase in dollar amounts as we continue to expand our sales and marketing
efforts, establish additional U.S. and international sales offices and increase
promotional activities.

    Research and development. Research and development expenses include costs
associated with the development and enhancement of our product, quality
assurance activities and allocated facility costs. These costs consist
primarily of employee salaries, benefits and the cost of consulting resources
that supplement our internal development team. Due to the relatively short time
between the date our products achieve technological feasibility and the date
they become generally available to customers, costs subject to capitalization
under SFAS No. 86 have been immaterial and have been expensed as incurred.
Research and development expenses decreased from $6.2 million in 1997 to
$5.9 million in 1998, and were $6.5 million 1999. The decrease in these
expenses for 1998 compared to 1997 was attributable to personnel related
expenses. The increase in these expenses for 1999 compared to 1998 was
attributable to an increase of $350,000 in personnel expenses and an increase
of $250,000 in general and administrative costs. We anticipate that we will
continue to devote

                                       22
<PAGE>

substantial resources to research and development and that these expenses will
continue to increase in dollar amounts.

    General and administrative. General and administrative expenses consist of
salaries for administrative, executive and finance personnel, recruiting costs,
information systems costs, professional service fees and allocated facility
costs. These expenses increased from $1.4 million in 1997, to $2.0 million in
1998 and were $2.7 million in 1999. The increase in these expenses for 1998
compared to 1997 was attributable to increases in $100,000 in professional
service fees and $500,000 in facility costs due to the move of our corporate
offices to a larger facility in support of our growing business. The increase
in these expenses for 1999 compared to 1998 was attributable to increases of
personnel expenses. This increase was primarily the result of additional
finance, executive and information services and an increase in outside
contractor expenses associated with increased recruiting efforts and expanded
human resources programs. We believe that our general and administrative
expenses will continue to increase in dollar amounts as a result of our growing
operations and the additional expenses associated with operating as a public
company.

    Amortization of stock-based compensation. Amortization of stock-based
compensation includes the amortization of unearned employee stock-based
compensation and expenses for stock granted to consultants in exchange for
services. Employee stock-based compensation expense is amortized over a four-
year vesting schedule using the multiple option approach. In connection with
the grant of some employee stock options, we recorded aggregate unearned stock-
based compensation expense of $11.3 million in 1999. Stock-based compensation
included in operating expenses totalled $498,000 in 1997, $489,000 in 1998 and
$2.7 million in 1999.

    From January 1, 2000 through February 10, 2000, we granted stock options to
purchase an aggregate of 285,500 shares of common stock at a weighted-average
exercise price of $8.37 per share. In connection with the grant of these stock
options Chordiant recognized unearned compensation totalling $1,892,000 which
will be amortized over the four year vesting period of the stock options.

Interest and Other Income (Expense), and Interest Expense

    Interest and other income (expense), net, and interest expense consists of
interest income generated from our cash, cash equivalents and short-term
investments, interest expense incurred in connection with outstanding
borrowings and other non-operating income and expenses. Interest and other
income (expense), net of interest expense increased from $330,000 in 1997 to
$440,000 in 1998, and was $(786,000) in 1999. The increase in these expenses
for 1998 compared to 1997 was attributable to increased interest income. The
losses for 1999 compared to 1998 was attributable to an increase in borrowings,
resulting in increased interest expense.

Provision for Income Taxes

    We have incurred operating losses for all periods since our inception. Our
deferred tax assets primarily consist of net operating loss carryforwards,
nondeductible allowances and research and development tax credits. We have
recorded a valuation allowance for the full amount of our net deferred tax
assets, as the future realization of the tax benefit is not considered by
management to be more-likely-than-not.

    As of December 31, 1998, we had net operating loss carryforwards for
federal tax purposes of approximately $25.7 million and for state tax purposes
of approximately $13.0 million. As of December 31, 1999, we had net operating
loss carryforward for federal tax purposes of approximately $48.0 million and
for state tax purposes of approximately $23.7 million. These federal and state
tax loss carryforwards are available to reduce future taxable income. The
federal tax loss carryforwards expire beginning in 2011 and the state tax loss
carryforwards expire beginning in 2001. Under the provisions of the Internal
Revenue Code, substantial changes in our ownership may limit the amount of net
operating loss carryforwards that could be used in the future to offset taxable
income.

                                       23
<PAGE>

Quarterly Results of Operations

    The following table provides unaudited consolidated statement of operations
data for the eight quarters in the period ended December 31, 1999, as well as
that data expressed as a percentage of our total net revenues for the periods
indicated. This data has been derived from unaudited consolidated financial
statements that have been prepared on the same basis as the audited
consolidated financial statements and, in the opinion of management, include
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the information.

<TABLE>
<CAPTION>
                                                         Quarter Ended
                          -------------------------------------------------------------------------------------
                          March 31,  June 30,   Sept. 30,  Dec. 31,   March 31,  June 30,   Sept. 30,  Dec. 31,
                            1998       1998       1998       1998       1999       1999       1999       1999
                          ---------  --------   ---------  --------   ---------  --------   ---------  --------
                                                        (in thousands)
                                                          (unaudited)
<S>                       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Consolidated Statement
  of Operations Data:
Net revenues:
 License................   $   253   $   955     $ 1,426   $ 1,726     $ 1,769   $ 1,671     $ 1,885   $ 2,682
 Service................       596     1,018       1,731     4,760       2,702     2,050       2,170     2,659
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total net
       revenues.........       849     1,973       3,157     6,486       4,471     3,721       4,055     5,341
                           -------   -------     -------   -------     -------   -------     -------   -------
Cost of net revenues:
 License................        --        --         288       137           7        38         173       179
 Service................       694     1,183       2,227     4,843       3,313     3,050       3,402     4,587
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total cost of net
       revenues.........       694     1,183       2,515     4,980       3,320     3,088       3,575     4,766
                           -------   -------     -------   -------     -------   -------     -------   -------
Gross profit............       155       790         642     1,506       1,151       633         480       575
                           -------   -------     -------   -------     -------   -------     -------   -------
Operating expenses:
 Sales and marketing....     2,236     3,197       3,084     4,063       2,959     3,315       3,283     3,811
 Research and
   development..........     1,456     1,281       1,406     1,715       1,632     1,671       1,487     1,704
 General and
   administrative.......       364       460         528       694         578       633         701       756
 Stock-based
   compensation.........         4        33         237       215         268       294         202     1,896
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total operating
       expenses.........     4,060     4,971       5,255     6,687       5,437     5,913       5,673     8,167
                           -------   -------     -------   -------     -------   -------     -------   -------
Loss from operations....    (3,905)   (4,181)     (4,613)   (5,181)     (4,286)   (5,280)     (5,193)   (7,592)
 Interest expense.......       (27)      (26)        (31)      (37)        (67)     (324)       (356)     (320)
 Other income (expense),
   net..................       224       169         102        66          16        16          38       211
                           -------   -------     -------   -------     -------   -------     -------   -------
Net loss................   $(3,708)  $(4,038)    $(4,542)  $(5,152)    $(4,337)  $(5,588)    $(5,511)  $(7,701)
                           =======   =======     =======   =======     =======   =======     =======   =======
As a Percentage of Total
  Net Revenues:
Net revenues:
 License................        30 %      48 %        45 %      27 %        40 %      45 %        46 %      50 %
 Service................        70        52          55        73          60        55          54        50
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total net
       revenues.........       100       100         100       100         100       100         100       100
                           -------   -------     -------   -------     -------   -------     -------   -------
Cost of net revenues:
 License................        --        --           9         2           0         1           4         3
 Service................        82        60          71        75          74        82          84        86
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total cost of net
       revenues.........        82        60          80        77          74        83          88        89
                           -------   -------     -------   -------     -------   -------     -------   -------
Gross profit............        18        40          20        23          26        17          12        11
                           -------   -------     -------   -------     -------   -------     -------   -------
Operating expenses:
 Sales and marketing....       263       162          97        63          66        89          81        71
 Research and
   development..........       171        65          45        26          37        45          37        32
 General and
   administrative.......        43        23          16        11          13        17          17        14
 Stock-based
   compensation.........         1         2           8         3           6         8           5        36
                           -------   -------     -------   -------     -------   -------     -------   -------
     Total operating
       expenses.........       478       252         166       103         122       159         140       153
                           -------   -------     -------   -------     -------   -------     -------   -------
Loss from operations....      (460)     (212)       (146)      (80)        (96)     (142)       (128)     (142)
 Interest expense.......        (3)       (2)         (1)       --          (1)       (9)         (9)       (6)
 Other income (expense),
   net..................        26         9           3         1           0         1           1         4
                           -------   -------     -------   -------     -------   -------     -------   -------
Net loss................      (437)%    (205)%      (144)%     (79)%       (97)%    (150)%      (136)%    (144)%
                           =======   =======     =======   =======     =======   =======     =======   =======
</TABLE>

                                       24
<PAGE>

    We have a limited operating history, which makes it difficult to predict
future operating results. We intend to continue to invest significantly in our
professional services organization, sales and marketing, and research and
development, and expect to incur net losses in the future. Our operating
expenses are relatively fixed and a delay in the recognition of revenues from
one or more license transactions could cause large variations in operating
results from quarter to quarter. While a large portion of our license revenues
each quarter is recognized from deferred revenues on a percentage of completion
basis, our quarterly performance will depend upon entering into new contracts
to generate revenues for both current and future quarters. New contracts will
likely not result in revenues during the quarter in which the contract was
signed, and we may not be able to accurately predict when revenues from these
contracts will be recognized. Our future operating results will depend on
factors including the following:

  .  delays in our ability to recognize revenues due to decisions by our
     customers to postpone software delivery or implementation;

  .  size and timing of customer orders and product and service delivery
     schedules;

  .  length of our sales cycle;

  .  the success of our international operations;

  .  success in maintaining and enhancing existing relationships and
     developing new relationships with system integrators;

  .  the level of utilization of our own professional services organization
     and third-party service providers; and

  .  timing of our development and release of new and enhanced products.

    We believe that period-to-period comparisons of our results of operations
are not necessarily meaningful and should not be relied upon as indications of
future performance. It is likely that in some future quarter our operating
results will be below the expectations of public market analysts, if any, and
investors. If this happens, the price of our common stock would likely decline.

Liquidity and Capital Resources

    Since inception, we have financed our operations primarily through private
sales of common and preferred stock, with net proceeds totaling $51.6 million,
and through the sale of $10.0 million in convertible debentures. As of December
31, 1999, we had $6.7 million in cash and cash equivalents, and $1.8 million in
working capital with $13.2 million of outstanding debt. Of the outstanding
debt, $10.0 million is in the form of convertible debentures that will convert
into 2 million shares of our common stock on the closing of this offering. We
intend to repay our outstanding bank line of credit following the closing of
this offering.

    Net cash used in operating activities was $3.1 million in 1997 and $14.6
million in 1998 and $27.6 million for 1999. Net cash used in investing
activities was $744,000 in 1997, $3.1 million in 1998 and $1.9 million for
1999. Investing activities consist primarily of purchases of property and
equipment and net proceeds from transactions involving our short-term
investments. Net cash generated from financing activities was $20.1 million in
1997, $448,000 in 1998 and $34.5 million in 1999. Net cash generated from
financing activities consists primarily of net proceeds from the issuance of
preferred stock.

    As of December 31, 1999, we had two lines of credit with a bank permitting
us to borrow up to an aggregate of $5.0 million. Borrowings under the accounts
receivable line of credit bear interest at the lending bank's prime rate of
8.50% as of December 31, 1999, and are limited to 80% of eligible accounts
receivable. Borrowings under the equipment loan bear interest at the lending
bank's prime rate plus 0.25%. Our assets secure borrowings under both lines of
credit. The lines of credit require us to maintain a minimum quick ratio of
1.25 to 1.00, a minimum liquidity ratio of 1.25 to 1.00, and a minimum capital
base of $4,000,000 through December 31, 1999 and $7,000,000 afterward. As of
December 31, 1999, we were in compliance with our financial covenants and we
had borrowed $2.4 million against the lines of credit.

                                       25
<PAGE>

    Payments under non-cancelable operating lease agreements for facilities and
other equipment expire on various dates through 2004, resulting in aggregate
lease expenses ranging from $799,000 to $1.7 million per year. We finance the
acquisition of property and equipment, primarily computer hardware and software
for our increasing employee base, as well as for our management information
systems, primarily through non-cancelable leases. We project capital
expenditures of $1.7 million in 2000 for computer hardware and software
applications.

    We expect to continue to experience growth in our operating expenses. We
anticipate that operating expenses and planned capital expenditures will
continue to be a material use of our cash resources. In addition, we may
utilize cash resources to fund acquisitions or investments in other businesses,
technologies or product lines. We believe that available cash and cash
equivalents and the net proceeds from the sale of the common stock in this
offering will be sufficient to meet our working capital and operating expense
requirements for at least the next 12 months. After that period, we may require
additional funds to support our working capital and operating expense
requirements or for other purposes and may seek to raise these additional funds
through public or private debt or equity financings. There can be no assurance
that this additional financing will be available, or if available, will be on
reasonable terms.

Recently Issued Accounting Pronouncements

    In June 1998, SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities was issued. SFAS No. 133 establishes accounting and
reporting standards for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because we
do not currently hold any derivative instruments and do not engage in hedging
activities, we expect the adoption of SFAS No. 133 will not have a material
impact on our financial position. In July 1999, SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133 was issued. We will be required to adopt SFAS No. 133
in 2000.

Qualitative and Quantitative Disclosures About Market Risk

    We are developing products in the United States and currently market our
product in North America, Europe and Africa. Our financial results could be
affected by factors including changes in foreign currency exchange rates or
weak economic conditions in foreign markets. Since all sales are currently made
in U.S. dollars, a strengthening of the dollar could make our product less
competitive in foreign markets. Our interest income is sensitive to changes in
the general level of U.S. interest rates, particularly since the majority of
our investments are in short-term instruments. Due to the short-term nature of
our investments, we believe that there is no material risk exposure. Therefore,
no quantitative tabular disclosures have been provided.

Year 2000 Readiness

    The year 2000 issue refers generally to the problems that some software may
have in determining the correct century for the year. For example, software
with date-sensitive functions that is not year 2000 compliant may not be able
to distinguish whether 00 means 1900 or 2000, which may result in failures or
the creation of erroneous results.

    We designed our product to be year 2000 compliant when configured and used
properly, and provided that the underlying operating system of the host machine
and any other software used with or in the host machine or our product are year
2000 compliant. However, we have not completely tested older versions of our
product for year 2000 compliance. We continue to respond to customer questions
about prior versions of our product on a case-by-case basis.

    We have defined year 2000 compliant as the ability to:

  .  correctly handle date information needed for the December 31, 1999 to
     January 1, 2000 date change;

                                       26
<PAGE>

  .  function according to the product documentation provided for this date
     change, without changes in operation resulting from the advent of a new
     century, assuming correct configuration;

  .  respond to two-digit date input in a way that resolves the ambiguity of
     century in a disclosed, defined and predetermined manner;

  .  store and provide output of date information in ways that are
     unambiguous about century if the date elements in interfaces and data
     storage specify the century; and

  .  recognize year 2000 as a leap year.

    As part of our year 2000 compliance strategy, we request assurances from
our vendors that licensed software is year 2000 compliant. To date, we have
received assurances from all significant vendors of our enterprise resource
planning software, and technology support software about their year 2000
compliance. Despite testing by us and current and potential customers, and
assurances from developers of technology incorporated into our product, our
product may contain undetected errors or defects associated with year 2000 date
functions. Known or unknown errors or defects in our product could result in
delay or loss of revenues, diversion of development resources, damage to our
reputation, increased service and warranty costs, or liability from our
customers, any of which could seriously harm our business. We are not aware of
any year 2000 problems with our product caused by the recent commencement of
year 2000.

    Litigation about year 2000 compliance issues could be significant, and we
are aware of potential lawsuits against other software vendors. Because of the
unprecedented nature of this litigation, it is uncertain whether or to what
extent we may be affected by it. Congress recently passed a law that is
intended to limit liability for some failures to achieve year 2000 compliance.
There can be no assurance that this law will provide us with any protection.

    We have completed an assessment of our material internal information
technology systems, including our own software products and third-party
technology. We continue to assess our non-information technology systems. To
the extent that we are unable to test the technology provided by third-party
vendors, we are seeking assurances from these vendors that their systems are
year 2000 compliant. We are not aware of any material operational issues or
costs associated with preparing our internal information technology and non-
information technology systems for year 2000. However, we may experience
material unanticipated problems and costs caused by undetected errors or
defects in the technology used in our internal information technology and non-
information technology systems.

    We do not have any information concerning the year 2000 compliance status
of our customers. Our current or future customers may incur significant
expenses to achieve year 2000 compliance. If our customers are not year 2000
compliant, they may experience material costs to remedy problems, or they may
face litigation costs. In either case, year 2000 issues could reduce or
eliminate the budgets that current or potential customers could have for or
delay purchases of our product and services. As a result, our business could be
harmed.

    We have funded our year 2000 plan from operating cash flows and have not
separately accounted for these costs in the past. To date, these costs have not
been material. We will incur additional costs related to the year 2000 plan for
administrative personnel to manage the project, outside contractor assistance,
technical support for our products, product engineering and customer
satisfaction. In addition, we may experience material problems and costs with
year 2000 compliance that could harm our business.

    Year 2000 issues affecting our business, if not adequately addressed by us,
our third-party vendors or suppliers or our customers, could have a number of
negative consequences. These include:

  .  claims from our customers asserting liability, including liability for
     breach of warranties related to the failure of our product and services
     to function properly, and any resulting settlements or judgments; and

  .  material disruption to our business.

                                       27
<PAGE>

                                    BUSINESS

Overview

    Chordiant provides e-business infrastructure software that it believes
enables companies to offer their customers personalized marketing, sales
programs, e-business services and customer support across multiple
communication channels. Our product, Customer Communications Solution, or CCS,
is a suite of applications designed to integrate customer information from
disparate data sources, automate business processes dependent on a customer's
specific profile and request, and provide consistent service to customers
across communications channels including the internet, telephone, e-mail and
branch offices. Our product is designed to enable companies to increase the
value of their customers by facilitating interactions between customers and
companies that we believe will help retain customers, grow revenues and
increase profits. Our customers include multinational market leading business-
to-consumer companies such as Bank One International, Cable & Wireless
Communications, Canadian Tire Acceptance Limited, Chase Manhattan Mortgage
Corporation, Direct Line Group Services Limited, First USA Bank, General
Motors' OnStar division, KLM Royal Dutch Airlines, Metropolitan Life Insurance
Company and Thomas Cook Global Services.

Industry Background

    The internet is large, pervasive, and rapidly growing. The internet has
emerged as a major platform for communication, providing new, highly efficient
channels through which companies can engage in commerce and interact directly
with customers. International Data Corporation forecasts that commerce
conducted over the internet will grow from $50 billion in 1998 to $1.3 trillion
by 2003.

    First generation electronic commerce companies generally offered a wider
selection of products at lower prices than traditional businesses and measured
success primarily by the number of web site visitors. These online businesses
focused primarily on gaining new customers and focused less on ways to deliver
high levels of customer service to retain existing customers. The internet has
created a new set of retail challenges, including price standardization,
product commoditization, decreased customer loyalty and high customer
acquisition and retention costs. As a result many of these early online
businesses struggled to continue their rapid growth without delivering
consistent high quality customer service across the broad array of
communications channels that were created by the convergence of traditional and
internet-based communications channels.

    Today, we believe customers are placing increasing value on convenient
access to information, products and services. To be successful in the next
generation of online commerce, commonly referred to as e-business, we believe
companies must take an approach to attract and retain valuable customers that
is primarily focused on the customer. To attract customers, companies must
focus on developing and executing a new set of strategies that provide users
with personalized experiences when they first contact the company. Companies
must be more responsive to customer needs and focus on delivering superior
customer service and satisfaction to differentiate themselves from their
competitors. Companies must work to retain their customers by providing
relevant and targeted experiences each time interactions take place. Moreover,
companies must recognize that every customer interaction provides an
opportunity to sell additional, and more valuable, products and services and
increase customer loyalty through personalized customer interaction.

    While the internet has emerged as a significant channel to initiate and
maintain customer relationships, we believe that existing and established
customer communication channels have not become less significant. Specifically,
to remain competitive, we believe that companies must provide consistent high
quality customer service across all communication channels including the
internet, e-mail systems and automated telephony self-service systems as well
as call center, branch and retail outlet contact points. Companies that use
organization-wide customer information to provide consistent customer services
through interactions across multiple channels and contact points will be able
to compete more successfully in the rapidly changing internet economy.

    There are many challenges to implementing an approach to e-business that is
focused on individual customers. These challenges include providing customers
access to information and functionality that

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traditionally resides within complex back-end systems, integrating and managing
disparate systems and generating relevant processes in real time. Successful
integration of these systems and the creation of a comprehensive single view of
the customer will allow companies to control routing and prompting of
appropriate responses to the customer in an automated and dynamic process.

    Many existing product technologies do not meet the new requirements of e-
business. Client/server technologies for sales force automation, call centers
and field service management were originally designed for departmental
functions and use by employees rather than customers. The growth of the
internet has given rise to a wide range of new products focused on a specific
channel of customer contact such as web self-service, e-mail response, and
marketing automation. These single function web-based products are not likely
to completely replace existing means of handling customer service and commerce.
For instance, many companies continue to rely heavily on telephone-based
customer service representatives and are struggling to integrate web and e-mail
products with the telephone. Companies have responded to the lack of
integration among existing products by attempting to design and build their own
e-business software applications. The cost and time to custom build these new
systems can be prohibitive, and the expertise required to design and integrate
the systems are often beyond the capabilities of most companies. Additionally,
most commercially-available and custom-built systems do not have the
flexibility to integrate existing and anticipated technologies or to allow
customization to keep up with a constantly changing Internet economy.

    We believe that companies need a flexible, integrated e-business
infrastructure solution that supports all channels of customer contact with a
comprehensive single view of the customer and consistent business services.
Today, customer data must be accessed from multiple data sources, existing
applications and transaction systems to respond to customer inquiries according
to company specific business rules. Unlike traditional customer profiles, a
comprehensive single view of the customer must be updated real time for each
customer contact and reflect the customer's contact history and other relevant
information. A complete customer focused e-business solution improves the
ability to attract, engage and retain customers on a personalized basis and
understand their needs and preferences to provide consistent interactions with
customers through any communication channel.

Solution

    We provide e-business infrastructure software that we believe enables
companies to offer their customers personalized marketing, sales programs, e-
business services and customer support across multiple communication channels.
We have designed our product to integrate customer information from different
data sources, generate business processes dependent on a customer's specific
profile and request, and provide uniform service and data to customers across
multiple communications channels. Our product is designed to enable companies
to deliver appropriate offers and information to a targeted customer at the
time of customer need. We believe that companies that use our product can
increase the value of their customers through improved retention rates and
linked selling opportunities that result from a personalized customer
interaction.

    Key benefits of our solution include:

    Comprehensive single view of the customer. Companies that have a
comprehensive single view of their customers and distribute that information
throughout the enterprise to the points of customer contact can provide a more
consistent and personalized consumer experience. Our data management technology
helps companies develop a single view of the customer by integrating,
consolidating and managing data derived from external and internal sources. Our
product uses multiple data sources, existing applications and transaction
systems to build a comprehensive single view of the customer and generate the
appropriate response at time of contact. A bank, for example, might use our
product to integrate information about a customer contained in internal
databases such as credit card, mortgage and savings account historical
transaction systems, web logs and e-mail management systems, as well as
external databases such as national credit check services. By integrating this
information, the bank has a more comprehensive understanding of the customer's
ability to repay a loan and the value of that customer's relationship with the
bank.

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    Automated, sophisticated decision making processes. Workflow-driven
business processes help companies to make automated, yet informed, decisions
about customer inquiries. Our workflow processing system supports customizable
business processes that allow companies to develop business rules that will be
implemented consistently. Our workflow editor is a graphical user interface
application that allows business analysts to customize and automate their
company's unique business rules. Our sophisticated routing engine is designed
to allow companies to instantly determine how to respond to specific customer
inquiries and generate offers appropriate for particular customers. A bank, for
example, could specify that at the time of contact, only customers with a solid
credit card history, an existing home loan, a savings account with a minimum
balance and a clean credit history should receive an attractive auto loan rate
and free online bill payment services.

    Consistent customer experience across multiple channels. Companies that
provide customers with a consistent experience across multiple communication
channels should enjoy greater customer satisfaction because customers are able
to receive the same reliable service and information regardless of how they
choose to contact the company. There is a large and increasing number of
customer communications channels, including web, e-mail, fax, self-service
systems, call centers and retail outlets. Our product implements a common set
of business rules uniformly across systems already existing in different
customer communications channels. A bank, for example, could ensure that a
particular customer receives the same attractive auto loan rate and online bill
payment service promotion, regardless of whether the customer contacts the bank
through the web, e-mail, a customer service call center or in person at a local
branch.

    Standard and customizable business services. We believe that companies that
implement customized business services will realize greater levels of
efficiency, consistency and customer satisfaction. Our product provides a broad
set of standard business objects, or fundamental business functions, that are
common across industries. These standard business objects can be modified to
accommodate specific customer and business processes, policies and transactions
of individual companies. A bank, for example, could customize our business
objects by activating specific financial services objects related to specific
transactions, such as processing auto loans, and alter our standard loan
business processes to bypass an external credit check if the customer has a
clean credit and mortgage history.

Strategy

    Our objective is to continue to provide innovative e-business
infrastructure software that enables companies to offer their customers
personalized marketing, sales programs, e-business services and customer
support across multiple communication channels.

    Key elements of our strategy include:

    Continue technology leadership. The increasing demands for multi-channel
interactive e-business solutions require a product that is adaptable,
extensible and interoperable. To meet these requirements, we intend to continue
to devote substantial resources to the development of new and innovative
product capabilities. Because we have designed our product from the beginning
to utilize the capabilities of the internet, we believe that our product is
more easily adapted to a constantly changing, e-business environment. For
example, is designed to accommodate additional contact points such as personal
digital assistants, cellular telephones and digital television.

    Extend technology and integration alliances. We have sought, secured and
continue to seek, strategic alliances to assist in developing, marketing and
selling our product. This approach is intended to leverage the technology and
resources available to perform application design and development services for
our customers and provide additional marketing and technical expertise in
industry segments. To help ensure that we deliver a comprehensive product to
our customers, we have established strategic relationships with organizations
in four general categories:

  .  computing and network platform vendors;

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<PAGE>

  .  software platform vendors;

  .  application service providers; and

  .  systems integrators.

    Target leading global business-to-consumer companies. We intend to
continue to target the global leaders in our primary business-to-consumer
markets by providing solutions to the financial services, telecommunications,
travel and retail industries, including many internet-only businesses that
compete in these markets. These industries are characterized by commodity-like
products and large numbers of dispersed customers, partners, vendors and
suppliers. We believe that companies in these industries will be early users,
and early beneficiaries, of an integrated system that can deliver
personalized, real-time processes utilizing a comprehensive single view of the
customer.

    Expand worldwide infrastructure. We intend to continue to grow our global
presence by expanding our worldwide field sales, marketing and services
organizations. We plan to continue to expand our international presence by
adding direct sales personnel and increasing our indirect sales channels. In
particular, we plan to expand our European operations from our existing
international headquarters in London, England in early 2000.

    Growth Through Customer References. We plan to achieve additional market
success as our customers become successful in using their e-business
initiatives to increase customer retention and revenues. Our most successful
customers become valuable references for our future sales opportunities. To
ensure that all our customers become Chordiant references, we intend to:

  .  hire and retain expert consultants to assist our customers in
     implementation of our product;

  .  work with experienced and knowledgeable systems integrators to help
     enable our customers to implement large scale deployments successfully;

  .  deliver high quality customer education and training on our product to
     assist our customers to meet and exceed their e-business expectations;
     and

  .  deliver superior customer service to our customers, to help ensure
     their long-term satisfaction and success with our product.

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Products

    Our software product, Customer Communications Solution, or CCS, is licensed
to our customers as a complete e-business infrastructure system. CCS is
available with the following customer facing applications: a customer service
representative application, a web communications interface application and an
e-mail communications interface application. Regardless of the customer-facing
application chosen, CCS includes business management, operations management and
customer case management capabilities. All applications utilize a standard set
of business services that are customizable and a workflow engine. CCS also
provides interfaces supporting various network protocols, telephone
environments, existing systems and data management services. The CCS product is
illustrated and summarized below:

[Graphic: Depicts the components of the Chordiant product including the
following:
 . Customer-Facing Applications
  -Customer Service Application
  -Web Communications Application
  -E-mail Communications Application
 . Management Applications
  -Business Management
  -Operations Management
  -Case Management
 . E-business Infrastructure
  -Business Services
  -Workflow Engine
 . Customers' IT Systems
  -Telephony Systems
  -Internal Databases
  -External Data Sources
  -Existing Applications
  -Third-Party Applications]

 Customer-Facing Applications

    CCS can be licensed with one or more customer-facing applications. All
customer-facing applications share common access to the business services and
workflow capabilities in our e-business infrastructure. All customer
interactions through these applications are logged in a comprehensive case
management system. In addition, companies can also choose to integrate their
existing customer-facing applications into our product.

    Customer Service Representative Application. The customer service
representative application supports high-volume processing of telephone calls
and enables conversations between customers and representatives. The
application provides the customer service representative with personalized
recommendations, promotions, and sale offers based on a customer's demographic
profile, preferences and history of purchases, inquiries and service incidents.

    Web Communications Application. The web communications interface
application provides companies with web-based functionality including self-
service enhancement features such as context-specific help, inquiry and
escalation through web forms, or buttons that schedule an outbound call from a
customer service representative.

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    E-mail Communications Application. The e-mail communications interface
application provides a tracking and routing system to respond to customer e-
mail. The application interface enables customer service representatives to
manage both e-mail received from, and e-mail sent to, customers in a
consistent manner.

Management Applications

    CCS includes three management applications: business management,
operations management and case management.

    Business Management. The business management application includes a
workflow editor for design, modification and control of company specific
workflow processes. These processes can be managed efficiently by sales,
marketing and service management personnel, keeping the product and corporate
business objectives coupled.

    Operations Management. The operations management application allows a
real-time view of the processes, users and activity status throughout the
enterprise.

    Case Management. The case management application enables companies to
create and resolve customer case histories, manage customer service
representative workloads and create user-defined workflows according to
company specific business process. Customer case histories allow all customer-
facing applications real-time access to data from previous interactions with a
specific customer. Within the application, cases can be prioritized for
purposes of assignment, workload management and reporting. Features of this
capability include:

  .  displays of a workload summary and real-time selection of case views;

  .  automatic display of customer history for viewing, editing, tracking
     and routing;

  .  case history analysis; and

  .  work assignment and procedures for dealing with customers that need
     additional assistance by more experienced or more specialized service
     representatives.

E-business Infrastructure

    The e-business infrastructure manages information and workflow between the
customer-facing and management applications and applicable back-end systems.
The infrastructure contains a workflow system with hundreds of standard
business objects providing fundamental business services. We provide companies
with a standard set of business services that contains functionality usable
across industries. A company or system integrator can customize these services
and define specific functions and rules according to the specialized needs of
their business processes and customer profiles. Workflow rules can be
processed in real time based on a customer's profile and request. Because
business processes are automated by our workflow system, customer service
representatives are available to manage customer relationships. Companies can
also incorporate third-party applications into our infrastructure and allow
our business services and applications to respond automatically to changes in
these third-party applications and systems.

Interfaces and coordination with back-end systems

    CCS provides interfaces supporting various network protocols, telephony
environments, existing computer systems and data management services, allowing
connection of our product to a company's existing information technology
software. Our data management services enable companies to create a
comprehensive single view of the customer from multiple data sources and
update these sources in real time. The data management services can be
customized to connect with third-party applications and systems to enable
access to financial transactions, order processing, billing, payment and other
financial and business services. This flexibility allows application
developers to build and deploy applications that can access and manage
multiple types of data through a single interface.

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Customers and Case Studies

    We target multinational market leaders in business-to-consumer industries,
particularly companies in the financial services, telecommunications, travel
and leisure and automotive industries. In the future, we plan to expand into
the retail, direct merchandise and utilities industries. Below is a list of our
customers as of December 31, 1999, each of which has purchased $500,000 or more
of product during the last two years.

  .  Bank One International

  .  Cable & Wireless Communications

  .  Canadian Tire Acceptance Limited

  .  Chase Manhattan Mortgage Corporation

  .  Direct Line Group Services Limited

  .  First USA Bank

  .  General Motors' OnStar division

  .  KLM Royal Dutch Airlines

  .  Metropolitan Life Insurance Company

  .  Thomas Cook Global Services

  .  Total System Services, Inc.

  .  Ventura

    A small number of customers account for a significant portion of our total
revenues. As a result, the loss or delay of individual orders or delays in the
product implementations for a customer can have a large impact on our revenues.
In 1997, revenues from Pagenet and VISA accounted for 53% and 28% of our total
net revenues. In 1998, revenues from KLM Royal Dutch Airlines, Thomas Cook
Global Services, Canadian Tire Acceptance Limited and Chase Manhattan Mortgage
Corporation accounted for 36%, 19%, 14% and 12% of our total net revenues. In
1999, revenues from Chase Manhattan Mortgage Corporation and First USA
accounted for 30% and 19% of our total net revenues. We expect that revenues
from a small number of customers will continue to account for a majority of our
total net revenues in the future as historical implementations are completed
and replaced with new projects from new and existing customers.

    The following are examples of how selected customers are using our product.
None of these customers are actively endorsing or promoting our product.

 Bank One International

    Bank One International Credit Card, a subsidiary of Bank One Corporation, a
U.S. bank, selected our product to provide its e-business and customer
interaction software to support its European credit card operation.

    Bank One International's web site allows customers to apply online for a
credit card and existing customers to access account details, view and print
statements, examine recent transactions and conduct online payment of card
balances. Our product facilitates the provision of these services by helping
the customer to get the service they require through their preferred channel,
and enables Bank One International to build relationships that will enhance
customer retention.

    With the requirement to add the promotion of its products and services
using the internet, Bank One International needed a solution capable of more
than just providing web-enabled customer services. It needed a system that
could integrate with both existing systems and other customer service delivery
channels, such as the traditional call center.

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    Our product's ability to provide Bank One International's customers with
consistent personalized service, whether through the internet, telephone, e-
mail, or other communications methods, was key to meeting both current and
future customer service requirements. With our product, Bank One International
will have the flexibility to automate its business processes once, and then
adapt the product to meet the requirements of alternative delivery channels.
Bank One International chose our product for its ability to link front and
back-end operations and integrate with Bank One International's outsourced
processing system.

 First USA Bank

    First USA Bank, a leading issuer of Visa credit cards, has selected
Chordiant software to provide the technology for its next-generation customer
retention system. Marketing services advisors in key customer centers serving
First USA's card members will use the Chordiant system. CCS is being deployed
at an initial location and is scheduled for roll-out to two additional customer
centers.

 Total System Services, Inc.

    Total System Services, Inc. is one of the leading information technology
processors of data and transactions for issuers of credit cards. Total Systems'
systems offer online accounting, data processing, electronic commerce services,
portfolio management, account acquisition, credit evaluation, risk management
and customer service.

    Until now, integrating customer-facing applications with back-end data,
transaction systems and business processes required extensive custom
development. Total Systems developed TSeclipseSM, a new customer interaction
application that enables financial services companies to deliver personalized
service using unique business processes. TSeclipse, is based on our product, a
suite of applications and business processes, to provide a single view of the
customer at every point of contact.

    TSeclipse is aimed at banks and private-label credit card issuers that need
to provide faster, more efficient, and more personalized interactions for their
consumers by delivering one-to-one service through call centers, through e-
mail, and other customer contact methods. CCS was chosen because it provides a
complete customer interaction solution, including real-time changes to business
processes, and its support of multiple channels, such as the Web, and other e-
business environments.

 Thomas Cook Global Services

    Chordiant's product has assisted Thomas Cook in launching its new Global
Services business, a worldwide service center providing traveler assistance
services. CCS is the core platform that Thomas Cook uses to provide a range of
business processes enabling Global Services business to improve customer
relationships.

    Operational since July 1998, the center offers travelers a range of
services. With a single telephone call to the service center from anywhere in
the world, Thomas Cook customers have access to a range of travel services.

Technology

    We design and build our product to provide an e-business infrastructure for
customer interaction applications. Using a software methodology based on a
flexible, object oriented, multi-tiered architecture, our product combines
advanced distributed object technology with a new approach to workflow
capabilities called workflow sequenced object processing, or WSOP. WSOP
provides a unique application development capability we call P3 Active. P3
Active was developed to deliver an enhanced level of personalization with every
customer interaction experience based on distributed information and processing
of business logic.

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    Our product is designed to handle multiple data sources, real-time
transaction systems and a large number of transactions. Our product
architecture supports a multi-tier e-business application environment for
deployment of web browser applications and desktop applications and also
extends application and business services to web, e-mail, fax, self-service
telephone systems, call centers, direct mail and retail outlets. The core
technologies that we have developed include:

  .  multi-channel integration capabilities;

  .  workflow engine for all queuing, routing, scheduling and applying
     business rules; and

  .  persistent data management for integrating multiple real-time data
     sources.

    Our product is based on open system standards and is designed to be
scalable and integrate with the enterprise, various information technology
systems, networks and telephony systems. Our architecture is designed to
utilize the capabilities of the Internet. Unlike a web-enabled client/server
architecture, where the application and user interface reside on the client
system, our product's multi-tier distributed object architecture provides the
means to distribute discrete objects for each customer contact point and to
deploy the application logic, business services and data management
appropriately to all parts of the system. This allows for increased
scalability, reliability and security. The web application, which operates
outside a company's security system, or firewall, is open to the public through
standard network protocols and security. The customer service representative
application is typically used within the company's information technology
infrastructure behind the firewall and is closed to public access. Our server
software runs on both UNIX server platforms and Windows NT servers and can be
configured for multiple servers.

    Our product architecture complies with software industry standards for
building large systems for performance on both network applications and
internet applications. For example, our product uses Java for application
development and customization and Hypertext Transfer Protocol for internet
access. Adherence to these industry standards provides compatibility with many
existing applications. We develop our client software in Java, and we use Sun
Microsystems' Forte Tool and C++ programming languages for the enterprise
server programs and management of data. The distributed object architecture is
based on industry standard interfaces at the object and communications level;
Java and HTML for application development; and XML, CORBA, IIOP and Forte
services for data management and transaction services.

Sales and Marketing

    We license our product and sell services primarily through our direct sales
organization, complemented by the selling and support efforts of system
integrators, application service providers and technology vendors. Our market
focus is in the business-to-consumer segment of the economy with a targeted
effort on leading consumer focused companies and companies using the internet
as the means of conducting business and serving customers. We target our sales
and marketing efforts, together with our product design efforts, on industries
such as retail banking, consumer financial services, telecommunications, travel
and leisure, automotive and direct merchandisers and retailers.

    The sales process generally ranges from three to twenty-four months
depending on the level of education that prospective customers need about the
use and benefits of our products and the involvement of system integrators.
During our sales process, we typically approach senior executive management
teams including the senior marketing officer, chief information officer and
chief executive officer of our potential customers. We utilize sales teams
consisting of sales and technical professionals who work with our strategic
partners to create organization-specific proposals, presentations and
demonstrations that address the specific needs of each potential customer.

    We have sales offices in the greater metropolitan areas of Dallas, Chicago
and New York, and in Cupertino, California, London, England and Amsterdam, the
Netherlands. Technical sales consultants who provide pre-sales support to
potential customers on product information and deployment capabilities

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<PAGE>

complement our direct sales professionals. We plan to significantly expand the
size of our direct sales organization and to establish additional sales offices
domestically and internationally.

    We focus our marketing efforts on educating potential customers, generating
new sales opportunities and creating awareness of our product. We conduct a
variety of marketing programs to educate our target market, including seminars,
trade shows, press relations and industry analyst programs.

    Our marketing organization serves an integral role in acquiring, organizing
and prioritizing customer and industry feedback to help provide product
direction to our development organization. We also have a detailed product
management process that surveys customers and identifies market needs to help
predict and prioritize future customer requirements.

Strategic Relationships

    To enhance the productivity of our sales and service organizations, we have
established relationships with systems integrators, complementary technology
providers and alternative service providers.

 System integrators

    We have established relationships with a number of leading system
integrators including EDS. We plan to expand these relationships to increase
our capacity to sell and implement our products. We have trained a significant
number of consultants in these organizations for the implementation and support
of our products. We believe that expanding our relationships with systems
integrators and independent consulting firms will enable us to gain a greater
share of emerging markets more rapidly.

 Application service providers

    Application service providers provide an additional channel of delivery for
e-business services and customer interaction applications. A hosted application
model may improve time-to-market, reduce the implementation risk and the
internal resources required while facilitating the deployment to the client. We
have recently entered into an application service provider relationship with
Total Systems Services, Inc., an outsourcer for retail banking credit and
consumer finance processing. Total Systems is expected to deliver our
application and integrate their processing and data services with our e-
business services and workflow. The resulting business model is intended to
provide clients with transaction pricing for an immediately available solution
hosted by Total Systems. We expect to continue to expand our relationships with
other application service providers.

 Complementary technology providers

    We design our products to be based on industry standards and technologies,
and to support a number of key software platforms. We have relationships with:

  .  Sun Microsystems for development of business services and client
     applications,

  .  IBM Software for IBM Visual Age tool support,

  .  Forte Software, a division of Sun Microsystems, for enterprise data and
     transaction management services, and

  .  Oracle and Sybase, Inc., providers of industry-standard relational
     databases.

Professional Services and Customer Support

    We offer a broad range of customer services including professional
consulting services and product support and training services. We believe that
providing a high level of customer service is critical to achievement of rapid
product implementation, customer success and continued revenues growth.

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 Professional Services

    Our professional service consulting teams assist our customer and system
integrator partners in the design and implementation of our product. Our
professional services organization deploys consultants as part of the project
team alongside system integration partners and members of the client's internal
team to provide the technical knowledge, business engineering, project guidance
and quality assessments during the project. In the design stage, we provide a
variety of professional services that help determine customer's business
objectives and the technical requirements of the application implementation. In
the implementation stage, we utilize our delivery methodology to assist
customers and integration partners in planning and managing the implementation.
System integrators, supported by our consultants, manage the overall project
and implement the product with a customer's existing communications,
applications, databases and transaction systems. In the final phases of an
implementation the system integrators provide education and training to enable
a customer's internal team to deploy the new system, train internal users and
assume control over ongoing support.

    Our methodology includes:

  .  user requirements and needs analysis;

  .  business engineering consultation;

  .  architectural analysis and performance planning;

  .  project management support services;

  .  engineering support for development and deployment; and

  .  technical support for software integration and communications
     integration.

 Customer Support Services

    Our customers have a choice of support and maintenance options depending on
the level of service desired. Our technical support is available to clients by
telephone, over the web and by e-mail. We maintain a technical support hotline
staffed by engineers from 8:00 a.m. to 9:00 p.m., eastern time, Monday through
Friday, from our corporate headquarters in Cupertino, California and local
support during business hours for European customers from London, England. An
optional premium service is available providing technical support 24 hours a
day, seven days a week. Additionally, we provide product enhancement releases
to all customers as part of their support and maintenance contract. We use a
customer service automation system to track each customer inquiry until it is
resolved. We also make use of our web site and a secured customer forum to
provide product information and technical support information worldwide 24
hours a day, seven days a week.

 Educational Services

    We provide educational services to train and enable our system integrators
and customers to use our product. We offer a comprehensive series of training
modules to provide the knowledge and skills to successfully deploy, use and
maintain our products. These training courses focus on the technical aspects of
our product as well as business issues and processes. A complete set of modules
covering business engineering, project management and development engineering
are available. Training courses can be provided on-site for a custom session at
a fee and are regularly scheduled through classroom and lab instruction at our
Cupertino, California corporate headquarters, and at our London, England
offices for European system integrators and customers.

Product Development

    We have made substantial investments in research and development through
internal development and technology licensing. Our product development efforts
are focused on extending our e-business services, application functionality,
self-service and web-based collaboration functionality, and continued
integration of key industry-specific transaction systems and services.

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    Our product development resources are organized into a number of
development teams including:

  .  system services and workflow development,

  .  business services and application design,

  .  tools and Internet development,

  .  enterprise integration,

  .  documentation,

  .  quality assurances and

  .  release management. Our software and internet applications teams have
     extensive experience in object oriented development, data management,
     workflow engineering, Java programming and Internet deployment.

    Our research and development expenditures were $6.2 million in 1997, $5.9
million in 1998 and $6.5 million in 1999.

Competition

    The market for our product is new and rapidly evolving, and is highly
competitive. The competitive landscape is rapidly evolving to address the
convergence of e-business services and customer interaction applications. To
realize the potential of this convergence, companies must be able to offer
personalized marketing and sales and extend e-business services to all points
of customer contact. This must be done through an integrated system and
customer data model tailored by each company to meet its specific customer
requirements.

    We face three main sources of competition:

  .  custom-built solutions;

  .  vendors with help desk, field service, call center or sales force
     automation products, and

  .  vendors of enterprise resource planning products.

    There is no one competitor, nor is there a small number of competitors,
that are dominant in our market.

 Custom-Built Solutions

    Corporate customer systems supporting branch and call centers have
historically been custom-built by professional services organizations or
internally developed. Custom development has the inherent limitation of being
a high cost alternative because it relies on building the entire solution from
scratch and the resulting configuration is difficult to upgrade to take
advantage of new requirements and channels of communication such as the
internet. We expect that internal development will continue to be a
significant source of competition.

 Stand-alone Solution Vendors

    We compete with providers of stand-alone solutions for Web-based customer
relationship management, such as Silknet, and Webline and providers of stand-
alone e-mail response capabilities, such as Kana, Mustang Software and
Brightware. We also compete against traditional client/server-based, call-
center service customer and salesforce automation solutions, such as Siebel
Systems, Vantive, Clarify and Pegasystems. Most point application providers
started with a single application focus, such as service, salesforce
automation or help desks, and then added additional modules addressing other
needs, such as e-mail, field service or quality tracking. Although these
vendors have started to pursue the enterprise-wide opportunity of providing e-
business

                                      39
<PAGE>

services to all points of customer contact, their lack of multichannel
integration, real-time data models for integration of multiple data sources and
lack of personalization capability and their client/server architecture are
limitations.

 Enterprise Application Vendors

    We anticipate competitive offerings and consolidation from several major
enterprise software developers, such as Oracle, PeopleSoft, IBM and SAP. To
date Oracle has announced and began delivery of modules to compete in various
areas of the traditional customer relationship management market and PeopleSoft
has purchased Vantive. We expect enterprise resource planning software vendors
to acquire and integrate point solutions as they approach different segments of
the e-business and customer relationship management markets.

 Other Potential Competitiors

    The telephony market for equipment and software is in the midst of a major
transition from proprietary systems to open software applications running on
commodity hardware. Recent software acquisitions announced by traditional
telephony vendors, such as Lucent Technologies Inc.'s purchase of Mosaix, Inc.
and Nortel Networks Corporations' purchase of Clarify are examples of the
desire to move from hardware platforms into software applications. Examples of
companies providing middleware in support of computer and telephony integration
are Genesys Telecommunications Laboratories, Inc. and Geotel Communications
Corporation, recently purchased by Cisco Systems. Providers of client/server
and mainframe call center systems include Pegasystems for financial services
and IMA and Quintas for outsourcers and call centers. These companies have not
historically provided e-business infrastructure and customer management
applications but may in the future.

    We believe that the principal competitive factors in our market include:

  .  the breadth and depth of solutions;

  .  product quality and performance;

  .  relationships with system integrators;

  .  the ability to implement solutions;

  .  establishment of a significant base of reference customers;

  .  the ability of products to operate with multiple software applications;

  .  customer service; and

  .  product price.

Although we believe that our product competes favorably with these factors, our
market is relatively new and is evolving rapidly. We may not be able to
maintain our competitive position against current and potential competitors,
especially those with significantly greater financial and personnel resources.

Intellectual Property and Propriety Rights

    Our success is dependent upon our ability to develop and protect our
proprietary technology and intellectual proprietary rights. We rely primarily
on a combination of contractual provisions, confidentiality procedures, trade
secrets, and copyright and trademark laws to accomplish these goals.

    We license our product through non-exclusive license agreements that impose
restrictions on customers' ability to utilize the software. In addition, we
seek to avoid disclosure of our trade secrets, including requiring employees,
customers and others with access to our proprietary information to execute
confidentiality agreements with us and restricting access to our source code.
We also seek to protect our rights in our product,

                                       40
<PAGE>

documentation and other written materials under trade secret and copyright
laws. Due to rapid technological change, we believe that factors such as the
technological and creative skills of our personnel, new product developments
and enhancements to our existing product are more important than the various
legal protections of our technology to establishing and maintaining a
technology leadership position.

    We integrate third-party software into our product. This third-party
software may not continue to be available on commercially reasonable terms. In
particular, we license Forte Tool and related Forte products from Forte
Software, a Sun Microsystems company. The license agreement expires in
September 2001, and can be extended upon agreement of the parties. If we cannot
maintain licenses to the Forte products or other key third-party software,
shipments of our product could be delayed until equivalent software could be
developed or licensed and integrated into our product. Moreover, although we
are generally indemnified against claims that technology licensed from third
parties infringes the intellectual property and proprietary rights of others,
this indemnification is not always available for all types of intellectual
property and proprietary rights and in some cases the scope of this
indemnification is limited. There can be no assurance that infringement or
invalidity claims arising from the incorporation of third-party technology, and
claims for indemnification from our customers resulting from these claims, will
not be asserted or prosecuted against us. These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources in addition to potential product redevelopment costs and
delays.

    Despite our efforts to protect our proprietary rights, existing laws afford
only limited protection. Attempts may be made to copy or reverse engineer
aspects of our product or to obtain and use information that we regard as
proprietary. There can be no assurance that we will be able to protect our
proprietary rights against unauthorized third-party copying or use. Use by
others of our proprietary rights could materially harm our business.
Furthermore, policing the unauthorized use of our product is difficult and
expensive litigation may be necessary in the future to enforce our intellectual
property rights.

    It is also possible that third parties will claim that we have infringed
their current or future products. We expect that software developers will
increasingly be subject to infringement claims as the number of products in
different industry segments overlap. Any claims, with or without merit, could
be time-consuming, result in costly litigation, prevent product shipment, cause
delays, or require us to enter into royalty or licensing agreements, any of
which could harm our business. Patent litigation in particular has complex
technical issues and inherent uncertainties. If an infringement claim against
us was successful and we could not obtain a license on acceptable terms or
license a substitute technology or redesign to avoid infringement, our business
would be harmed.

Employees

    As of December 31, 1999, we employed 144 full-time employees. Of that
total, 36 were primarily engaged in product development, engineering or systems
engineering, 37 were engaged in sales and marketing, 41 were engaged in
professional services and 30 were engaged in operational, financial and
administrative functions.

    None of our employees is represented by a labor union and we have never
experienced a work stoppage. We believe that our relations with our employees
are good.

Facilities

    Our headquarters are located in approximately 31,000 square feet in
Cupertino, California, occupied under an office lease expiring in July 2004. We
also lease office space in Mahwah, New Jersey; Irving, Texas; Chicago,
Illinois; London, England and Amsterdam, the Netherlands.

Legal Proceedings

    We are not a party to any material legal proceedings. We may be subject to
various claims and legal actions arising in the ordinary course of business.

                                       41
<PAGE>

                                   MANAGEMENT

Officers and Directors

    Our officers and directors and key employees, the positions held by them,
and their ages as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                    Name                     Age           Position
 ------------------------------------------- --- ----------------------------
 <C>                                         <C> <S>
                                                 President, Chief Executive
 Samuel T. Spadafora........................  57 Officer and Chairman
 Steven R. Springsteel......................  42 Executive Vice President,
                                                  Chief Financial Officer and
                                                  Secretary
 Donald J. Morrison.........................  42 Executive Vice President,
                                                  World Wide Sales and
                                                  Marketing
                                                 Chief Technology Officer and
 Joseph F. Tumminaro........................  51 Director
                                                 Senior Vice President,
 Steven J. Sherman..........................  41 Engineering
 Stephen Kelly..............................  38 Senior Vice President, EMEA
 Oliver D. Curme............................  45 Director
 Kathryn C. Gould...........................  49 Director
 Mitchell E. Kertzman.......................  50 Director
 Robert S. McKinney.........................  56 Director
 William Raduchel...........................  52 Director
 Carol L. Realini...........................  45 Director
 David R. Springett.........................  55 Director
</TABLE>

    Samuel T. Spadafora has served as president, chief executive officer and a
director of Chordiant since June 1998. In November 1999, Mr. Spadafora was
elected as our chairman. From April 1994 to June 1998, Mr. Spadafora served as
vice president of worldwide field operations for the microelectronic business
of Sun Microsystems, Inc., a computer and networking company. From October 1988
to January 1994, Mr. Spadafora served as senior vice president and general
manager of field operations for The Santa Cruz Operation, a software provider.
Mr. Spadafora has also served as senior vice president of sales and marketing
at Altos Computer System, and vice president of U.S. sales and operations at
Memorex. Mr. Spadafora holds a B.A. in marketing from Eastern Michigan
University.

    Steven R. Springsteel has served as our executive vice president and chief
financial officer since November of 1996, and secretary since October 1999.
From April 1995 to November 1996, Mr. Springsteel served as corporate
controller at Global Village Communications, a communications company. From
February 1994 to April 1995, Mr. Springsteel was vice president and chief
financial officer and secretary at Multipoint Networks, a wireless data
communications company. From September 1990 to February 1994, Mr. Springsteel
served as corporate controller at the Santa Cruz Operation, a software
provider. Mr. Springsteel received his B.A. in business administration from
Cleveland State University.

    Donald J. Morrison has served as our executive vice president, world wide
sales and marketing since January 1999. Mr. Morrison joined Chordiant as
executive vice president of marketing in June 1997. From March 1995 to June
1996, Mr. Morrison served as senior vice president of marketing and OEM sales
for Network Peripherals Inc., a high-speed networking company focused on fast
ethernet products. From January 1994 to February 1995, Mr. Morrison served as
vice president of marketing at Strategic Mapping, Inc., an applications
software company. Mr. Morrison has also held various sales and marketing
positions at the Santa Cruz Operation, a software provider. Mr. Morrison
received his B.A. in business administration from San Francisco State
University and his masters degree in marketing management from Golden Gate
University.

    Joseph F. Tumminaro is a founder of Chordiant and has served as chief
technology officer and a director since Chordiant's inception in March 1991.
Mr. Tumminaro served as secretary of Chordiant from its inception until October
1999. From 1985 to 1990, Mr. Tumminaro served as president, vice president of
technology and a director of J. Frank Consulting. Mr. Tumminaro received his
B.A. from Southern Illinois University.

                                       42
<PAGE>

    Steven J. Sherman has served as our senior vice president of engineering
since October 1999. From January 1999 to September 1999, Mr. Sherman served as
vice president of product development for The Vantive Corporation, a customer
relationship management software vendor. From June 1996 to December 1998, Mr.
Sherman served as executive vice president of product development and later
president, of Tetra International, Inc. for Tetra plc, an enterprise software
provider. From March 1994 to May 1996, Mr. Sherman was vice president of
engineering for Frame Technology and Adobe Systems, both of which are
publishing software companies. Mr. Sherman received his B.A. in mathematics and
computer science from Emory University in 1979 and an M.B.A. from San Jose
State University in 1991. Mr. Sherman has served on the board of Marin
Research, Inc., a private project management software company, since September
1999.

    Stephen Kelly has served as our senior vice president of Europe, Middle
East and Africa operations since October 1998. From October 1997 to September
1998, Mr. Kelly served as our vice president of Europe, Middle East and Africa
operations. From 1987 to 1998, Mr. Kelly worked in various sales, alliances and
marketing roles at Oracle Corporation's United Kingdom operations, most
recently as director of Europe, Middle East and Africa alliances and industry
groups. Mr. Kelly received his B.A. with honors in business administration and
accounting from the University of Bath, in England.

    Oliver D. Curme has been a director of Chordiant since July, 1996. Mr.
Curme has served as a general partner of several entities associated with
Battery Ventures, a venture capital company since 1988. Mr. Curme received his
B.S. from Brown University and his M.B.A. from Harvard Business School.

    Kathryn C. Gould has been a director of Chordiant since July, 1996. She is
a manager for each of the general partners for Foundation Capital I, II, and
III, a family of venture capital limited partnerships, and has been a member of
that firm since December 1995. Since 1989, Ms. Gould has been a general partner
of Merrill, Pickard, Anderson & Eyre, a venture capital firm. Ms. Gould also
serves as a director of Documentum, Inc., a publicly held web-based software
application developer. Ms. Gould also serves as a director of Interwoven, a
publicly held software provider. Ms. Gould received a B.Sc. in physics from the
University of Toronto and an M.B.A. from the University of Chicago.

    Mitchell E. Kertzman has been a director of Chordiant since February, 1997.
Mr. Kertzman has served as president, chief executive officer and a director of
Liberate Technologies, a public internet access software company since November
1998. Before joining Liberate, Mr. Kertzman was a member of the board of
directors of Sybase, a database company, from February 1995 until November
1998. He has served as chairman of Sybase's board of directors since July 1997.
Between February 1998 and August 1998, he also served as co-chief executive
officer of Sybase. From July 1996 until February 1997 Mr. Kertzman served as
chief executive officer of Sybase and from July 1996 until July 1997 he also
served as president of Sybase. Between February 1995 and July 1996, Mr.
Kertzman served as an executive vice president of Sybase. In February 1995,
Sybase merged with Powersoft Corporation, a provider of application development
tools. Mr. Kertzman had served as chief executive officer and a director of
Powersoft since he founded it in 1974. Mr. Kertzman has also served as a
director of CNET, a internet content company since 1997.

    Robert S. McKinney has been a director of Chordiant since January, 2000.
Mr. McKinney has served as president of Information Management Consulting, a
consulting firm, since September, 1998 and is acting chief information officer
of Metropolitan Life Insurance Company's individual business and client
services business units, Mr. McKinney was chief information officer of Tenneco,
an automotive parts manufacturing company, from March, 1996 to September, 1998
and chief information officer of PaineWebber, an investment banking firm, from
February, 1990 to February, 1996. Mr. McKinney received a masters degree in
management and industrial engineering from Columbia University and a B.S. in
mechanical engineering from the U.S.M.M.S, Kings Point.

    William Raduchel has been a director of Chordiant since August, 1998. Mr.
Raduchel is currently the chief technology officer of America Online
Incorporated, an online service provider. Mr. Raduchel held various positions
with Sun Microsystems, Inc., a computer systems company from 1989 to 1998
including chief

                                       43
<PAGE>

strategy officer from January, 1998 to September, 1999, vice president,
corporate planning and development and chief Information officer from July 1991
to January 1998 and chief financial officer. Mr. Raduchel received his B.A.
from Michigan State University in 1966 and his A.M. and Ph.D. from Harvard
University in 1968 and 1972. He is a director of MIH Limited and OpenTV, Inc.
and two private companies.

    Carol L. Realini was a founder of Chordiant and has been a director since
our inception in March 1991. Ms. Realini has served as president, chief
executive officer and chairman of Xokidz.com, Inc. since November 1999. From
May 1997 to November 1999, she served as our chairman. From May 1997 until June
1998, Ms. Realini served as our president and chief executive officer. From
January 1990 until May 1997, Ms. Realini served as president, chief executive
officer and chairman of J. Frank Consulting, Inc., a consulting services firm
and the predecessor company to Chordiant. From June 1988 to January 1990,
Ms. Realini served as vice president of sales and marketing of Legato Systems,
Inc. Ms. Realini received her B.A. with honors in mathematics from University
of California, Santa Cruz and her masters degree from California State
University, San Jose.

    David R. Springett, Ph.D. has been a director of Chordiant since January,
2000. Dr. Springett has served as president of the Community College
Foundation, an educational foundation since February 1994. Dr. Springett was
also president of Strategic Marketing Associates, a marketing company from
January 1992 to January 1994 and held various positions with Xerox Corporation,
a photocopy and computer equipment company, from May 1963 to May 1991,
including vice-president strategic marketing and director European marketing.
He is a board member of the California Vehicle Foundation and the California
State Commission on Welfare Reform and Training. Dr. Springett has received
degrees from the Royal Military College of Canada, the University of Toronto,
Queen's University and Harvard University.

    Joseph F. Tumminaro, our chief technology officer and a director, and Carol
L. Realini, a director, are married to each other. There are no other family
relationships among any of our directors and executive officers.

Board Committees

    The board of directors has established an audit committee and a
compensation committee. The audit committee makes recommendations to the board
of directors about the selection of independent auditors, reviews the results
and scope of the audit and other services provided by our independent auditors
and reviews and evaluates our audit and control functions.

    The compensation committee makes recommendations about our 1999 equity
incentive plan and concerning salaries and incentive compensation for our
employees and consultants.

    The membership of the audit and compensation commttee is described below:

<TABLE>
<CAPTION>
     Audit                         Compensation
     -----                         ------------
     <S>                           <C>
     Oliver D. Curme               Kathryn C. Gould
     William Raduchel              Mitchell Kertzman
     David R. Springett
</TABLE>

Director Compensation

    Directors currently receive no compensation from us for their services as
members of the board or for attendance at committee meetings. In February 1997,
Mr. Kertzman, a director of Chordiant, was granted an option to purchase 88,825
shares of our common stock at an exercise price of $0.14 per share. In August,
1998, Mr. Raduchel, also a director of Chordiant, was granted an option to
purchase 87,500 shares of our common stock at an exercise price of $0.90 per
share. Each option was granted under our 1999 equity incentive plan.

                                       44
<PAGE>

    According to our 1999 non-employee directors' stock option plan, each non-
employee director will be granted an option to purchase up to 25,000 shares of
our common stock on the effective date of this offering, if a director on the
effective date, or on a director's election or appointment to the board, if
later. Directors will be granted an option to purchase up to 7,500 shares of
our common stock on the day after each annual meeting of stockholders after the
effective date of this offering. Also, directors who serve as committee members
will be granted an option to purchase up to 5,000 shares of our common stock on
the day after each of our annual meetings of stockholders. The exercise price
of each option will be the fair market value of a share of our common stock on
the date of grant of the option.

Compensation Committee Interlocks And Insider Participation

    None of our executive officers serve as a member of the board of directors
or compensation committee of any entity that has one or more executive officers
serving as a member of our board of directors or compensation committee.
Individuals and investment entities affiliated with Ms. Gould and Mr. Curme
have purchased shares of our preferred stock. See Related Party Transactions.
For a further description of interlocking transactions, see Related Party
Transactions.

Board Composition

    We have authorized nine directors. Upon the closing of this offering and as
provided by the terms of our amended and restated certificate of incorporation,
the terms of office of the board of directors will be divided into three
classes. As a result, a portion of our board of directors will be elected each
year. The division of the three classes, their election dates and the directors
in each class are as follows:

<TABLE>
   <S>            <C>                                       <C>
    Class of
     director               Date of election                 Directors in class
   ----------     -------------------------------------     --------------------
       I          first annual meeting of stockholders      Oliver D. Curme
                                                            Kathryn C. Gould
                                                            Carol L. Realini

       II         second annual meeting of stockholders     Samuel T. Spadafora
                                                            Joseph F. Tumminaro
                                                            David R. Springett

      III         third annual meeting of stockholders      Mitchell E. Kertzman
                                                            William Raduchel
                                                            Robert S. McKinney
</TABLE>

    At each annual meeting of stockholders after the initial classification,
the successors to directors whose terms will then expire will be elected to
serve from the time of election and qualification until the third annual
meeting following election. Any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of one-third of the
directors. This classification of the board of directors may have the effect of
delaying or preventing changes in control or management of Chordiant.

                                       45
<PAGE>

Executive Compensation

    The following table provides information concerning compensation for
services performed during the year ended December 31, 1999 by our chief
executive officer and our most highly compensated executive officers whose
salary and bonus for the last year exceeded $100,000. As required by the rules
of the Securities and Exchange Commission, the compensation described in the
table excludes medical, group life insurance or other benefits that are
available generally to all salaried employees of Chordiant and other
perquisites and personal benefits received that do not exceed the lesser of
$50,000 or 10% of any officer's salary and bonus disclosed in this table. None
of the officers named below had any other annual compensation, was granted any
restricted stock award, long term incentive plan payout or received any other
compensation.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                    Long-Term
                                                                   Compensation
                                             ------------------    ------------
                                                   Annual
                                                Compensation          Awards
                                             ------------------    ------------
                                                                    Securities
                                              Salary                Underlying
      Name and Principal Position       Year   ($)    Bonus ($)    Options (#)
      ---------------------------       ---- -------- ---------    ------------
<S>                                     <C>  <C>      <C>          <C>
Samuel T. Spadafora.................... 1999 $250,000 $312,500            --
 President and Chief Executive Officer
Steven R. Springsteel.................. 1999 $183,912 $ 93,672       100,000
 Chief Financial Officer
Donald J. Morrison..................... 1999 $190,836 $122,645(1)     87,500
 Senior Vice President, Worldwide Sales
   and Marketing
Joseph F. Tumminaro.................... 1999 $162,083 $ 51,077            --
 Chief Technology Officer
John Palmer(2)......................... 1999 $175,734 $ 46,750            --
 Former Executive Vice President,
   Engineering
</TABLE>
- --------
(1) Includes commissions of $50,658.

(2) In August 1999, Mr. Palmer resigned as our executive vice president,
    engineering and is no longer an officer of Chordiant.

 Option Grants in Fiscal Year 1999

    The following table lists each grant of stock options during the year ended
December 31, 1999, to each of the individuals listed on the previous table.

    The exercise price of each option was equal to the fair market value of our
common stock as valued by the board of directors on the date of grant. The
exercise price may be paid in cash, in shares of our common stock valued at
fair market value on the exercise date or through a cashless exercise procedure
involving a same-day sale of the purchased shares.

    The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed as prescribed by the rules of the Securities and Exchange Commission
and does not represent our prediction of our stock price performance. The
potential realizable values at 5% and 10% appreciation are calculated by:

  .  multiplying the number of shares of common stock subject to a given
     option by the assumed initial public offering price of $15.00 per
     share;

  .  assuming that the aggregate stock value derived from that calculation
     compounds at the annual 5% or 10% rate shown in the table until the
     expiration of the options; and

  .  subtracting from that result the aggregate option exercise price.

                                       46
<PAGE>

    The initial public offering price may be higher than the estimated fair
market value on the date of grant, and the potential realizable value of the
option grants could be significantly higher than the numbers shown in the table
if future stock prices were projected to the end of the option term by applying
the same annual rates of stock price appreciation to the initial public
offering price.

    The shares listed in the following table under Number of Securities
Underlying Options Granted vest in a series of equal monthly installments over
the four years following the vesting start date. Our stock option plans allow
for the early exercise of options granted to employees. All options exercised
early are subject to repurchase by Chordiant at the original exercise price,
upon the option holder's cessation of service before to the vesting of the
shares. Each of the options has a ten-year term, subject to earlier termination
if the option holder's service with us ceases. See Employee Stock Plans for a
description of other terms of these options.

    Percentages shown under % of Total Options Granted to Employees in Fiscal
Year are based on an aggregate of 3,381,513 options granted to our employees
under our equity incentive plans during the period from January 1, 1999 through
December 31, 1999.

                       Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                       Individual Grants
                         ---------------------------------------------
                                                                       Potential Realizable
                         Number of                                       Value at Assumed
                         Securities     % of                           Annual Rates of Stock
                         Underlying Total Options                       Price Appreciation
                          Options    Granted to   Exercise                For Option Term
                          Granted   Employees in   Price    Expiration ---------------------
          Name              (#)      Fiscal Year  ($/Share)    Date      5% ($)    10% ($)
          ----           ---------- ------------- --------- ---------- ---------- ----------
<S>                      <C>        <C>           <C>       <C>        <C>        <C>
Samuel T. Spadafora.....       --         --          --           --          --         --
Steven R. Springsteel...   50,000        1.5        2.90     03/19/09   1,076,671  1,800,307
                           50,000        1.5        4.00     11/16/09   1,021,671  1,745,307
Donald J. Morrison......   37,500        1.1        2.90     03/19/09     807,503  1,350,230
                           50,000        1.5        4.00     11/16/09   1,021,671  1,745,307
Joseph F. Tumminaro.....       --         --          --           --          --         --
John Palmer.............       --         --          --           --          --         --
</TABLE>

 Fiscal Year-End Option Values

    The following table provides the number and value of securities underlying
unexercised options that are held by each of the individuals listed on the
previous page as of December 31, 1999.

    Amounts shown under the columns Value Realized and Value of Unexercised In-
the-Money Options at Fiscal Year End are based on an assumed initial public
offering price of $15.00 without taking into account any taxes that may be
payable in connection with the transaction, multiplied by the number of shares
underlying the option, less the exercise price payable for these shares. Our
stock option plans allow for the early exercise of options granted to
employees. All options exercised early are subject to repurchase by Chordiant
at the original exercise price, upon the option holder's cessation of service
before the vesting of the shares.

    Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values

<TABLE>
<CAPTION>
                                                    Number of Securities
                                                   Underlying Unexercised     Value of Unexercised
                                                         Options at          In-the-Money Options at
                            Shares                  Fiscal Year End (#)        Fiscal Year End ($)
                         Acquired on     Value     ------------------------ -------------------------
Name                     Exercise (#) Realized ($)   Vested     Unvested    Exercisable Unexercisable
- ----                     ------------ ------------ ----------- ------------ ----------- -------------
<S>                      <C>          <C>          <C>         <C>          <C>         <C>
Samuel T. Spadafora.....    45,000      646,413        903,825     861,175  $25,347,554       --
Steven R. Springsteel...    10,000      148,600        200,532     262,811  $ 6,407,423       --
Donald J. Morrison......    15,000      220,500        253,260     339,598  $ 8,344,841       --
Joseph F. Tumminaro.....        --           --         28,560       2,465  $   379,498       --
John Palmer.............        --           --        188,046          --  $ 2,769,797       --
</TABLE>


                                       47
<PAGE>

Employee Stock Plans

 1999 Equity Incentive Plan.

    Our board adopted our 1999 equity incentive plan on November 30, 1999. Our
stockholders approved the plan on December 31, 1999. The incentive plan is an
amendment and restatement of our 1997 equity incentive plan.

    Administration. The board administers the incentive plan unless it
delegates administration to a committee. The board or this committee has the
authority to construe, interpret and amend the incentive plan and determine:

  .  the grant recipients;

  .  the grant dates;

  .  the number of shares subject to the award;

  .  the exercisability and vesting of the award;

  .  the exercise price;

  .  the type of consideration; and

  .  the other terms of the award.

    Share Reserve. We have reserved a total of 9,712,500 shares of our common
stock for issuance under the incentive plan. On October 1 of each year for 10
years, starting on October 1, 2000, the share reserve will automatically be
increased by a number of shares equal to the greater of:

  .  5% of our outstanding shares on a fully-diluted basis; or

  .  that number of shares subject to stock awards made under the incentive
     plan during the prior 12-month period.

    However, the automatic increase is subject to reduction by the board, and
no more than 20 million shares of the share reserve, as increased, may be used
for incentive stock options. If the recipient of a stock award does not
purchase the shares subject to the stock award before the stock award expires
or terminates, the shares that are not purchased again become available for
issuance under the incentive plan.

    Eligibility. The board may grant incentive stock options that qualify under
Section 422 of the Internal Revenue Code to our employees. The board also may
grant nonstatutory stock options, stock bonuses and restricted stock purchase
awards to our employees, directors and consultants.

  .  A stock option is a contractual right to purchase a specified number of
     our shares at a specified price, called the exercise price, for a
     specified period of time.

  .  An incentive stock option is a stock option that has met the
     requirements of Section 422 of the Internal Revenue Code. This type of
     option is free from regular tax at both the date of grant and the date
     of exercise. However, the difference between the fair market value on
     date of exercise and the exercise price is an item of alternative
     minimum tax unless there is a disqualifying disposition in the year of
     exercise. If two holding period tests are met--two years between grant
     date and sale date and one year between exercise date and sale date--
     all profit on the sale of our shares acquired by exercising the
     incentive stock option is long-term capital gain income. However, if
     either of the holding periods is not met, there has been a
     disqualifying disposition, and a portion of any profit will be taxed at
     ordinary income rates.

  .  A nonstatutory stock option is a stock option not meeting the Internal
     Revenue Code criteria for qualifying incentive stock options and,
     therefore, triggering a tax upon exercise. This type of option requires
     payment of state and federal income tax and, if applicable, other taxes
     on the difference between the exercise price and the fair market value
     on the exercise date.

                                       48
<PAGE>

  .  A restricted stock purchase award is our offer to sell our shares at a
     price either at or near the fair market value of the shares. A stock
     bonus is a grant of our shares at no cost to the recipient in
     consideration for past services performed.

    The board may not grant an incentive stock option to any person who, at the
time of the grant, owns or is deemed to own stock possessing more than 10% of
our total combined voting power or the total combined voting power of an
affiliate of ours, unless the exercise price is at least 110% of the fair
market value of the stock on the grant date and the option term is five years
or less.

    Limits on Option Grants. There are limits on the number of shares that the
board may grant under an option.

  .  Section 162(m) of the Internal Revenue Code denies a deduction to
     publicly held corporations for compensation paid to the chief executive
     officer and the four highest compensated officers in a taxable year to
     the extent that the compensation for each the officer exceeds
     $1,000,000. When we become subject to Section 162(m), to prevent
     options granted under the incentive plan from being included in
     compensation, the board may not grant options under the incentive plan
     to an employee covering an aggregate of more than 5 million shares in
     any calendar year.

  .  In addition, an employee may not receive incentive stock options that
     exceed the $100,000 per year limitation provide in Section 422(d) of
     the Internal Revenue Code. In calculating the $100,000 per year
     limitation, we determine the aggregate number of shares under all
     incentive stock options granted to that employee that will become
     exercisable for the first time during a calendar year. For this
     purpose, we include incentive stock options granted under the incentive
     plan as well as under any other stock plans that we maintain. We then
     determine the aggregate fair market value of the stock as of the grant
     date of the option. Taking the options into account in the order in
     which they were granted, we treat only the options covering the first
     $100,000 worth of stock as incentive stock options. We treat any
     options covering stock in excess of $100,000 as nonstatutory stock
     options.

    Option Terms. The board may grant incentive stock options with an exercise
price of 100% or more of the fair market value of a share of our common stock
on the grant date. It may grant nonstatutory stock options at a discount. If
the value of our shares declines after the date of grant, the board may offer
option holders the opportunity to replace their outstanding higher-priced
options with new lower-priced options. To the extent required by Section 162(m)
of the Internal Revenue Code, the repriced option is considered to be canceled
and a new option granted, but both options will be counted against the Section
162(m) limit discussed above.

    The maximum option term is 10 years. The board may provide for exercise
periods of any length in individual option grants. However, generally an option
terminates three months after the option holder's service to us terminates. If
this termination is due to the option holder's disability, the exercise period
generally is extended to 12 months. If this termination is due to the option
holder's death or if the option holder dies within three months after the
option holder's service terminates, the exercise period generally is extended
to 18 months following the option holder's death.

    The board may provide for the transferability of nonstatutory stock options
but not incentive stock options. However, the option holder may designate a
beneficiary to exercise either type of option following the option holder's
death. If the option holder does not designate a beneficiary, the option
holder's option rights will pass by will or by the laws of descent and
distribution.

    Terms of Other Stock Awards. The board determines the purchase price of
other stock awards. However, the board may award stock bonuses in consideration
of past services without a purchase payment. Shares that we sell or award under
the incentive plan may, but need not be, restricted and subject to a repurchase
option in our favor based on with a vesting schedule that the board determines.
The board, however, may accelerate the vesting of the restricted stock.

                                       49
<PAGE>

    Other Provisions. Transactions not involving our receipt of consideration,
including a merger, consolidation, reorganization, stock dividend, and stock
split, may change the class and number of shares subject to the incentive plan
and to outstanding awards. In that event, the board will appropriately adjust
the incentive plan for the class and the maximum number of shares subject to
the incentive plan, to the cap on the number of shares available for incentive
stock options, and to the Section 162(m) limit. It also will adjust outstanding
awards for the class, number of shares and price per share subject to the
awards.

    If a change in control happens, the surviving entity may either assume or
replace outstanding awards under the incentive plan. If this does not occur,
then generally the vesting and exercisability of the awards will accelerate,
and unexercised awards will terminate immediately before the event. A change in
control includes the following:

  .  A dissolution, liquidation or sale of all or substantially all of our
     assets.

  .  A merger or consolidation in which we are not the surviving
     corporation.

  .  A reverse merger in which we are the surviving corporation but the
     shares of our common stock outstanding immediately preceding the merger
     are converted by virtue of the merger into other property.

  .  After this initial public offering, generally the acquisition by any
     person, entity or group of the beneficial ownership of our securities
     representing at least 50% of the combined voting power permitted to
     vote in the election of directors.

    If there is a change in control, other than a merger or consolidation for
the purpose of a change in domicile, then for options held by persons then
performing services as an employee or director of, or consultant to, us, the
vesting of the option will be accelerated by one year.

    Stock Awards Granted. As of December 31, 1999, we had issued

  .  1,040,504 shares upon the exercise of options under the incentive plan

  .  options to purchase 7,773,658 shares at a weighted average exercise
     price of $1.82 per share were outstanding and

  .  898,276 shares remained available for future grant.

    As of December 31, 1999, the board had not granted any stock bonuses or
restricted stock under the incentive plan.

    Plan Termination. The incentive plan will terminate in 2009 unless the
board terminates it sooner.

 1999 Non-Employee Directors' Stock Option Plan.

    Our board adopted the 1999 non-employee directors' stock option plan on
November 30, 1999. Our stockholders approved the plan on December 31, 1999. The
directors' plan provides for the automatic grant to our non-employee directors
of options to purchase shares of our common stock.

    Share Reserve. We have reserved a total of 700,000 shares of our common
stock for issuance under the directors' plan. On October 1 of each year for 10
years, starting on October 1, 2000, the share reserve will automatically be
increased by a number of shares equal to the greater of:

  .  0.5% of our outstanding shares on a fully-diluted basis, or

  .  that number of shares subject to options granted under the directors'
     plan during the prior 12-month period.

    However, the automatic increase is subject to reduction by the board. If an
option holder does not purchase the shares subject to their option before the
option expires or terminates, the shares that are not purchased again become
available for issuance under the directors' plan.

                                       50
<PAGE>

    Administration. The board administers the directors' plan. The board has
the authority to construe, interpret and amend the directors' plan but the
directors' plan specifies the essential terms of the options, including:

  .  the option recipients;

  .  the grant dates;

  .  the number of shares subject to the option;

  .  the exercisability and vesting of the option;

  .  the exercise price; and

  .  the type of consideration.

    Eligibility. We automatically will issue options to our non-employee
directors under the directors' plan as follows:

  .  Each person who is an non-employee director on the effective date of
     this offering or who is first elected or appointed after the date of
     the prospectus as a non-employee director will automatically receive an
     initial option for 25,000 shares. The initial option is exercisable
     immediately but will vest at the rate of 25% of the shares on the first
     anniversary of the grant date and monthly over the next three years.

  .  In addition, on the day after each of our annual meetings of the
     stockholders, starting with the annual meeting in 2001, each non-
     employee director will automatically receive an annual option for 7,500
     shares. The annual option is exercisable immediately but will vest
     monthly over the next year. If the non-employee director is appointed
     to the board after the annual meeting, the annual option will be
     adjusted based on the time actually served by the director.

  .  Finally, on the day after each of our annual meetings of the
     stockholders, starting with the annual meeting in 2001, each non-
     employee director who is serving on a board committee will
     automatically receive a committee option for 5,000 shares. The
     committee option is exercisable immediately but will vest monthly over
     the next year. If the non-employee director is appointed to the
     committee after the annual meeting, the committee option will be pro
     rated.

    As long as the option holder continues to serve with us, whether in the
capacity of a director, an employee or a consultant, the option will continue
to vest and be exercisable during its term. When the option holder's service
terminates, we will have the right to repurchase any unvested shares at the
original exercise price, without interest.

    Option Terms. Options have an exercise price equal to 100% of the fair
market value of our common stock on the grant date. The option term is 10 years
but it terminates three months after the option holder's service terminates. If
this termination is due to the option holder's disability, the post-termination
exercise period is extended to 12 months. If this termination is due to the
option holder's death or if the option holder dies within three months after
their service terminates, the post-termination exercise period is extended to
18 months following death.

    The option holder may transfer the option by gift to immediate family or
for estate-planning purposes. The option holder also may designate a
beneficiary to exercise the option following the option holder's death.
Alternatively, the option exercise rights will pass by the option holder's will
or by the laws of descent and distribution.

    Other Provisions. Transactions not involving our receipt of consideration,
including a merger, consolidation, reorganization, stock dividend, and stock
split, may change the class and number of shares subject to the directors' plan
and to outstanding options. In that event, the board will appropriately adjust
the directors' plan for the class and the maximum number of shares subject to
the directors' plan and to the automatic option grants. It also will adjust
outstanding options for the class, number of shares and price per share subject
to the options.

                                       51
<PAGE>

    If a change in control happens, the surviving entity may either assume or
replace outstanding options under the directors' plan. If this does not occur,
then generally the vesting of the options will accelerate, and unexercised
options will terminate immediately before the event. A change in control
includes the following:

  .  A dissolution, liquidation or sale of all or substantially all of our
     assets.

  .  A merger or consolidation in which we are not the surviving
     corporation.

  .  A reverse merger in which we are the surviving corporation but the
     shares of our common stock outstanding immediately preceding the merger
     are converted by virtue of the merger into other property.

  .  Generally the acquisition by any person, entity or group of the
     beneficial ownership of our securities representing at least 50% of the
     combined voting power permitted to vote in the election of directors.

    If there is a change in control, other than a merger or consolidation for
the purpose of a change in domicile, then for options held by persons then
performing services as an employee or director of, or consultant to, us, the
vesting of the option will be accelerated by one year.

    Options Issued. The directors' plan will not be effective until the
effective date of this offering. We have not issued any options under the
directors' plan.

    Plan Termination. The directors' plan has no set termination date.

 1999 Employee Stock Purchase Plan

    Our board adopted the 1999 employee stock purchase plan on November 30,
1999. Our stockholders approved the plan on December 31, 1999.

    Administration. The board administers the purchase plan unless it delegates
administration to a committee. The board or this committee has the authority to
construe, interpret and amend the purchase plan and determine the terms of
rights granted under the purchase plan.

    Share Reserve. We reserved 2,000,000 shares of our common stock for
issuance to eligible employees with purchase rights under the purchase plan. On
October 1 of each year for 10 years, starting on October 1, 2000, the share
reserve will automatically be increased by a number of shares equal to the
greater of:

  .  2% of our outstanding shares on a fully-diluted basis; or

  .  that number of shares issued under the purchase plan during the prior
     12-month period.

    However, the automatic increase is subject to reduction by the board, and
no more than 13,000,000 shares of the share reserve, as increased, may be used
under the purchase plan.

    Eligibility. The purchase plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code.
The purchase plan provides a means by which eligible employees may purchase our
common stock through payroll deductions. We implement the purchase plan by
offerings of purchase rights to eligible employees. Generally, all of our full-
time employees in the United States and in the United Kingdom who have been
employed for at least 10 days may participate in offerings under the purchase
plan. However, no employee may participate in the purchase plan if immediately
after we grant the employee a purchase right, the employee has voting power
over 5% or more of our outstanding capital stock.

    Offerings. Under the purchase plan, the board may specify offerings of up
to 27 months. Unless the board determines differently, common stock is
purchased for accounts of participating employees at a price per share equal to
the lower of:

  .  85% of the fair market value of a share on the first day of the
     offering; or

  .  85% of the fair market value of a share on the purchase date.

                                       52
<PAGE>

    The first offering will begin on the effective date of this offering, and
we will offer shares registered on a Form S-8 registration statement. The fair
market value of the shares on the first date of this offering will be the price
per share at which our shares are first sold to the public as specified in the
final prospectus for this offering. Otherwise, fair market value generally
means the closing sales price, rounded up where necessary to the nearest whole
cent, for these shares, or the closing bid, if no sales were reported, as
quoted on the Nasdaq National Market on the last trading day before the
relevant determination date, as reported in The Wall Street Journal.

    The board may provide that employees who become eligible to participate
after the offering period begins nevertheless may enroll in the offering. These
employees will purchase our stock at the lower of:

  .  85% of the fair market value of a share on the day they began
     participating in the purchase plan; or

  .  85% of the fair market value of a share on the purchase date.

    Participating employees may authorize payroll deductions of up to 15% of
their compensation for the purchase of stock under the purchase plan. Employees
may end their participation in the offering before a purchase period ends.
Their participation ends automatically on termination of their employment.

    Other Provisions. The board may grant eligible employees purchase rights
under the purchase plan only if the purchase rights together with any other
purchase rights granted under other employee stock purchase plans established
by us or by our affiliates, if any, do not permit the employee's rights to
purchase our stock to accrue at a rate which exceeds $25,000 of fair market
value of our stock for each calendar year in which the purchase rights are
outstanding.

    Upon a change in control, the board may provide that the successor
corporation either will assume or replace outstanding purchase rights.
Alternatively, the board may shorten the ongoing offering period and provide
that our stock will be purchased for the participants immediately before the
change in control.

    Shares Issued. The purchase plan will not be effective until the effective
date of this initial public offering of our stock. Therefore, as of the date of
this prospectus, no shares of common stock have been purchased under the
purchase plan.

    Plan Termination. The purchase plan has no set termination date.

401(k) Plan

    We have established the Chordiant corporation retirement savings plan
effective January 1, 1996. The 401(k) plan is intended to qualify under Section
401 of the Code so that contributions by employees or by Chordiant, and income
earned, are not taxable until withdrawn and so that contributions by us will be
deductible by us when made. The 401(k) plan provides that each participant may
reduce their pre-tax gross compensation by up to 15%, up to a statutorily
prescribed annual limit of $10,000 in 1999, and have that amount contributed to
the 401(k) plan. Employees become eligible to participate in the 401(k) plan
upon commencement of their employment with Chordiant. Participants are fully
vested in all amounts they contribute under the 401(k) plan and in the earnings
on the contributed amounts.

    In addition to the employee salary deferrals described above, the 401(k)
plan requires us to make contributions under the 401(k) plan on behalf of the
participants. These contributions include a matching contribution of up to
$1,500 per year of salary deferred contributions made by each participant. The
employer contributions to the 401(k) plan each year will be divided among
participants in the ratio that each participant's compensation bears to the
compensation of all participants. Participants become vested in matching
contributions and employer contributions according to a graded vesting schedule
under which they become fully vested after five years of service with
Chordiant.

                                       53
<PAGE>

    Employee participants may elect to invest their accounts under the 401(k)
plan in various established funds.

Limitations On Directors' And Executive Officers' Liability And
Indemnification

    Our amended and restated certificate of incorporation and amended and
restated bylaws contain provisions permitted under Delaware law relating to
the liability of directors and officers.

    These provisions eliminate a director's personal liability for monetary
damages resulting from a breach of fiduciary duty, except in circumstances
involving wrongful acts, including:

  .  for any breach of the directors' 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;

  .  for any acts under Section 174 of the Delaware General Corporation Law;
     or

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

These provisions do not limit or eliminate our rights or any stockholder's
rights to seek non-monetary relief, including an injunction or rescission, if
a director breaches a fiduciary duty. These provisions will not alter a
director's liability under federal securities laws.

    In addition, we intend to enter into separate indemnification agreements
with our directors and executive officers that provide each of them
indemnification protection if the amended and restated certificate of
incorporation and amended and restated bylaws are subsequently amended. We
believe that these provisions and agreements will assist us in attracting and
retaining qualified individuals to serve as directors and officers.

                                      54
<PAGE>

                           RELATED PARTY TRANSACTIONS

    The following is a description of transactions since January 1, 1997, to
which we have been a party, in which the amount involved in the transaction
exceeds $60,000, and in which any of our directors, executive officers or
holders of more than 5% of the capital stock had or will have a direct or
indirect material interest, other than compensation arrangements that are
described under "Management."

    The following executive officers, directors or holders of more than five
percent of our voting securities purchased securities in the amounts and as of
the date listed below. Option information is as of December 31, 1999.

<TABLE>
<CAPTION>
                                                 Shares of Preferred Stock
                              Common     ---------------------------------------------
                              Stock       Series B   Series C  Series D      Series E
                          -------------- ---------- ---------- ---------    ----------
<S>                       <C>            <C>        <C>        <C>          <C>
Directors and Executive
  Officers
Samuel T. Spadafora(1)..       1,810,150         --         --        --            --
Steven R.
  Springsteel(2)........         473,345         --         --        --            --
Donald J. Morrison(3) ..         607,859         --         --        --            --
Joseph F. Tumminaro(4)
  ......................       5,018,422         --         --        --            --
Steven Sherman(5) ......         400,000         --         --        --            --
Stephen Kelly(6)........         350,000
John Palmer(7) .........         188,046         --         --        --            --
Mitchell Kertzman.......          88,825         --         --        --            --
William Raduchel........          87,500         --         --        --            --
Carol Realini(4) .......       5,018,422         --         --        --            --
Entities Associated with
  Directors
Entities associated with
  Foundation
  Capital(8)............              --    588,235    195,312        --        52,631
Battery Ventures III,
  LP(9).................              --         --    195,312        --        26,316
Other 5% Stockholders
Entities associated with
  Charter Growth
  Capital(10)...........              --         --         -- 2,000,000            --
First Plaza Trust(11)...              --         --         --        --     3,947,368
MCI Systemhouse
  Corp.(12).............              --         --  2,421,875        --            --
Norwest Venture Partners
  VI LP.................              --  2,073,529    195,312        --        52,631
Orchid/T. Rowe Threshold
  III...................              --    470,588    351,562        --       263,158
Vertex Investment II
  Ltd.(13)..............              --  1,175,625    390,624        --       131,579

  Price per share.......  $0.04 to $4.00      $1.70      $2.56          (9)      $3.80
  Date(s) of purchase...         various     6/1997    12/1997          (9)     9/1999
</TABLE>
- --------
 (1) Consists of:
    .shares held by Mr. Spadafora's children,
    .10,000 shares held by a family trust and
    .1,765,150 shares subject to outstanding options, of which 861,325 shares
    are fully vested.
 (2) Consists of:
    .shares held by Mr. Springsteel's children and
    .463,345 shares subject to outstanding options, of which 211,245 shares are
    fully vested.
 (3) Consists of:
    .shares held by trusts for the benefit of Mr. Morrison's children and
    .592,859 shares subject to outstanding options, of which 266,866 shares are
    fully vested.
 (4) The common stock held by Mr. Tumminaro and Ms. Realini consists of:
  .  4,970,000 shares held in a family trust and trusts for the benefit of
     Mr. Tumminaro and Ms. Realini's children

                                       55
<PAGE>

   .  26,026 shares subject to outstanding options held by Mr. Tumminaro, of
      which 23,868 shares are fully vested and
   .  22,396 shares subject to outstanding options held by Ms. Realini, of
      which 21,802 shares are fully vested.
 (5) Consists of:
   .  100,000 shares of common stock held by Mr. Sherman, all of which are
      subject to a right of repurchase in favor of Chordiant if Mr. Sherman
      terminates his services as an employee and
   .  300,000 shares subject to an outstanding option, none of which are
      vested.
 (6) Consists of 350,000 shares subject to outstanding options, of which
     99,999 shares are vested.
 (7) Consists of 188,046 shares subject to outstanding options, all of which
     shares are fully vested. In August 1999, Mr. Palmer resigned as our
     executive vice president, engineering and is no longer an officer of
     Chordiant.
 (8) Kathryn C. Gould, one of our directors, is a managing member of
     Foundation Capital Management, LLC, which is the general partner and
     managing member of Foundation Capital, LP and Foundation Capital
     Entrepreneurs Fund LLC.
 (9) Oliver D. Curme, one of our directors, is a general partner of, Battery
     Partners III LP, which is the sole general partner of Battery Ventures
     III, LP.
(10) Consists of:
   .  a convertible debenture held by Charter Growth Capital, L.P.
      convertible into 560,000 shares of series D preferred stock,
   .  a convertible debenture held by CGC Investors, L.P. convertible into
      35,000 shares of series D preferred stock,
   .  and a convertible debenture held by Charter Growth Capital
      Co-Investment Fund, L.P. convertible into 1,405,000 shares of series D
      preferred stock.
    The conversion price of the debentures is $5.00 per share. The debentures
    were purchased in April 1999.
(11) The Chase Manhattan Bank acts as the trustee for First Plaza Group Trust,
     a trust for the benefit of employee benefit plans of General Motors
     Corporation. These shares may be considered to be owned beneficially by
     General Motors Investment Management Corporation, a wholly owned
     subsidiary of General Motors. General Motors Investment Management is
     serving as the trust's investment manager for these shares and in that
     capacity it has the sole power to direct the trustee on the voting and
     disposition of these shares. Because of the trustee's limited role,
     beneficial ownership of the shares by the trustee is disclaimed.
(12) MCI Systemhouse was acquired by Electronic Data Systems Corporation in
     April 1999.
(13) Consists of:
   .  130,625 shares of series B preferred stock held by HWH Investment PTE,
      Ltd.,
   .  522,500 shares of series B preferred stock and 195,312 shares of series
      C preferred stock held by Vertex Asia Ltd., and
   .  522,500 shares of series B preferred stock, 195,312 shares of series C
      preferred stock and 131,579 shares of series E preferred stock held by
      Vertex Investments II Ltd.

    Chordiant and the preferred stockholders described above have entered into
an agreement giving preferred stockholders and holders of our convertible
debentures registration rights for their shares of common stock following this
offering. Upon the completion of this offering, all shares of our outstanding
preferred stock and convertible debentures will be automatically converted
into an equal number of shares of common stock.

    We intend to enter into indemnification agreements with our directors and
officers for the indemnification of and advancement of expenses to these
persons to the full extent permitted by law. We also intend to execute these
agreements with our future directors and officers.

    As described in the table above, in December 1997 we issued to MCI
Systemhouse Corp. shares of our series C preferred stock. At that time we also
entered into a license agreement for our product, under which

                                      56
<PAGE>


MCI Systemhouse prepaid $6 million of license fees. In April 1999 MCI
Systemhouse was acquired by Electronic Data Systems Corporation and the shares
of our stock held by MCI Systemhouse were transferred to Electronic Data
Systems. MCI's right to distribute and license our software, including the
prepayment arrangement, was still in effect at the time of Electronic Data
Systems' acquisition of MCI. Following the acquisition, Chordiant and
Electronic Data Systems agreed that the agreement with MCI Systemhouse would no
longer be in effect. EDS may generally receive the following discounts from our
list price under the agreement:


<TABLE>
<S>                       <C>
  . product purchases     35%
  . services              20%
  . educational services  25%
</TABLE>

The rate for products used internationally is increased 15% from the discounted
rate above.

    Before to the acquisition by Electronic Data Systems of MCI Systemhouse, in
July 1998, we entered into an unrelated license agreement with Electronic Data
Systems that allows Electronic Data Systems to license Chordiant's product and
services for its internal use and to sublicense our product to its customers.
The license under the agreement is worldwide and non-exclusive and Chordiant
provides to Electronic Data Systems under the agreement warranties concerning
the product and indemnification for infringement. Electronic Data Systems paid
Chordiant $1,325,000 under this license agreement in 1998 and was obligated to
pay $6,607,000 in 1999. The amounts payable in 1999 were credited against the
$6 million prepayment made to Chordiant by MCI Systemhouse under the previous
license agreement between Chordiant and MCI Systemhouse. As a result, Chordiant
only received $607,000 in actual cash payments from Electronic Data Systems in
1999. The license agreement with Electronic Data Systems was signed nine months
before the date that Electronic Data Systems became a principal stockholder of
Chordiant. Chordiant believes that the terms of the Electronic Data Systems
license are a result of an arm's length business negotiation and do not reflect
negotiations with a related party.

    Carol Realini entered into a separation agreement with Chordiant dated
December 9, 1998 terminating her employment with us as president and chief
executive officer effective December 31, 1998. From January 1, 1999 until
January 1, 2000, we continued to pay Ms. Realini's base salary and car
allowance. Her option to purchase 20,373 shares of common stock was fully
vested as of November 30, 1998. Her second option to purchase 2,023 shares of
common stock shall continue to vest while she serves as a member of our board
of directors.

    John Palmer entered into a separation agreement with Chordiant dated August
23, 1999 terminating his employment with us as executive vice president,
engineering effective August 26, 1999. From his separation date until February
26, 2000, we have agreed to pay Mr. Palmer's base salary. Mr. Palmer is not
eligible for further vesting of his options after August 26, 1999, but has the
right to exercise the options that are vested for a period of up to ninety days
after February 26, 2000.

    Options granted to our directors, executive officers and employees are
immediately exercisable for both vested an unvested shares, with unvested
shares being subject to a right of repurchase in our favor if termination of
employment occurs before the vesting of all the shares. The following
individuals have elected to pay the exercise price for some of their
outstanding options with full recourse promissory notes secured by the common
stock underlying the options. The notes bear interest at 5.74% to 5.88% per
year, and interest payments on the notes are due and payable annually on the
anniversary date of the note. Unpaid principal and interest on the notes are
due and payable immediately upon termination of the participant's employment
with us, or two years after the date of the promissory note. As of February 7,
2000, the original and outstanding aggregate principal amounts of the
promissory notes executed by each executive officer in favor of Chordiant are
listed below.

<TABLE>
<CAPTION>
                                                                    Aggregate
                                                                   Original and
                                                                   Outstanding
   Executive Officer                                               Note Amount
   -----------------                                               ------------
   <S>                                                             <C>
   Samuel T. Spadafora............................................   $276,800
   Steven R. Springsteel .........................................   $197,723
   Donald J. Morrison.............................................   $ 68,906
   Steven Sherman.................................................   $400,000
</TABLE>

    All future transactions, including loans, between us and our officers,
directors and principal stockholders will be approved by a majority of the
board of directors, including a majority of the independent and disinterested
directors.

                                       57
<PAGE>

                             PRINCIPAL STOCKHOLDERS

    The following table provides information about the beneficial ownership of
our common stock as of December 31, 1999, and as adjusted to reflect the sale
of our common stock offered by this prospectus, by:

  .  each of the individuals listed in the Summary Compensation Table;

  .  each of our directors;

  .  each person, or group of persons, who is known by us to own
     beneficially 5% or more of our common stock; and

  .  all current directors and executive officers as a group.

    Beneficial ownership is calculated based upon the rules of the Securities
and Exchange Commission. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares of common stock
subject to options held by that person that are currently exercisable or
exercisable within 60 days of December 31, 1999 are considered outstanding.
These shares, however, are not considered outstanding for the purposes of
computing the percentage ownership of any other person. Except as indicated in
the footnotes to this table or as a result of applicable community property
laws, each stockholder named in the table has sole voting and investment power
to the shares shown as beneficially owned by them.

    Applicable percentage ownership in the following table is based on
30,318,295 shares of common stock outstanding as of December 31, 1999, after
giving effect to the conversion of all outstanding shares of preferred stock
and convertible debentures into common stock upon the closing of the offering
and 34,818,295 shares of common stock outstanding immediately following
completion of the offering. This table assumes no exercise of the underwriters'
over-allotment options. Unless otherwise indicated, the address of each of the
individuals named below is: c/o Chordiant Software, Inc., 20400 Stevens Creek
Blvd, Suite 400, Cupertino, California 95014.

<TABLE>
<CAPTION>
                                  Beneficial Ownership   Beneficial Ownership
                                  Before the Offering     After the Offering
                                 ---------------------- ----------------------
Name of Beneficial Owner           Shares   Percent (%)   Shares   Percent (%)
- ------------------------         ---------- ----------- ---------- -----------
<S>                              <C>        <C>         <C>        <C>
Directors, Executive Officers:
Samuel T. Spadafora(1).........   1,810,150     5.64     1,810,150     4.95
Steven R. Springsteel(2).......     473,343     1.54       473,343     1.34
Donald J. Morrison(3)..........     607,858     1.97       607,858     1.72
Joseph F. Tumminaro(4).........   5,018,422    16.53     5,043,422    14.45
Steven Sherman(5)..............     400,000     1.31       400,000     1.14
Stephen Kelly(6)...............     350,000     1.14       350,000     1.00
John Palmer(7).................     188,046     0.62       188,046     0.54
Oliver D. Curme(8).............   2,501,263     8.25     2,526,263     7.26
Kathryn C. Gould(9)............   3,115,813    10.28     3,140,813     9.02
Mitchell Kertzman(10)..........      88,825     0.29       113,825     0.33
Robert S. McKinney(11).........           0     0.00        25,000     0.07
William Raduchel(12)...........      87,500     0.29       112,500     0.32
David R. Springett(13).........           0     0.00        25,000     0.07
Carol L. Realini(4)............   5,018,422    16.53     5,043,422    14.45
All directors and officers as a
  group(14)....................  14,641,223    42.81    14,816,223    38.11

Five Percent Stockholders:
First Plaza Group Trust(15)....   3,947,368    13.02     3,947,368    11.34
  The Chase Manhattan Bank
  3 Chase Metrotech Center
  7th Floor
  Brooklyn, NY 11245
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>
                                     Beneficial Ownership  Beneficial Ownership
                                      Before the Offering   After the Offering
                                     --------------------- ---------------------
Name of Beneficial Owner              Shares   Percent (%)  Shares   Percent (%)
- ------------------------             --------- ----------- --------- -----------
<S>                                  <C>       <C>         <C>       <C>
Entities associated with Foundation
  Capital, L.P(16).................  3,115,813    10.28    3,115,813    9.02
  70 Willow Road
  Suite 200
  Menlo Park, CA 94025
Orchid & Co., nominee for T. Rowe
  Price Threshold Fund III, L.P....  2,605,065     8.59    2,605,065    7.48
  100 East Pratt Street
  Baltimore, MD 21202
Battery Ventures III, L.P..........  2,501,263     8.25    2,501,263    7.26
  20 William Street
  Suite 200
  Wellesley, MA 02481
Electronic Data Systems
  Corporation......................  2,421,875     7.99    2,421,875    6.96
  5400 Legacy Drive
  Plano, TX 75024
Norwest Venture Partners VI,
  LP(17)...........................  2,321,472     7.66    2,321,472    6.67
  245 Lytton Avenue
  Suite 250
  Palo Alto, CA 94301
Entities associated with Charter
  Growth Capital(18)...............  2,000,000     6.60    2,000,000    5.74
  525 University Avenue
  Suite 1500
  Palo Alto, CA 94301
Entities associated with Vertex
  Investment II(19)................  1,697,828     5.60    1,697,828    4.88
  Three Lagoon Drive
  Suite 220
  Redwood City, CA 94065
</TABLE>
- --------

 (1) Consists of:
   .  shares held by Mr. Spadafora's children,
   .  10,000 shares held by a family trust and
   .  1,765,150 shares subject to an outstanding option, of which 861,325
      shares are vested.

 (2) Consists of:
   .  shares held by Mr. Springsteel's children and
   .  463,345 shares subject to outstanding options, of which 211,245 shares
      are vested.

 (3) Consists of:
   .  shares held by trusts for the benefit of Mr. Morrison's children and
   .  592,859 shares subject to outstanding options, of which 266,866 shares
      are vested.

 (4) The common stock held by Mr. Tumminaro and Ms. Realini consists of:
   .  4,970,000 shares held by a family trust and trusts for the benefit of
      Mr. Tumminaro and Ms. Realini children
   .  26,026 shares subject to outstanding options held by Mr. Tumminaro, of
      which 23,868 shares are fully vested
   .  22,396 shares subject to outstanding options held by Ms. Realini, of
      which 21,802 shares are fully vested and
   .  25,000 shares subject to an outstanding option that will be
      automatically granted to Ms. Realini upon completion of the offering,
      none of which are vested.-
    A trust for the benefit of the family of Mr. Tumminaro and Ms. Realini and
    a trust for the benefit of the children of Mr. Tumminaro and Ms. Realini
    have granted an option to the underwriters to purchase up to aggregate of
    250,000 shares of common stock to cover over-allotments.


                                      59
<PAGE>

 (5) Consists of:
   .  100,000 shares of common stock held by Mr. Sherman, all of which are
      subject to a right of repurchase in favor of Chordiant if Mr. Sherman
      terminates his services as an employee
   .  300,000 shares are subject to an outstanding option, none of which are
      vested.

 (6) Consists of 350,000 shares subject to outstanding options, of which
     99,999 shares are vested.

 (7) Consists of 188,046 shares subject to outstanding options, all of which
     shares are fully vested. In August 1999, Mr. Palmer resigned as our
     executive vice president, engineering and is no longer an officer of
     Chordiant.

 (8) Consists of 25,000 shares subject to an outstanding option that will be
     automatically granted to Mr. Curme upon completion of the offering, none
     of which are vested. Mr. Curme is a general partner of Battery Ventures
     III, L.P, which is the sole general partner of Battery Ventures III LP.
     Mr. Curme disclaims beneficial ownership of the shares held by these
     entities except to the extent of his proportionate partnership interest
     in these entities.

 (9) Consists of 25,000 shares subject to an outstanding option that will be
     automatically granted to Ms. Gould upon completion of the offering, none
     of which are vested. Ms. Gould is a managing member of Foundation Capital
     Management, LLC, which is the general partner and managing member of
     Foundation Capital, LP and Foundation Capital Entrepreneurs Fund LLC. She
     disclaims beneficial ownership of the shares held by the entities
     associated with Foundation Capital, except to the extent of her financial
     interest in these entities.

(10) Consists of:
   .  88,825 shares subject to an outstanding option, of which 62,917 shares
      are vested and
   .  25,000 shares subject to an outstanding option that will be
      automatically granted to Mr. Kertzman upon completion of the offering,
      none of which are vested.

(11) Consists of 25,000 shares subject to an outstanding option that will be
     automatically granted upon completion of the offering, none of which are
     vested.

(12) Consists of 87,500 shares subject to an outstanding option, of which
     29,166 shares are vested.

(13) Consists of 25,000 shares subject to an outstanding option that will be
     automatically granted upon completion of the offering, none of which are
     vested.

(14) Includes shares described in the notes above, as applicable.

(15) The Chase Manhattan Bank acts as the trustee for First Plaza Group Trust.
     These shares may be considered to be owned beneficially by General Motors
     Investment Management, a wholly owned subsidiary of General Motors.
     General Motors Investment Management is serving as the trust's investment
     manager for these shares and in that capacity it has the sole power to
     direct the trustee about the voting and disposition of these shares.
     Because of the trustee's limited role, beneficial ownership of the shares
     by the trustee is disclaimed.

(16) Consists of:
   .  260,724 shares held by Foundation Capital Entrepreneurs LLC and
   .  2,802,458 shares held by Foundation Capital LP.

    Foundation Capital Management, LLC is the managing member of Foundation
    Capital Entrepreneurs Fund, LLC and is the general partner of Foundation
    Capital, LP. Ms. Gould is a director of Chordiant and disclaims beneficial
    ownership of the shares held by these Foundation Capital entities, except
    to the extent of her financial interest as a member of Foundation Capital
    Management, LLC.

(17) The sole general partner of Norwest Venture Partners VI, LP is Itasca VC
     Partners VI, LLP, whose managing partner is George Still and whose
     managing administrative partner is John Whaley. All voting and investment
     power of these shares is held solely by Norwest Venture Partners VI, LP
     acting by and through Itasca VC Partners VI and its managing partner and
     managing administration partner.

                                      60
<PAGE>

(18) Consists of:
   .  a convertible debenture held by Charter Growth Capital, L.P.
      convertible into 560,000 shares of series D preferred stock,
   .  a convertible debenture held by CGC Investors, L.P. convertible into
      35,000 shares of series D preferred stock and
   .  a convertible debenture held by Charter Growth Capital Co-Investment
      Fund, L.P. convertible into 1,405,000 shares of series D preferred
      stock.

(19) Consists of:
   .  130,625 shares held by HWH Investment PTE, Ltd.,
   .  717,812 shares held by Vertex Asia Ltd., and
   .  849,391 shares held by Vertex Investments II Ltd.

                                       61
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

    Our authorized capital stock consists of 300,000,000 shares of common
stock, and 51,000,000 shares of preferred stock. There were 30,318,295 shares
of our common stock outstanding as of December 31, 1999, held by 114
stockholders, after giving effect to the conversion of our preferred stock and
convertible debentures into common stock.

Common Stock

    The holders of our common stock are permitted to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding shares of preferred stock, holders of common
stock are allowed to receive dividends as may be declared by the board of
directors out of funds legally available in proportion to their stockholdings.
If we liquidate, dissolve or wind up, holders of common stock are allowed to
share in proportion to their stockholdings in all assets remaining after
payment of liabilities and the liquidation preferences of any outstanding
shares of preferred stock. Holders of common stock have no preemptive,
conversion, or subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are, and all shares of common stock to be outstanding upon completion of
this offering will be, fully paid and nonassessable.

Preferred Stock

    Under our amended and restated certificate of incorporation, our board has
the authority, without further action by stockholders, to issue up to
51,000,000 shares of preferred stock in one or more series and to fix the
rights, preferences, privileges, qualifications and restrictions granted to or
imposed upon preferred stock, including dividend rights, conversion rights,
voting rights, rights and terms of redemption, liquidation preference and
sinking fund terms, any or all of which may be greater than the rights of the
common stock. The issuance of preferred stock could reduce the voting power of
holders of common stock and reduce the likelihood that the holders of common
stock will receive dividend payments and payments upon liquidation. This
issuance could have the effect of decreasing the market price of the common
stock. The issuance of preferred stock could also have the effect of delaying,
deterring or preventing a change in control of Chordiant. We have no present
plans to issue any shares of preferred stock.

Registration Rights

    Upon completion of this offering and subject to contractual limitations,
the holders of 24,412,193 shares of common stock will have rights to register
these shares under the Securities Act. If we propose to register any of our
securities under the Securities Act, either for our own account or for the
account of other securityholders, the holders of these shares will receive
notice of the registration and will be allowed to include, at our expense,
their shares of common stock. The holders of these shares may also require us,
at our expense and on not more than two occasions at any time beginning on the
later of September 28, 2000 or six months from the date of the closing of this
offering, to file a registration statement under the Securities Act for their
shares of common stock, and we will be required to use our best efforts to
effect the registration. Further, the holders may require us, at our expense,
to register their shares on Form S-3 when this form becomes available to us.
These rights terminate six years after the effective date of this offering.

Delaware Anti-Takeover Law

    Statutory Business Combination Provision. We are subject to Section 203 of
the Delaware General Corporation Law. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years following the date
that the stockholder became an interested stockholder unless:

  .  before that date, the board of directors approved either the business
     combination or the transaction that resulted in the stockholder
     becoming an interested stockholder;

                                       62
<PAGE>

  .  upon consummation of the transaction that resulted in the stockholder
     becoming an interested stockholder, the interested stockholder owned at
     least 85% of the voting stock of the corporation outstanding at the
     time the transaction commenced; or

  .  on or after that date, the business combination is approved by the
     board of directors and authorized at a meeting of stockholders, by the
     vote of at least two-thirds of the outstanding voting stock that is not
     owned by the interested stockholder.

    In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person associated with or controlling or
controlled by the entity or person.

  Section 203 defines business combination to include:

  .  any merger involving the corporation and the interested stockholder;

  .  any sale or other transfer involving the interested stockholder of 10%
     or more of the assets of the corporation;

  .  any transaction that results in the issuance or transfer by the
     corporation of any stock of the corporation to the interested
     stockholder; or

  .  the receipt by the interested stockholder of the benefit of any loans,
     or other financial benefits provided by or through the corporation.

Charter and Bylaw Protections

    Our amended and restated certificate of incorporation provides that any
action required or permitted to be taken by our stockholders must be effected
at a duly called annual or special meeting of stockholders and may not be
effected by any consent in writing. In addition, our amended and restated
bylaws provide that special meetings of our stockholders may be called only by
the chairman of the board of directors, the chief executive officer or the
board of directors by a resolution adopted by a majority of the total number of
authorized directors, or by the holders of 50% of our outstanding voting stock.
Furthermore, our amended and restated certificate requires the advance notice
of stockholders' nominations for the election of directors and business brought
before a meeting of stockholders.

    Our amended and restated certificate specifies that our board of directors
will be classified into three classes of directors. Under Delaware law,
directors of a corporation with a classified board may be removed only for
cause unless the corporation's certificate of incorporation provides otherwise.
Our amended and restated certificate does not provide otherwise. In addition,
the amended and restated certificate specifies that the authorized number of
directors may be changed only by resolution of the board of directors and
excludes cumulative voting for directors. Under cumulative voting, a minority
stockholder holding a sufficient percentage of a class of shares may be able to
ensure the election of one or more directors. Our amended and restated
certificate provides that a majority of the directors in office, even if less
than a quorum, can fill vacancies created by resignation, death,
disqualification, removal or by an increase in the size of the board.

    Some provisions of our amended and restated certificate may only be amended
with the approval of 66 2/3% of our outstanding voting stock and our amended
and restated bylaws may be amended only by the board or by the approval of 66
2/3% of our outstanding voting stock.

    These provisions contained in our amended and restated certificate and our
amended and restated bylaws could delay or discourage some types of
transactions involving an actual or potential change in control of Chordiant or
its management, which includes transactions in which stockholders might
otherwise receive a

                                       63
<PAGE>

premium for their shares over then current prices. They may also limit the
ability of stockholders to remove our current management or approve
transactions that stockholders may consider to be in their best interests and,
therefore, could adversely affect the price of our common stock.

Transfer Agent And Registrar

    The transfer agent and registrar for our common stock is BankBoston, N.A.
Its telephone number is (781) 575-3120.

                                       64
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

    Before this offering, there has been no public market for our common stock.
Future sales of substantial amounts of our common stock in the public market
could reduce our price. Since, other than the shares offered in this offering,
no shares will be available for sale shortly after this offering because of
contractual and legal restrictions on resale as described below, sales of large
amounts of our common stock in the public market after these restrictions lapse
could reduce our stock's market price and our ability to raise equity capital.

    Upon completion of this offering, we will have outstanding an aggregate of
34,818,295 shares of common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options after December 31,
1999. Of these shares, all of the shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
unless these shares are purchased by directors, officers or owners of ten
percent or more of our stock. The remaining 30,094,801 shares of common stock
are restricted securities. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
described below under Rules 144, 144(k) or 701 under the Securities Act.

    As a result of the contractual restrictions described below and the
provisions of Rules 144, 144(k) and 701, the restricted shares will be
available for sale in the public market as follows:

  .  no shares will be eligible for sale before 180 days from the date the
     registration statement of which this prospectus is a part is declared
     effective;

  .  24,109,283 shares will be eligible for sale upon the expiration of the
     lock-up agreements described below 180 days after the date this
     offering is declared effective;

  .  5,963,155 shares will be eligible for sale at various times after the
     expiration of the lock-up agreements described below 180 days after the
     date this offering is declared effective; and

  .  2,109,283 shares will be eligible for sale upon the exercise of vested
     options 180 days after the date this offering is declared effective.

Lock-Up Agreements

    Our officers, directors, and stockholders have agreed, subject to some
exclusions, not to transfer or dispose of any shares of our common stock or any
securities convertible into shares of our common stock. This restriction will
be applicable until 180 days after the date this offering is declared
effective. Transfers can be made sooner in certain circumstances or with the
prior written consent of FleetBoston Robertson Stephens Inc.

Rule 144

    In general, under Rule 144 as currently in effect, beginning 90 days after
the date of our public offering, a person who has beneficially owned shares of
our common stock for at least one year, including any directors, officers or
owners of ten percent or more of our stock, can 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 345,948 shares immediately after this offering; or

  .  the average weekly trading volume of the common stock on the Nasdaq
     National Market during the four weeks preceding the filing of a notice
     on Form 144 for the sale.

    Sales under Rule 144 are also subject to other requirements concerning the
manner of sale, notice filing and the availability of current public
information about Chordiant.

Rule 144(k)

    Under Rule 144(k), a person who is not a director, executive officer or
owner of ten percent or more of our stock and was not at any time during the 90
days preceding a sale, and who has beneficially owned the

                                       65
<PAGE>

shares proposed to be sold for at least two years, including the holding period
of any prior owner other than a director, executive officer or 10% stockholder,
is allowed to sell these shares without complying with the manner of sale,
notice filing, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, these shares may be sold immediately upon the
completion of this offering.

Rule 701

    In general, under Rule 701, any Chordiant employee, director, officer,
consultant or advisor who purchases shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of the offering is allowed to resell these shares 90 days after
the effective date of our initial public offering in reliance on Rule 144,
without having to comply with some restrictions, including the holding period,
contained in Rule 144.

    The Securities and Exchanges Commission has indicated that Rule 701 will
apply to stock options granted by an issuer before it becomes subject to the
reporting requirements of the Exchange Act, along with the shares acquired upon
exercise of these options, including exercises after the date of this
prospectus. Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, beginning 90 days
after the date of this prospectus, may be sold by persons other than officers,
directors and 10% stockholders, as defined in Rule 144, subject only to the
manner of sale provisions of Rule 144 and by officers, directors and 10%
stockholders under Rule 144 without compliance with its one-year minimum
holding period requirement.

Registration Rights

    Upon completion of this offering, the holders of 24,412,193 shares of our
common stock will have rights for the registration of their shares under the
Securities Act. Registration of their shares under the Securities Act would
result in the shares becoming freely tradable without restriction under the
Securities Act, except for shares purchased by officers, directors and 10%
stockholders, immediately upon the effectiveness of this offering.

Stock Options

    After this offering, we intend to file a registration statement under the
Securities Act covering the shares of common stock reserved for issuance under
our 1999 equity incentive plan, the 1999 employee stock purchase plan and the
1999 non-employee directors stock option plan. The registration statement is
expected to be filed and become effective as soon as practicable after the
closing of this offering. Shares registered under the registration statements
will, subject to Rule 144 volume limitations applicable to officers, directors
and 10% stockholders and contractual limitations, be available for sale in the
open market, immediately after the effective date of that registration
statement.

                                       66
<PAGE>

                                  UNDERWRITING

    The underwriters named below, acting through their representatives,
FleetBoston Robertson Stephens Inc., Dain Rauscher Incorporated, and Thomas
Weisel Partners LLC, have each agreed with us and the selling stockholders,
subject to the terms and conditions of the underwriting agreement, to purchase
from us the number of shares of common stock listed opposite their names below.
The underwriters are committed to purchase and pay for all of these shares if
any are purchased.

<TABLE>
<CAPTION>
                           Underwriters                         Number of Shares
                           ------------                         ----------------
   <S>                                                          <C>
   FleetBoston Robertson Stephens Inc.........................
   Dain Rauscher Incorporated.................................
   Thomas Weisel Partners LLC.................................
                                                                   ---------
     Total....................................................     4,500,000
                                                                   =========
</TABLE>

    We have been advised by the representatives that the underwriters propose
to offer the shares of common stock to the public at the initial public
offering price of $    per share and to dealers at that price less a concession
of not more than $    per share, of which $    may be allowed to other dealers.
After the initial public offering, these prices may be reduced by the
representatives. This reduction will not change the amount of proceeds to be
received by us or the selling stockholders. The common stock is offered by the
underwriters subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part.

    The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

    Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since
December 1998, Thomas Weisel Partners has been named as a lead or co-manager on
115 filed public offerings of equity securities, of which 82 have been
completed, and has acted as an underwriter in an additional 56 public offerings
of equity securities in which it has not acted as a lead or co-manager. Thomas
Weisel Partners does not have any material relationship with us or any of our
officers, directors or other controlling persons, except for its contractual
relationship with us under the underwriting agreement entered into for this
offering.

    The following table summarizes the compensation to be paid to the
underwriters by Chordiant:

<TABLE>
<CAPTION>
                                             Per Share             Total
                                        ------------------- -------------------
                                         Without    With     Without    With
                                          Over-     Over-     Over-     Over-
                                        allotment allotment allotment allotment
                                        --------- --------- --------- ---------
<S>                                     <C>       <C>       <C>       <C>
Underwriting discounts and commissions
  paid by Chordiant...................    $         $         $         $
Expenses payable by Chordiant.........    $         $         $         $
</TABLE>

    Over-allotment Options. We have granted to the underwriters an option to
purchase up to 425,000 additional shares of common stock at $    per share.
Additionally, a principal stockholder and a family trust for the benefit of the
family of Carol Realini and Joseph Tumminaro, each a director and founder of
Chordiant, and an educational trust for the benefit of the children of Mr.
Tumminaro and Ms. Realini have granted to the underwriters an option to
purchase up to 250,000 additional shares of common stock at $     per share.
Each option is exercisable for 30 days after the date of this prospectus. If
the underwriters exercise either option, each of the underwriters will be
required to purchase the same percentage of additional shares that the number
of shares of common stock to be purchased by it shown in the above table
represents as a percentage of the total number of shares offered.

    If purchased, these additional shares will be sold by the underwriters on
the same terms as those offered by this prospectus. If our option is exercised
we will be required to sell the shares the underwriters choose to purchase
under the option. If the selling stockholders' option is exercised they will be
required to sell the shares the underwriters choose to purchase under the
option. The underwriters are obligated to exercise the selling stockholders'
option in full before exercising their option with us. The underwriters may
exercise these options only to cover over-allotments made for the sale of the
shares of common stock offered in this offering.

                                       67
<PAGE>

    Indemnity. The underwriting agreement contains covenants of indemnity among
the underwriters, Chordiant and the selling stockholders, including indemnity
against liabilities under the Securities Act and liabilities arising from
breaches of representations and warranties contained in the underwriting
agreement.

    Lock-up Agreements. Our officers, directors and stockholders have agreed,
for a period of 180 days after the date of this prospectus, that, subject to
exceptions, they will not offer to sell or transfer any shares of common stock
or any securities convertible into shares of common stock owned as of the date
of this prospectus or, with some exceptions, acquired by them after the date of
this prospectus without the prior written consent of FleetBoston Robertson
Stephens Inc. However, FleetBoston Robertson Stephens Inc. may release all or a
portion of the securities subject to the lock-up agreements. There are no
agreements between the representatives and any of our stockholders providing
consent by the representatives to the sale of shares before the expiration of
the lock-up period other than through this offering.

    Future Sales. We have agreed that until 180 days after the date of this
prospectus, we will not, subject to some exceptions, without the prior written
consent of FleetBoston Robertson Stephens Inc.:

  .  consent to the transfer of any shares of our common stock held by our
     stockholders before the expiration of the lock-up period; or

  .  issue, sell or transfer any shares of our common stock, or any
     securities convertible into our common stock other than

    (1)the sale of shares in this offering,

    (2)the issuance of common stock upon the exercise of outstanding
        options,

    (3)the issuance of options under existing stock option and incentive
        plans, and

    (4)the issuance of up to 3,400,000 shares as a result of future
        acquisitions.

    Listing. Our common stock has been approved for quotation on the Nasdaq
National Market under the symbol CHRD.

    No Prior Public Market. Before this offering, there was no public market
for our common stock. As a result, the initial public offering price for the
common stock offered in this offering will be determined through negotiations
between us and the representatives. We will determine the initial offering
price based on factors including:

  .  prevailing market conditions,

  .  our financial information,

  .  market valuations of other companies that we and the representatives
     believe to be comparable to ours,

  .  estimates of our business potential, and

  .  our present state of development.

    Stabilization. The representatives have advised us that the underwriters
may perform the following transactions.

<TABLE>
 <C>                                             <S>
                   Transaction                                   Description

     stabilizing bid                              a bid for or the purchase of the common
                                                  stock on behalf of the underwriters for
                                                  the purpose of fixing or maintaining the
                                                  price of the common stock.
</TABLE>

                                       68
<PAGE>

<TABLE>
<S>                                            <C>
  syndicate covering transaction               a bid for or the purchase of the common
                                               stock on behalf of the underwriters to
                                               cover a position where the underwriter
                                               has sold shares it did not yet own,
                                               incurred by the underwriters for this
                                               offering.

  penalty bid                                  an arrangement permitting the
                                               representatives to reclaim the selling
                                               concession otherwise payable to an
                                               underwriter for this offering if the
                                               common stock originally sold by the
                                               underwriter is purchased by the
                                               representatives in a syndicate covering
                                               transaction and has therefore not been
                                               effectively placed by the underwriter.
</TABLE>

These transactions may have the effect of stabilizing or maintaining the market
price of the common stock at a level above that which might otherwise prevail
in the open market. The representatives have advised us that these transactions
may be effected on the Nasdaq National Market and, if commenced, may be
discontinued at any time.

    Internet Distribution. The representatives have advised us that a limited
number of shares will be made available to the customers of E*TRADE Securities,
Inc. E*TRADE Securities will make a copy of the prospectus in electronic format
available on its web site located at www.etrade.com. E*TRADE will accept
conditional offers to purchase shares from all of its customers that complete
and pass an online eligibility profile. If demand for shares from the customers
of E*TRADE exceeds the number of shares allocated to it, E*TRADE will use a
random allocation methodology to distribute shares in even lots of 100 shares
per customer. The representatives have advised us that there are no plans to
direct shares to particular internet purchasers.

    Directed share program. At our request, the underwriters have reserved up
to 225,000 shares of common stock at the initial public offering price, to
directors, officers, employees, business associates and related persons of
Chordiant. The number of shares of common stock available for sale to the
general public will be reduced to the extent these persons purchase the
reserved shares. Any reserved shares that are not purchased by the identified
persons will be offered by the underwriters to the general public on the same
basis as the other shares offered by this prospectus. We have agreed to
indemnify the underwriters against liabilities and expenses, including
liabilities under the Securities Act of 1933 for the sales of these shares.

                                 LEGAL MATTERS

    The validity of the issuance of the common stock offered by this prospectus
will be passed upon for us by Cooley Godward LLP, Palo Alto, California. Other
specified legal matters in connection with this offering will be passed upon
for the underwriters by Brobeck, Phleger & Harrison LLP, Palo Alto, California.

                                    EXPERTS

    The consolidated financial statements as of December 31, 1998 and 1999, and
for each of the three years in the period ended December 31, 1999, included in
this prospectus, have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

                                       69
<PAGE>

                      WHERE YOU CAN FIND MORE INFORMATION

    We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 for the registration of the common stock offered by this
prospectus. This prospectus, which forms a part of the registration statement,
does not contain all the information included in the registration statement,
parts of which are contained in exhibits to the registration statement as
permitted by the Securities and Exchange Commission rules and regulations. For
further information about us and our common stock, you should refer to the
registration statement.

    The registration statement can be inspected and copied at the Securities
and Exchange Commission's following locations:

<TABLE>
   <C>                          <C>                       <S>
   Public Reference Room Office Northeast Regional Office Midwest Regional Office
      450 Fifth Street, N.W.    Seven World Trade Center      Citicorp Center
      Washington, D.C. 20549           Suite 1300         500 West Madison Street
                                   New York, NY 10048            Suite 1400
                                                           Chicago, IL 60661-2511
</TABLE>

In addition, the registration statement is publicly available through the
Securities and Exchange Commission's site on the Internet's world wide web,
located at http://www.sec.gov.

    We will also file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission. You may
obtain copies of the documents that we file electronically with the Securities
and Exchange Commission through the Securities and Exchange Commission's
website located at http://www.sec.gov. You can also request copies of these
documents, for a copying fee, by writing to the Securities and Exchange
Commission.

                                       70
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Accountants.......................................... F-2

Consolidated Balance Sheet................................................. F-3

Consolidated Statement of Operations....................................... F-4

Consolidated Statement of Stockholders' Deficit............................ F-5

Consolidated Statement of Cash Flows....................................... F-6

Notes to Consolidated Financial Statements................................. F-7
</TABLE>

                                      F-1
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Chordiant Software, Inc.

    In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' deficit and of cash
flows present fairly, in all material respects, the financial position of
Chordiant Software, Inc.("Chordiant"), at December 31, 1998 and 1999 and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with generally accepted
accounting principles. These consolidated financial statements are the
responsibility of the Chordiant's management; our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit 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 the opinion expressed
above.

PricewaterhouseCoopers LLP

San Jose, California
January 18, 2000, except for Note 14 which is as of February 10, 2000

                                      F-2
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                           CONSOLIDATED BALANCE SHEET
            (amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                   Pro Forma
                                                                Liabilities and
                                                                 Stockholders'
                                              December 31,         Equity at
                                            ------------------   December 31,
                                              1998      1999         1999
                                            --------  --------  ---------------
                                                                  (unaudited)
<S>                                         <C>       <C>       <C>
ASSETS
Current Assets:
  Cash and cash equivalents...............  $  1,713  $  6,719
  Short-term investments..................     1,051     2,000
  Accounts receivable--third parties,
    net...................................     5,287     7,233
  Accounts receivable--related parties....       102     1,211
  Other current assets....................       274     1,775
                                            --------  --------
     Total current assets.................     8,427    18,938
Property and equipment, net...............     2,866     2,580
Other assets..............................       228       568
                                            --------  --------
                                            $ 11,521  $ 22,086
                                            ========  ========
LIABILITIES, MANDATORILY REDEEMABLE
  CONVERTIBLE PREFERRED STOCK AND
  STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Borrowings..............................  $    776  $  2,608     $  2,608
  Accounts payable--related parties.......       206        --           --
  Accounts payable--third parties.........     4,346     2,101        2,101
  Accrued expenses........................     2,115     2,493        2,493
  Prepaid licenses--related parties.......     6,000        --           --
  Deferred revenue........................     5,146     9,903        9,903
                                            --------  --------     --------
     Total current liabilities............    18,589    17,105       17,105
Borrowings, long-term.....................       911    10,617          617
Deferred revenue..........................       573       293          293
Other liabilities.........................       103       244          244
                                            --------  --------     --------
                                              20,176    28,259       18,259
                                            --------  --------     --------
Mandatorily Redeemable Convertible
  Preferred Stock, $0.001 par value;
  25,027,985 shares authorized, 16,449,038
  and 22,412,194 shares issued and
  outstanding; no shares issued and
  outstanding pro forma...................    28,949    51,609           --
                                            --------  --------     --------
Commitments and contingencies (Notes 6 and
  8)

Stockholders' Equity (Deficit):
  Preferred Stock, $0.001 par value;
    51,000,000 shares authorized; no
    shares issued and outstanding.........        --        --           --
  Common Stock, $0.001 par value;
    300,000,000 shares authorized;
    5,218,973 and 5,906,101 shares issued
    and outstanding; 30,318,295 shares
    issued and outstanding pro forma......         5         6           30
  Additional paid-in capital..............     2,820    14,652       76,237
  Note receivable from stockholder........        --      (406)        (406)
  Unearned compensation...................    (1,002)   (9,470)      (9,470)
  Accumulated deficit.....................   (39,427)  (62,564)     (62,564)
                                            --------  --------     --------
     Total stockholders' equity
       (deficit)..........................   (37,604)  (57,782)       3,827
                                            --------  --------     --------
                                            $ 11,521  $ 22,086     $ 22,086
                                            ========  ========     ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-3
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS
            (amounts in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              --------------------------------
                                                1997       1998        1999
                                              ---------  ---------  ----------
<S>                                           <C>        <C>        <C>
Net revenues:
 License--third parties...................... $   1,142  $   4,360  $    5,938
 License--related parties....................        --         --       2,069
 Service--third parties......................     1,677      8,013       9,007
 Service--related parties....................        89         92         574
                                              ---------  ---------  ----------
     Total net revenues......................     2,908     12,465      17,588
                                              ---------  ---------  ----------
Cost of net revenues:
 License--third parties......................        73        425         263
 License--related parties....................        --         --         134
 Service--third parties......................     1,388      8,846      13,999
 Service--related parties....................        74        101         353
                                              ---------  ---------  ----------
     Total cost of net revenues..............     1,535      9,372      14,749
                                              ---------  ---------  ----------
Gross profit (loss)..........................     1,373      3,093       2,839
                                              ---------  ---------  ----------
Operating expenses:
 Sales and marketing.........................     5,142     12,580      13,368
 Research and development....................     6,240      5,858       6,494
 General and administrative..................     1,416      2,046       2,668
 Stock-based compensation....................       498        489       2,660
                                              ---------  ---------  ----------
     Total operating expenses................    13,296     20,973      25,190
                                              ---------  ---------  ----------
Loss from operations.........................   (11,923)   (17,880)    (22,351)
Interest expense.............................      (112)      (121)     (1,067)
Other income (expense), net..................       442        561         281
                                              ---------  ---------  ----------
Net loss..................................... $ (11,593) $ (17,440) $  (23,137)
                                              =========  =========  ==========
Net loss per share:
 Basic and diluted........................... $   (2.31) $   (3.44) $    (4.34)
                                              =========  =========  ==========
 Weighted average shares..................... 5,008,623  5,074,533   5,326,831
                                              =========  =========  ==========
Pro forma net loss per share (unaudited):
 Basic and diluted...........................                       $    (0.93)
                                                                    ==========
 Weighted average shares.....................                       24,805,221
                                                                    ==========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                   (amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                         Note
                           Common Stock    Additional Receivable                               Total
                         -----------------  Paid-in      from       Unearned   Accumulated Stockholders'
                          Shares    Amount  Capital   Stockholder Compensation   Deficit      Deficit
                         ---------  ------ ---------- ----------- ------------ ----------- -------------
<S>                      <C>        <C>    <C>        <C>         <C>          <C>         <C>
Balance at December 31,
  1995.................. 5,000,000   $ 5    $   803      $  --      $     --    $ (2,832)    $ (2,024)
 Exercise of stock
   options..............    70,625    --          6         --            --          --            6
 Repurchase of common
   stock................   (66,250)   --         (9)        --            --          --           (9)
 Stock compensation.....        --    --          3         --            --          --            3
 Net loss...............        --    --         --         --            --      (7,562)      (7,562)
                         ---------   ---    -------      -----      --------    --------     --------
Balance at December 31,
  1996.................. 5,004,375     5        803         --            --     (10,394)      (9,586)
 Exercise of stock
   options..............    31,638    --          4         --            --          --            4
 Repurchase of common
   stock................   (23,280)   --         (5)        --            --          --           (5)
 Stock compensation.....        --    --        498         --            --          --          498
 Net loss...............        --    --         --         --            --     (11,593)     (11,593)
                         ---------   ---    -------      -----      --------    --------     --------
Balance at December 31,
  1997.................. 5,012,733     5      1,300         --            --     (21,987)     (20,682)
 Exercise of stock
   options..............   236,635    --         56         --            --          --           56
 Repurchase of common
   stock................   (30,395)   --        (27)        --            --          --          (27)
 Unearned compensation..        --    --      1,500         --        (1,500)         --           --
 Amortization of
   unearned
   compensation.........        --    --         --         --           489          --          489
 Stock option
   cancellations........        --    --         (9)        --             9          --           --
 Net loss...............        --    --         --         --            --     (17,440)     (17,440)
                         ---------   ---    -------      -----      --------    --------     --------
Balance at December 31,
  1998.................. 5,218,973     5      2,820         --        (1,002)    (39,427)     (37,604)
 Exercise of stock
   options..............   712,703     1        745       (406)           --          --          340
 Repurchase of common
   stock................   (25,575)   --        (41)        --            --          --          (41)
 Unearned compensation..        --    --     11,274         --       (11,274)         --           --
 Amortization of
   unearned
   compensation.........        --    --         --         --         2,660          --        2,660
 Stock option
   cancellations........        --    --       (146)        --           146          --           --
 Net loss...............        --    --         --         --            --     (23,137)     (23,137)
                         ---------   ---    -------      -----      --------    --------     --------
Balance at December 31,
  1999.................. 5,906,101   $ 6    $14,652      $(406)     $ (9,470)   $(62,564)    $(57,782)
                         =========   ===    =======      =====      ========    ========     ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Cash flows from operating activities:
 Net loss........................................ $(11,593) $(17,440) $(23,137)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization..................      913       521     1,276
  Stock-based compensation.......................      498       489     2,660
  Provision for doubtful accounts................      569        17       470
  Changes in assets and liabilities:
   Accounts receivable--third parties............      467    (4,963)   (2,416)
   Accounts receivable--related parties..........     (117)       15    (1,109)
   Other current assets..........................    1,074       311    (1,501)
   Other assets..................................       (2)     (181)     (340)
   Accounts payable--third parties...............       37     3,936    (2,245)
   Accounts payable--related parties.............      206        --      (206)
   Accrued expenses..............................   (1,417)    1,308       378
   Prepaid licenses--related parties.............    6,000        --        --
   Deferred revenue..............................      223     1,317    (1,523)
   Other liabilities.............................       --       103       141
                                                  --------  --------  --------
     Net cash used in operating activities.......   (3,142)  (14,567)  (27,552)
                                                  --------  --------  --------
Cash flows from investing activities:
 Purchases of property and equipment.............     (744)   (2,033)     (990)
 Purchases of short-term investments.............       --    (9,558)   (2,800)
 Proceeds from sales and maturities of short-term
  investments....................................       --     8,507     1,851
                                                  --------  --------  --------
     Net cash used in investing activities.......     (744)   (3,084)   (1,939)
                                                  --------  --------  --------
Cash flows from financing activities:
 Issuance of mandatorily redeemable convertible
  preferred stock, net...........................   19,902        --    22,660
 Exercise of stock options.......................        4        56       340
 Repurchase of common stock......................       (5)      (27)      (41)
 Proceeds from borrowings........................      558       781    14,627
 Repayment of borrowings.........................     (335)     (362)   (3,089)
                                                  --------  --------  --------
     Net cash provided by financing activities...   20,124       448    34,497
                                                  --------  --------  --------
Net increase (decrease) in cash and cash
 equivalents.....................................   16,238   (17,203)    5,006
Cash and cash equivalents at beginning of
 period..........................................    2,678    18,916     1,713
                                                  --------  --------  --------
Cash and cash equivalents at end of period....... $ 18,916  $  1,713  $  6,719
                                                  ========  ========  ========
Supplemental cash flow information:
 Cash paid for interest.......................... $    112  $    112  $  1,062
                                                  ========  ========  ========
 Cash paid for income taxes...................... $     --  $     --  $     --
                                                  ========  ========  ========
Supplemental non-cash activities:
 Common Stock issued for stockholder note........ $     --  $     --  $    406
                                                  ========  ========  ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<PAGE>

                            CHORDIANT SOFTWARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (amounts in thousands, except share and per share data)

NOTE 1--THE COMPANY:

    Chordiant Software, Inc. ("Chordiant"), formerly J. Frank Consulting, Inc.
and J. Frank & Associates, Inc., was incorporated in California in March 1991
and reincorporated in Delaware by merging into Chordiant Delaware, Inc., a
wholly-owned Delaware subsidiary, in October 1997. At that time, Chordiant
Delaware, Inc. changed its name to Chordiant Software, Inc. Chordiant provides
e-business infrastructure software for customer interaction applications.
Chordiant's product helps enable companies to offer their customers
personalized marketing, sales programs, e-business services and customer
support across multiple channels of communication.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Principles of consolidation

    The accompanying consolidated financial statements include the accounts of
the Chordiant and its wholly-owned subsidiary. All significant intercompany
transactions and balances have been eliminated in consolidation.

 Use of estimates

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

 Cash, cash equivalents and short-term investments

    Chordiant considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. At December
31, 1998 and 1999, $1,477 and $6,087 of money market account balances,
commercial paper and municipal bonds, the fair value of which approximates
cost, are included in cash and cash equivalents. The gross unrealized gains and
losses were not significant in the periods presented.

    Chordiant classifies its short-term investment securities as "available-
for-sale." At December 31, 1998 and 1999, the fair value of these securities,
comprised primarily of medium-term notes, approximates cost, and the gross
unrealized gains and losses were not significant. These securities mature
within one year.

 Fair value of financial instruments

    Chordiant's financial instruments, including cash and cash equivalents,
accounts receivable, deposits, accounts payable and borrowings are carried at
cost, which approximates fair value because of the short-term nature of those
instruments.

 Property and equipment

    Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method based upon the estimated useful lives of assets which
range from three to seven years. Amortization of leasehold improvements is
calculated using the straight-line method over the shorter of the estimated
economic

                                      F-7
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)

life of the asset or the lease term. Purchased internal-use software consists
primarily of amounts paid for perpetual licenses to third party software
applications which are amortized over their estimated useful life, generally
three years.

 Prepaid licenses-related parties

    Prepaid licenses-related parties totalling $6 million was received from a
stockholder in 1997. The intention of this cash advance was that the amount
would be applied against future revenue contracts, to the extent that any such
contracts are entered. During 1999, Chordiant delivered licenses to the
stockholder and reduced the prepaid licenses-related parties account. Chordiant
recognized this revenue in accordance with its revenue recognition accounting
policy.

 Impairment of long-lived assets

    Chordiant evaluates the recoverability of long-lived assets in accordance
with Statement of Financial Accounting Standards "SFAS No. 121", "Accounting
for Impairment of Long-Lived Assets and for Long-lived Assets to be Disposed
of." SFAS No. 121 requires recognition of impairment of long-lived assets if
the net book value of such assets exceeds the estimated future undiscounted
cash flows attributable to such assets.

 Revenue recognition

    Chordiant derives revenues from licenses of its software and related
services, which include assistance in implementation, customization and
integration, post-contract customer support, training and consulting.

    On contracts involving significant implementation or customization
essential to the functionality of the Chordiant's product, license and service
revenues are recognized using the percentage-of-completion method using labor
hours incurred as the measure of progress towards completion. Chordiant
classifies revenues from these arrangements as license and services revenues,
based upon the estimated fair value of each element. Provisions for estimated
contract losses are recognized in the period in which the loss becomes probable
and can be reasonably estimated.

    On contracts that do not involve significant implementation or
customization essential to the functionality of Chordiant's product, license
fees are recognized when there is persuasive evidence of an arrangement for a
fixed and determinable fee that is probable of collection and when delivery has
occurred. For arrangements with multiple elements, Chordiant recognizes revenue
for services and post-contract customer support based upon vendor specific
objective evidence (VSOE), VSOE for the services element is based upon the
standard hourly rates it charges for services and based upon the complexity of
the services and experience of the professional performing the services and
such services are separately priced in the contract, VSOE for annual post-
contract customer support is established with the stated future renewal rates
included in the contracts. Chordiant recognizes revenue for the license portion
of a multiple element arrangement based upon the residual contract value as
prescribed by Statement of Position No. 98-9, "Modification of SoP No. 97-2
with Respect to Certain Transactions."

    Revenues from reseller arrangements are recognized when reported by the
reseller upon re-licensing of Chordiant's software to end users. Chordiant's
agreements with its customers and resellers do not contain product return
rights.

    Other service revenues from consulting and training services are recognized
as such services are performed. Service revenues from post-contract customer
support are recognized ratably over the support period, generally one year.

                                      F-8
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


    In future periods, Chordiant expects to derive revenues from contracts that
provide for implementation services at a fixed hourly rate. On other contracts
Chordiant expects to derive revenues from the licensing of the installed
product on a per transaction basis. In connection with such arrangements,
Chordiant will recognize the fair value of the implementation services as such
services are delivered and will recognize license fees on a monthly basis at
the contractual rate.

    Chordiant bills customers in accordance with contract terms. Amounts billed
to customers in excess of revenues recognized are recorded as deferred
revenues.

 Concentrations of Credit Risk

    Financial instruments that potentially subject Chordiant to concentrations
of credit risk consist of cash, cash equivalents, short-term investments and
accounts receivable. To date, Chordiant has invested excess funds in money
market accounts, commercial paper, municipal bonds and term notes. Chordiant
deposits cash, cash equivalents and short-term investments with financial
institutions that management believes are credit worthy. Chordiant's accounts
receivable are derived from revenues earned from customers located in the
United States, United Kingdom, Canada, Netherlands and Africa. Chordiant
performs ongoing credit evaluations of its customers' financial condition and,
generally, requires no collateral from its customers. Chordiant maintains an
allowance for doubtful accounts receivable based upon the expected
collectibility of all accounts receivable.

    The following table summarizes the revenues from customers, all of which
were third parties, in excess of 10% of total net revenues:

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                   December 31,
                                                                  ----------------
                                                                  1997  1998  1999
                                                                  ----  ----  ----
   <S>                                                            <C>   <C>   <C>
   Company A.....................................................  28%   --    --
   Company B.....................................................  --    12%   30%
   Company C.....................................................  --    --    19%
   Company D.....................................................  53%   --    --
   Company E.....................................................  --    14%   --
   Company F.....................................................  --    36%   --
   Company G.....................................................  --    19%   --
</TABLE>

    At December 31, 1998, Companies B and F accounted for 21% and 26% of
accounts receivable, net. At December 31, 1999, companies B and C accounted for
24% and 8% of accounts receivable, net.

 Research and development

    Research and development costs are expensed as incurred in accordance with
Statement of Financial Accounting Standards No. 2, "Accounting for Research and
Development Costs."

 Software development costs

    Costs incurred in the research and development of new products and
enhancements to existing products are charged to expense as incurred until the
technological feasibility of the product or enhancement has been established
through the development of a working model. After establishing technological
feasibility, additional development costs incurred through the date the product
is available for general release would be capitalized and amortized over the
estimated product life. No costs have been capitalized to date, as the effect
on the financial statements for all periods presented is immaterial.

                                      F-9
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Advertising costs

    Advertising costs are expensed as incurred in accordance with Statement of
Position No. 93-7, "Reporting on Advertising Costs." Advertising costs for the
years ended December 31, 1997, 1998 and 1999 totaled $1,316, $1,955 and $1,340.

 Stock-based costs and expenses

    Chordiant accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and complies with the
disclosure provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). Under APB 25,
compensation cost is recognized based on the difference, if any, on the date of
grant between the fair value of Chordiant's stock and the amount an employee
must pay to acquire the stock.

 Foreign currency translation

    The functional currency of Chordiant's sales office located in the United
Kingdom is its local currency. Foreign currency assets and liabilities are
translated at the current exchange rates at each balance sheet date. Revenues
and expenses are translated at weighted average exchange rates in effect during
the year. Gains and losses resulting from foreign currency translation have not
been material to the financial statements of any period presented. To the
extent these gains or losses are recognized in future periods, such amounts
will be recorded directly into a separate component of stockholders' deficit.
Foreign currency transaction gains and losses are included in the determination
of net income or loss. During the years ended December 31, 1997, 1998 and 1999,
net foreign currency transaction gains or losses were immaterial.

 Income taxes

    Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current year
and deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in Chordiant's financial statements or tax
returns. The measurement of current and deferred tax liabilities and assets are
based on provisions of the enacted tax law; the effects of future changes in
tax laws or rates are not anticipated. The measurement of deferred tax assets
is reduced, if necessary, by the amount of any tax benefits that, based on
available evidence, are not expected to be realized.

 Recapitalization

    In November 1999, Chordiant's board of directors approved the filing of a
registration statement for an underwritten public offering of Chordiant's
common stock whereupon the authorized number of shares of common stock will be
increased to 300,000,000 and the authorized number of shares of undesignated
convertible preferred stock will be increased to 51,000,000. All share
information included in these consolidated financial statements have been
retroactively adjusted to reflect this recapitalization.

 Reverse Stock Split

    In November 1999, Chordiant's Board of Directors approved a 1-for-2 reverse
stock split of Chordiant's outstanding shares. The reverse stock split is
expected to become effective before the effective date of the initial public
offering. All share and per share information included in these consolidated
financial statements have been retroactively adjusted to reflect this reverse
stock split.

                                      F-10
<PAGE>

                           CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Net loss per share

    Basic net loss per share is computed by dividing the net loss for the
period by the weighted average shares of common stock outstanding during the
period. Diluted net loss per share is computed by dividing the net loss for
the period by the weighted average number of common and potential common
shares outstanding during the period. Potential common shares consist of the
incremental number of common shares issuable upon conversion of mandatorily
redeemable convertible preferred stock (using the if-converted method), common
shares issuable upon the exercise of stock options (using the treasury stock
method), common shares issuable upon the assumed conversion of convertible
debt (using the if-converted method) and common shares subject to repurchase
by Chordiant. The calculation of diluted net loss per share excludes potential
common shares if their effect is anti-dilutive.

    The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated:

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              -------------------------------
                                                1997       1998       1999
                                              ---------  ---------  ---------
<S>                                           <C>        <C>        <C>
Net loss..................................... $ (11,593) $ (17,440) $ (23,137)
                                              ---------  ---------  ---------

Weighted average common shares............... 5,008,623  5,074,533  5,391,265
Weighted average unvested
  Common shares subject to repurchase........        --         --    (64,434)
                                              ---------  ---------  ---------
Denominator for basic and diluted
  calculation................................ 5,008,623  5,074,533  5,326,831
                                              ---------  ---------  ---------

Net loss per share--basic and diluted........ $   (2.31) $   (3.44) $   (4.34)
                                              =========  =========  =========
</TABLE>

    The following table sets forth the weighted average potential common
shares that are excluded from the calculation of diluted net loss per share as
their effect is anti-dilutive:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                               --------------------------------
                                                  1997       1998       1999
                                               ---------- ---------- ----------
<S>                                            <C>        <C>        <C>
Weighted average effect of antidilutive
  securities:
  Mandatorily redeemable convertible
    preferred stock..........................  10,008,307 16,449,038 17,998,938
  Convertible debt...........................          --         --  1,479,452
  Employee stock options.....................     506,603  1,908,598  6,201,931
  Common shares subject to repurchase........          --         --     64,434
                                               ---------- ---------- ----------
                                               10,514,910 18,357,636 25,744,755
                                               ========== ========== ==========
</TABLE>

 Pro forma net loss per share (unaudited)

    Pro forma net loss per share for the year ended December 31, 1999, is
computed using the weighted average number of common shares outstanding,
including the assumed conversion of Chordiant's mandatorily redeemable
convertible preferred stock and the conversion of convertible debt that the
holders have committed to converting, into shares of Chordiant's common stock
effective upon the closing of an initial public offering, as if such
conversions occurred on January 1, 1999, or at the date of original issuance,
if later. The resulting unaudited pro forma adjustment includes an increase in
the weighted average shares used to compute basic and diluted net loss per
share of 19,478,390 for the year ended December 31, 1999. The calculation of
pro forma diluted net loss per share excludes other potential common shares as
the effect is anti-dilutive. Pro forma potential common shares are comprised
of common stock subject to repurchase and incremental common stock issuable
upon the exercise of stock options.

                                     F-11
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Pro forma liabilities and stockholders' equity (unaudited)

    Effective upon the closing of Chordiant's initial public offering, the
outstanding shares of mandatorily redeemable convertible preferred stock and
the outstanding convertible debt will convert into 22,412,194 and 2,000,000
shares of common stock. Also effective upon the closing of this offering,
Chordiant will be authorized to issue 300,000,000 shares of common stock and
51,000,000 shares of undesignated convertible preferred stock. The pro forma
effects of these transactions are unaudited and have been reflected in the
accompanying pro forma Liabilities and Stockholders' Equity as of December 31,
1999.

 Segment information

    Effective January 1, 1998, Chordiant adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
the way companies report information about operating segments in financial
statements. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. In accordance with
the provisions of SFAS No. 131, Chordiant has determined that it operates in a
single operating segment.

    Foreign revenues are based on the country in which the customer is located.
The following is a summary of total net revenues by geographic area:

<TABLE>
<CAPTION>
                                                           Year Ended December
                                                                   31,
                                                          ----------------------
                                                           1997   1998    1999
                                                          ------ ------- -------
   <S>                                                    <C>    <C>     <C>
   United States......................................... $2,719 $ 2,729 $10,974
   United Kingdom........................................    189   3,441   3,973
   Canada................................................     --   1,724     642
   Netherlands...........................................     --   4,500   1,653
   Other.................................................     --      71     346
                                                          ------ ------- -------
                                                          $2,908 $12,465 $17,588
                                                          ====== ======= =======
</TABLE>

    Property and equipment information is based on the physical location of the
assets. The following is a summary of property and equipment by geographic
area:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   -------------
                                                                    1998   1999
                                                                   ------ ------
   <S>                                                             <C>    <C>
   United States.................................................. $2,587 $2,350
   United Kingdom.................................................    279    230
                                                                   ------ ------
                                                                   $2,866 $2,580
                                                                   ====== ======
</TABLE>

 Comprehensive income

    Effective January 1, 1998, Chordiant adopted the provisions of Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS
130 establishes standards for reporting comprehensive income and its components
in financial statements. Comprehensive income includes all changes in equity
during a period from nonowner sources. To date, Chordiant has not had any
material transactions that are required to be reported in comprehensive income
other than its net loss.

                                      F-12
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Recent accounting pronouncements

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including derivative instruments in other
contracts (collectively referred to as derivatives), and for hedging
activities. In June 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 137, "Accounting for
Derivatives Instruments and Hedging Activities--Deferral of Effective Date of
FASB Statement No. 133." SFAS No. 133, as amended by SFAS No. 137, is effective
for all fiscal quarters of all fiscal years beginning after June 15, 2000, with
earlier application encouraged. Chordiant does not currently, nor does it
intend in the future, to use derivative instruments and therefore does not
expect that the adoption of SFAS No. 133 will have any impact on its financial
position or results of operations.

NOTE 3--BALANCE SHEET COMPONENTS:

<TABLE>
<CAPTION>
                                                                December 31,
                                                               ----------------
                                                                1998     1999
                                                               -------  -------
   <S>                                                         <C>      <C>
   Accounts receivable--third parties, net:
    Accounts receivable....................................... $ 5,541  $ 7,957
    Allowance for doubtful accounts...........................    (254)    (724)
                                                               -------  -------
                                                               $ 5,287  $ 7,233
                                                               =======  =======
   Property and equipment, net:
    Computer hardware......................................... $ 3,190  $ 3,907
    Purchased internal-use software...........................     895    1,082
    Furniture and equipment...................................     983    1,036
    Leasehold improvements....................................     500      533
                                                               -------  -------
                                                                 5,568    6,558
    Accumulated depreciation and amortization.................  (2,702)  (3,978)
                                                               -------  -------
                                                               $ 2,866  $ 2,580
                                                               =======  =======
   Accrued expenses:
    Accrued payroll and related expenses...................... $ 1,799  $ 1,753
    Other accrued liabilities.................................     316      740
                                                               -------  -------
                                                               $ 2,115  $ 2,493
                                                               =======  =======
</TABLE>

NOTE 4--SOFTWARE DEVELOPMENT AGREEMENT:

    During 1995, Chordiant and Visa International Services Association entered
into an agreement to jointly perform research and development for a call center
software application. In December 1996, Chordiant received notice from Visa
terminating the agreement. At December 31, 1996, Chordiant had recorded the
total advances received under the agreement of $2,500 as deferred revenue. On
May 29, 1997, Visa and Chordiant completed mediation surrounding the
termination of the agreement and Chordiant agreed to refund Visa $1,700 of the
advances received. The remaining advances totaling $800 were recognized as
service revenue from third parties during the year ended December 31, 1997.

                                      F-13
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


NOTE 5--RELATED PARTY TRANSACTIONS:

    Chordiant has entered into agreements with some holders of Chordiant's
mandatorily redeemable convertible preferred stock. These agreements consist
primarily of product licenses and related services. Revenues and related costs
of revenues together with deferred revenues, accounts receivable, accounts
payable and prepaid licenses from these related parties are separately
disclosed in the consolidated statements of operations and cash flows and in
the consolidated balance sheet.

NOTE 6--BORROWINGS:

 Bank credit facility

    At December 31, 1999, Chordiant maintained a credit facility with a bank
consisting of three equipment loans in the aggregate amount of $2,351. As of
December 31, 1999, Chordiant had borrowed $910 under these loans. The loans
accrue interest at the bank's prime rate plus 0.25% (8.5% at December 31,
1999). The loans mature in June 2000, March 2000 and December 2000. The loans
are secured by the assets of Chordiant and include the following material
financial covenants, a minimum quick ratio of 1.25 to 1.00, a minimum liquidity
ratio of 1.50 to 1.00 and a minimum capital base of $4,000,000 through December
31, 1999 and $7,000,000 thereafter. At December 31, 1999, Chordiant was in
compliance with these covenants.

    In January 1999, Chordiant renegotiated its credit facility and entered
into an accounts receivable line of credit arrangement for borrowings of up to
$4,000 and an equipment loan in the amount of $1,000. Chordiant's borrowings
under the accounts receivable line of credit are limited to 80% of eligible
accounts receivable, accrue interest at the bank's prime rate and mature in
January 2000. The borrowings under the equipment loan accrue interest at the
bank's prime rate plus 0.25%, 8.5% at December 31, 1999, and mature in January
2002. As of December 31, 1999, Chordiant had borrowed $2,376 against the lines
of credit of which $1,485 is payable on demand.

 Convertible debt

    In April 1999, Chordiant raised $10,000 through a convertible debt
financing arrangement. The convertible debt bears interest at a rate of 9% per
annum and is payable in April 2004. The holders have the right to accelerate
Chordiant's obligation to repay the convertible debt upon a change in control,
initial public offering of at least $20,000 at a price not less than $10.00 per
share, or a significant transaction, as defined. The convertible debt also
provides the holders the right to convert the debt instrument into 2,000,000
shares of Chordiant's series D mandatorily redeemable convertible preferred
stock at a conversion rate of $5.00 per share.

    The aggregate future payments under the bank credit facilities and
convertible debt financing arrangement are as follows:

<TABLE>
<CAPTION>
                                                                    December 31,
   Year Ending December 31,                                             1999
   ------------------------                                         ------------
   <S>                                                              <C>
   1999............................................................   $ 2,621
   2000............................................................       591
   2001............................................................        74
   2002............................................................        --
   2003............................................................        --
   2004............................................................    10,000
                                                                      -------
                                                                       13,286
   Less discount...................................................       (61)
   Less current portion (net of discount)..........................    (2,608)
                                                                      -------
   Long term portion (net of discount).............................   $10,617
                                                                      =======
</TABLE>

                                      F-14
<PAGE>

                           CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


NOTE 7--INCOME TAXES:

    No provision for income taxes has been recorded for any period presented
as Chordiant has incurred net operating losses for tax purposes.

    Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                December 31,
                                                              -----------------
                                                                1998     1999
                                                              --------  -------
   <S>                                                        <C>       <C>
   Net operating loss carryforwards.......................... $  9,483  $17,700
   Accrued expenses and provisions...........................    3,588    3,700
   Tax credit carryforwards..................................      864    1,100
                                                              --------  -------
   Gross deferred tax assets.................................   13,935   22,500
   Deferred tax valuation allowance..........................  (13,935) (22,500)
                                                              --------  -------
   Net deferred tax assets................................... $     --  $    --
                                                              ========  =======
</TABLE>

    Chordiant provides a valuation allowance for deferred tax assets when it
is more likely than not that some portion or all of the net deferred tax
assets will not be realized. Based on a number of factors, including the lack
of a history of profits and that the market in which Chordiant competes is
intensely competitive and characterized by rapidly changing technology,
management believes that there is sufficient uncertainty regarding the
realization of deferred tax assets that a full valuation allowance has been
provided.

    At December 31, 1998, Chordiant had approximately $25,664 and $12,983 of
net operating loss carryforwards for federal and state purposes. At December
31, 1999, Chordiant had approximately $47,989 and $23,702 of net operating
loss carryforwards for federal and state purposes. These carryforwards are
available to offset future taxable income and expire beginning in 2011 and
2001.

    Under the Tax Reform Act of 1986, the amounts of and the benefit from net
operating losses that can be carried forward may be or limited in certain
circumstances. Events that may cause limitations in the utilization of net
operating losses include, a cumulative stock ownership change of more than 50%
over a three year period and other events. Chordiant has not yet determined
whether or not operating loss benefits are impaired or limited.

NOTE 8--COMMITMENTS AND CONTINGENCIES:

 Leases

    Chordiant leases its facilities and some equipment under noncancelable
operating leases that expire on various dates through 2004. Rent expense is
recognized ratably over the lease term. Future minimum lease payments as of
December 31, 1999, are as follows:

<TABLE>
<CAPTION>
      Year Ending December 31,
      ------------------------
      <S>                                                               <C>
      2000............................................................. $1,687
      2001.............................................................  1,629
      2002.............................................................  1,512
      2003.............................................................  1,555
      2004.............................................................    799
      Thereafter.......................................................     --
                                                                        ------
                                                                        $7,182
                                                                        ======
</TABLE>

    Rent expense for the year ended December 31, 1997, 1998 and 1999 totaled
$559, $1,036 and $1,438.

                                     F-15
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


NOTE 9--MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

    Mandatorily redeemable convertible preferred stock consists of the
following:

<TABLE>
<CAPTION>
                                             Shares Issued and     Redemption
                                                Outstanding         Amount at
                                           --------------------- ---------------
                                               December 31,       December 31,
                                  Shares   --------------------- ---------------
                                Authorized    1998       1999     1998    1999
                                ---------- ---------- ---------- ------- -------
<S>                             <C>        <C>        <C>        <C>     <C>
Series A.......................  6,838,905  6,838,905  6,838,905 $ 9,000 $ 9,000
Series B.......................  5,410,917  5,410,917  5,410,917   9,199   9,199
Series C.......................  4,199,216  4,199,216  4,199,216  10,750  10,750
Series D.......................  2,000,000         --         --      --      --
Series E.......................  6,578,947         --  5,963,156      --  22,660
                                ---------- ---------- ---------- ------- -------
                                25,027,985 16,449,038 22,412,194 $28,949 $51,609
                                ========== ========== ========== ======= =======
</TABLE>

    The series A, series B, series C, series D and series E have rights,
preferences and restrictions concerning dividends, conversion, liquidation,
voting and redemption as follows:

 Dividends

    The holders of Series A, B, C, D and E are entitled to receive
noncumulative, preferential dividends of $0.1316, $0.17, $0.256, $0.50 and
$0.38 per share per annum when and if declared by the board of directors.

 Conversion

    Each share of series A, B, C, D and E is convertible into one share of
common stock, subject to protection from dilution. For series A, B, and C such
conversion is automatic upon the completion of a public offering of common
stock for which the aggregate proceeds exceed $10 million and the per share
offering price equals or exceeds $4.00. For Series D and E such conversion is
automatic upon the completion of a public offering of common stock for which
the aggregate proceeds exceed $30 million and the per share offering price
equals or exceeds $10.00, when the holders of the majority of the outstanding
series A, B, C, D and E elect to convert such shares into common stock. A total
of 24,412,194 shares of common stock have been reserved for the conversion of
the preferred stock.

 Liquidation

    If any liquidation, dissolution or winding up of Chordiant occurs, series
A, B, C, D and E stockholders are entitled to a per share distribution in
preference to the holders of common stock equal to the original issue price per
share of $1.316, $1.70, $2.56, $5.00 and $3.80 plus any declared but unpaid
dividends. Upon liquidation, the series E stockholders are entitled to receive
their liquidation before and in preference to the holders of series A, B, C and
D. If funds are sufficient to make a complete distribution to the holders of
series A, B, C, D and E as described above, all remaining assets shall be
distributed among the holders of the common and preferred stock in proportion
to their stockholdings until the holders of the series A, B, C, D and E have
received a maximum distribution of $3.40, $3.40, $3.40, $6.64 and $6.64.

                                      F-16
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Voting

    The holders of series A, B, C, D and E have the right to one vote for each
share of common stock into which the series A, B, C, D and E could be
converted. The holders of series A, B, C, D and E have full voting rights and
powers equal to the voting rights and powers of the holders of common stock.
The consent of more than fifty percent of the holders of series A, B, C, D and
E shares, voting together as a single class, is required for Chordiant to
perform the following:

  . redeem or acquire any shares of series A, B, C, D or E except as
    discussed below;

  . in any twelve month period, repurchase shares of common stock having a
    value in excess of $25 excluding Chordiant's right to repurchase shares
    held by employees, and directors upon termination of employment;

  . create any new class of securities convertible into equity securities of
    Chordiant having preference over the series A, B, C, D and E shares;

  . pay or set aside payment of any dividend or distribution on any share of
    common stock;

  . effect any transaction or series of related transactions in which more
    than fifty percent of the voting power of Chordiant is disposed of;

  . increase or decrease the authorized amount of preferred stock;

  . cause the sale of shares of any additional stock by a subsidiary of
    Chordiant; and

  . consent to any liquidation, dissolution, or winding up of Chordiant.

    The holders of series A, B, C, D and E, voting as a separate class, are
entitled to elect one member to the board of directors. The holders of common
stock, voting as a separate class, are entitled to elect one member to the
board of directors. The holders of common and preferred stock, voting together
as a class on an as-if converted basis, shall be entitled to elect all
remaining members of the board of directors.

 Redemption

    On or after June 17, 2001 for Series A and B, on or after December 31, 2001
for Series C, on or after April 6, 2003 for Series D and on or after September
28, 2003, for Series E Chordiant is required, at the written request of holders
of not less than sixty percent of the then outstanding series A, B, C, D or E
preferred stock to redeem such holders' outstanding shares of series A, B, C, D
or E preferred stock for cash at the original issue price plus declared and
unpaid dividends in three annual installments beginning no earlier than one
full year following the date of the redemption request.

NOTE 10--COMMON STOCK:

    During 1997, 1998 and 1999, Chordiant repurchased 23,280, 30,395, and
25,575 shares of common stock at original issuance prices for a total
repurchase price of $5, $27, and $41. The shares were retired upon repurchase.

NOTE 11--STOCK OPTION PLAN:

    In November 1999, the 1999 equity incentive plan was adopted by the board
of directors and amends Chordiant's 1997 equity plan. The 1999 plan provides
for the grant to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 and for grants to employees,
directors and consultants of nonstatutory stock options and stock purchase
rights. Unless terminated sooner, the 1999 plan will terminate automatically in
2009. A total of 9,712,500 shares of common stock have been reserved

                                      F-17
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)

for issuance under the 1999 plan. The amount reserved under the plan will
automatically increase at the end of each year by the greater of (1) 5% of
outstanding shares on that date and (2) the number of shares subject to stock
awards made under the 1999 plan during the prior twelve month period. However,
the automatic increase is subject to reduction by the board of directors. The
1999 plan is administered by the board of directors or a committee that this
board delegated this power and provides generally that the option price shall
not be less than the fair market value of the shares on the date of grant and
that no portion may be exercised beyond ten years from that date. Under the
1999 plan, stock options vest over a period that is limited to five years, but
are typically granted with a four year vesting period. Each option outstanding
under the 1999 plan may be exercised in whole or in part at any time. Exercised
but unvested shares are subject to repurchase by Chordiant at the initial
exercise price. At December 31, 1999, 161,384 shares were subject to
repurchase.

    During 1997, the Company implemented the bonus and salary conversion plan.
The bonus plan provides a means by which selected employees may elect to forego
cash bonuses in exchange for fully vested options to purchase shares of
Chordiant's common stock. During the years ended December 31, 1997, 1998 and
1999, 500,000, 189,108 and 0 options were granted under the bonus plan with
exercise prices ranging from $0.07 to $0.32 per share. The shares subject to
the bonus plan can not exceed 750,000.

    The following table summarizes option activity under Chordiant's stock-
based compensation plans:

<TABLE>
<CAPTION>
                                          Years Ended December 31,
                          -----------------------------------------------------------
                                 1997                1998                1999
                          ------------------- ------------------- -------------------
                                     Weighted            Weighted            Weighted
                                     Average             Average             Average
                                     Exercise            Exercise            Exercise
                           Shares     Price    Shares     Price    Shares     Price
                          ---------  -------- ---------  -------- ---------  --------
<S>                       <C>        <C>      <C>        <C>      <C>        <C>
Outstanding at beginning
  of period.............    774,187   $0.12   2,217,653   $0.21   5,980,581   $ 0.60
Granted.................  1,619,762    0.25   4,435,474    0.74   3,392,550     3.66
Cancelled...............   (144,658)   0.13    (435,911)   0.32    (886,770)    1.06
Exercised...............    (31,638)   0.14    (236,635)   0.26    (712,703)    1.28
                          ---------           ---------           ---------
Outstanding at end of
  period................  2,217,653    0.21   5,980,581    0.60   7,773,658     1.82
                          ---------           ---------           ---------
Options exercisable at
  end of period.........    517,545           1,284,044           2,672,112
                          ---------           ---------           ---------
Weighted average minimum
  value of options
  granted during the
  period................              $0.06               $0.16               $ 0.79
                                      =====               =====               ======
</TABLE>

    The following table summarizes information about stock options outstanding
and exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                         Options Outstanding at     Options Exercisable
                           December 31, 1999        at December 31, 1999
                     ------------------------------ --------------------
                                           Weighted             Weighted
                                 Weighted  Average              Average
      Range of         Number     Average  Exercise   Number    Exercise
   Exercise Prices   Outstanding Remaining  Price   Exercisable  Price
   ---------------   ----------- --------- -------- ----------- --------
   <S>               <C>         <C>       <C>      <C>         <C>
   $0.08-0.14         1,170,332    7.03     $0.20      863,635   $0.20
   $0.30-0.40             7,359    7.95      0.40        7,359    0.40
   $0.64              2,886,815    8.36      0.64    1,432,236    0.64
   $0.90-1.50           666,813    8.79      1.18      204,443    1.15
   $2.90                727,607    9.21      2.90      123,577    2.90
   $3.10-4.00         2,314,732    9.82      3.99       40,862    3.99
                      ---------                      ---------
                      7,773,658                      2,672,112
                      =========                      =========
</TABLE>

                                      F-18
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


    During the years ended December 31, 1997, 1998 and 1999, Chordiant recorded
unearned compensation expense of approximately $498, $1,500 and $11,274 related
to the issuance of stock options. These expenses are being amortized over a
period of four years from the date of issuance using the "multiple option"
approach prescribed by FASB Interpretation No. 28, "Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Reward Plans.
Amortization of unearned compensation expense related to these options of
approximately $498, $489, and $2,660, was included in operating expenses as
stock-based compensation in the years ended December 31, 1997 1998 and 1999.

    Had compensation cost for Chordiant's stock-based compensation awards been
determined based on the minimum value at the grant dates as prescribed by SFAS
No. 123, Chordiant's net loss would have been as follows:

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                               -----------------------------
                                                 1997      1998      1999
                                               --------  --------  ---------
   <S>                                         <C>       <C>       <C>       <C>
   Net Loss:
     As reported.............................  $(11,593) $(17,440) $(23,137)
     Pro forma...............................  $(11,643) $(17,746) $(23,944)
   Basic and diluted net loss per share:
     As reported.............................  $  (2.31) $  (3.44) $  (4.34)
     Pro forma...............................  $  (2.32) $  (3.50) $  (4.49)
</TABLE>

    Under SFAS No. 123, the minimum value of each option grant is estimated on
the grant date using the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                 Year Ended
                                                                December 31,
                                                               ----------------
                                                               1997  1998  1999
                                                               ----  ----  ----
   <S>                                                         <C>   <C>   <C>
   Expected lives in years.................................... 4.6   4.6   4.6
   Risk free interest rates................................... 6.2%  6.2%  5.5%
   Dividend yield............................................. 0.0%  0.0%  0.0%
   Volatility................................................. 0.0%  0.0%  0.0%
</TABLE>

    Because the determination of the fair value of all options granted after
Chordiant becomes a public entity will include an expected volatility factor in
addition to the other factors described in the table above and because
additional option grants are expected to be made each year, the above pro forma
disclosures are not representative of the pro forma effects of option grants on
reported results for future years.

NOTE 12--EMPLOYEE BENEFIT PLANS:

 401(k) Savings Plan

    Chordiant sponsors a 401(k) Savings Plan. Under the 401(k) plan, employees
may elect to contribute up to 15% of their pre-tax compensation. Chordiant's
contributions to the 401(k) plan totaled $66, $99, and $155 for the years ended
December 31, 1997, 1998 and 1999.

 Defined Contribution Plan

    Chordiant also sponsors a defined contribution pension plan for the
employees of Chordiant's sales office in the United Kingdom. Under the pension
plan, each employee of the United Kingdom sales office may elect to contribute
5% of their pre-tax compensation. Chordiant's contributions to the pension plan
totaled $0, $62, and $123 for the years ended December 31, 1997, 1998, and
1999.

                                      F-19
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 1999 Employee Stock Purchase Plan

    In November 1999, the 1999 employee stock purchase plan was adopted by the
board of directors and will be submitted to the stockholders for their approval
before the date of Chordiant's initial public offering, to become effective on
the date of the initial public offering. The purchase plan permits participants
to purchase common stock through payroll deductions. A total of 2,000,000
shares of common stock have been reserved for issuance under to the purchase
plan. The amount reserved under the plan will automatically increase at the end
of each year by the greater of (1) 2% outstanding shares on such date and (2)
the number of shares subject to stock awards made under the purchase plan
during the prior twelve month period. However, the automatic increase is
subject to reduction by the board of directors.

 1999 Non-Employees Director Option Plan

    In November 1999, the 1999 director option plan was adopted by the board of
directors and will be submitted to the stockholders for their approval before
the date of Chordiant's initial public offering, to become effective on the
date of the initial public offering. The director plan provides for the
automatic grant of a nonstatutory option to purchase 25,000 shares of common
stock to each new non-employee director who becomes a director after the date
of Chordiant's initial public offering on the date that such person becomes a
director. Each current and future non-employee director will automatically be
granted an additional nonstatutory option to purchase 7,500 shares on the day
after each of Chordiant's annual meetings of the stockholders. Each director
who is a member of a board committee will automatically be granted an
additional nonstatutory option to purchase 5,000 shares on the day after each
of Chordiant's annual meetings of the stockholders. A total of 700,000 shares
of common stock have been reserved for issuance under the director plan. The
amount reserved under the plan will automatically increase each year by the
greater of (1) 0.5% outstanding shares on such date and (2) the number of
shares subject to stock awards made under the director plan during the prior
twelve month period. However, the automatic increase is subject to reduction by
the board of directors.

NOTE 13--LICENSE AGREEMENT:

    During 1996, Chordiant entered into a value-added reseller license and
services agreement with Forte Software, Inc. Under this agreement, Chordiant
may acquire full-use product licenses for assignment to one or more third-party
end-users and pay Forte Software, Inc. the license fees due upon delivery of
the product licenses. The amounts payable to Forte Software, Inc. total 75% of
the license fees charged to the end-user by Chordiant and are recognized as a
cost of net revenues.

    During 1997, following the re-negotiation of a product license agreement
with a third-party end-user, Forte Software, Inc. forgave some amounts due from
Chordiant under the value-added reseller license and services agreement.
Chordiant recognized $333 in other income during 1997.

NOTE 14--SUBSEQUENT EVENTS:

 Stock Option Grants

    From January 1, 2000 through February 10, 2000, Chordiant granted stock
options to purchase an aggregate of 285,500 shares of common stock at a
weighted average exercise price of $8.37 per share. In connection with the
grant of these stock options Chordiant recognized unearned compensation
totalling $1,893 which will be amortized over the four year vesting period of
the stock options.

                                      F-20
<PAGE>

                            CHORDIANT SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (amounts in thousands, except share and per share data)


 Stock Option Exercises

    From January 1, 2000 through February 10, 2000, Chordiant issued 1,432,465
shares of common stock in connection with employee stock option exercises. Cash
proceeds received by Chordiant from the exercises totaled $636. Additionally,
Chordiant received notes receivable from stockholders totaling $588 in
connection with such exercises.

 Potential Legal Proceedings

    In a letter dated January 25, 2000, a customer claimed that Chordiant
breached a license and related services agreements and provided notice of the
customer's intent to terminate the agreements. The customer alleged that
Chordiant failed to meet product specifications and development-related
milestones and requested that Chordiant either cure the alleged breaches or, if
unable to do so, refund the customer's past payments. Chordiant, after
consultation with legal counsel, does not believe that it breached its
agreements with the customer and intends to continue to satisfy its obligations
to the customer. Chordiant intends to defend itself vigorously if an action is
brought by the customer. An estimate of the possible loss or range of possible
loss upon an unfavorable outcome can not be made at this time. During the years
ended December 31, 1999 and 1998, Chordiant recognized $5.3 million and $1.5
million of revenue from the customer. At December 31, 1999, Chordiant's
outstanding receivable balance from the customer was $1.7 million. An
unfavorable outcome in the dispute with the customer, could result in a
material adverse effect on the consolidated financial position, results of
operations and cash flows of Chordiant.

                                      F-21
<PAGE>




                       [LOGO OF CHORDIANT SOFTWARE, INC.]
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the     +
+Securities and Exchange Commission is effective. This prospectus is not an    +
+offer to sell securities, and we are not soliciting offers to buy these       +
+securities, in any state where the offer or sale is not permitted.            +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

              SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000

PRELIMINARY PROSPECTUS


                       [LOGO OF CHORDIANT SOFTWARE, INC.]


                                4,500,000 Shares

                                  Common Stock

  Chordiant Software, Inc. is offering 4,500,000 shares of its common stock.
This is our initial public offering, and no public market currently exists for
our shares. Our common stock has been approved for quotation on the Nasdaq
National Market under the symbol CHRD. We anticipate that the initial public
offering price will be between $14.00 and $16.00 per share.

                                --------------

 Investing in our common stock involves risks. See "Risk Factors" beginning on
                                    page 8.

                                --------------

<TABLE>
<CAPTION>
                                                                 Per Share Total
                                                                 --------- -----
<S>                                                              <C>       <C>
Public Offering Price...........................................   $       $
Underwriting Discounts and Commissions..........................   $       $
Proceeds to Chordiant...........................................   $       $
</TABLE>

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

  We have granted the underwriters a 30-day option to purchase up to an
additional 425,000 shares of our common stock to cover over-allotments. Two of
our stockholders, who are identified on page 67, have granted the underwriters
a 30-day option to purchase up to an additional 250,000 shares of our common
stock to cover over-allotments.

                                --------------

Robertson Stephens International
                 Dain Rauscher Wessels
                                                      Thomas Weisel Partners LLC

                  The date of this prospectus is        , 2000
<PAGE>

                                  UNDERWRITING

    The underwriters named below, acting through their representatives,
FleetBoston Robertson Stephens Inc., Dain Rauscher Incorporated, and Thomas
Weisel Partners LLC, have each agreed with us and the selling stockholders,
subject to the terms and conditions of the underwriting agreement, to purchase
from us the number of shares of common stock listed opposite their names below.
The underwriters are committed to purchase and pay for all of these shares if
any are purchased.

<TABLE>
<CAPTION>
                           Underwriters                         Number of Shares
                           ------------                         ----------------
   <S>                                                          <C>
   FleetBoston Robertson Stephens Inc. and BancBoston
     Robertson Stephens International Limited.................
   Dain Rauscher Incorporated.................................
   Thomas Weisel Partners LLC.................................
                                                                   ---------
     Total....................................................     4,500,000
                                                                   =========
</TABLE>

    We have been advised by the representatives that the underwriters propose
to offer the shares of common stock to the public at the initial public
offering price of $   per share and to dealers at that price less a concession
of not more than $    per share, of which $    may be allowed to other dealers.
After the initial public offering, these prices may be reduced by the
representatives. This reduction will not change the amount of proceeds to be
received by us or the selling stockholders. The common stock is offered by the
underwriters, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part.

    The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

    Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since
December 1998, Thomas Weisel Partners has been named as a lead or co-manager on
91 filed public offerings of equity securities, of which 73 have been
completed, and has acted as a syndicate member in an additional 48 public
offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except for its contractual relationship with us under to
the underwriting agreement entered into for this offering.

    The following table summarizes the compensation to be paid to the
underwriters by Chordiant:

<TABLE>
<CAPTION>
                                             Per Share             Total
                                        ------------------- -------------------
                                         Without    With     Without    With
                                          Over-     Over-     Over-     Over-
                                        allotment allotment allotment allotment
                                        --------- --------- --------- ---------
<S>                                     <C>       <C>       <C>       <C>
Underwriting discounts and commissions
  paid by Chordiant...................    $         $         $         $
Expenses payable by Chordiant.........    $         $         $         $
</TABLE>

    Over-allotment Options. We have granted to the underwriters an option to
purchase up to 425,000 additional shares of common stock at $   per share.
Additionally, a principal stockholder and a family trust for the benefit of the
family of Carol Realini and Joseph Tumminaro, each a director and founder of
Chordiant, and an educational trust for the benefit of the children of Mr.
Tumminaro and Ms. Realini have granted to the underwriters an option to
purchase up to 250,000 additional shares of common stock at $   per share. Each
option is exercisable for 30 days after the date of this prospectus. If the
underwriters exercise either option, each of the underwriters will be required
to purchase the same percentage of additional shares that the number of shares
of common stock to be purchased by it shown in the above table represents as a
percentage of the total number of shares offered.


                                       67
<PAGE>


    If purchased, these additional shares will be sold by the underwriters on
the same terms as those offered by this prospectus. If our option is exercised
we will be required to sell shares the underwriters choose to purchase under
the option. If the selling stockholders' option is exercised, they will be
required to sell the shares the underwriters choose to purchase under the
option. The underwriters are obligated to exercise the selling stockholders
option in full before to exercising their option with us. The underwriters may
exercise these options only to cover over-allotments made for the sale of the
shares of common stock offered in this offering.

    Indemnity. The underwriting agreement contains covenants of indemnity among
the underwriters, Chordiant and the selling stockholders, including liabilities
under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the underwriting agreement.

    Lock-up Agreements. Our officers, directors and stockholders have agreed,
for a period of 180 days after the date of this prospectus, that, subject to
exceptions, they will not offer to sell or transfer any shares of common stock
or any securities convertible into shares of common stock owned as of the date
of this prospectus or, with some exceptions, acquired by them after the date of
this prospectus without the written consent of FleetBoston Robertson Stephens
Inc. However, FleetBoston Robertson Stephens Inc. may release all or a portion
of the securities subject to the lock-up agreements. There are no agreements
between the representatives and any of our stockholders providing consent by
the representatives to the sale of shares before the expiration of the lock-up
period other than through this offering.

    Future Sales. We have agreed that until 180 days after the date of this
prospectus, we will not, subject to some exceptions, without the written
consent of FleetBoston Robertson Stephens Inc.:

  .  consent to the transfer of any shares held by stockholders before the
     expiration of the lock-up period; or

  .  issue, sell or transfer any shares of common stock or any securities
     convertible into our common stock other than

    (1)the sale of shares in this offering,

    (2)the issuance of common stock upon the exercise of outstanding
        options,

    (3)the issuance of options under existing stock option and incentive
        plans, and

    (4)the issuance of up to 3,400,000 shares as a result of future
        acquisitions.

    Listing. Our common stock has been approved for quotation on the Nasdaq
National Market under the symbol CHRD.

    No Prior Public Market. Before this offering, there was no public market
for our common stock. As a result, the initial public offering price for the
common stock offered in this offering will be determined through negotiations
between us and the representatives. We will determine the initial offering
price based on factors including:

  .prevailing market conditions,

  .our financial information,

  .market valuations of other companies that we and the representatives
      believe to be comparable to ours,

  .estimates of our business potential, and

  .our present state of development.

    Stabilization. The representatives have advised us that the underwriters
may perform the following transactions.

                                       68
<PAGE>

<TABLE>
 <C>                                             <S>
                   Transaction                                   Description

     stabilizing bid                              a bid for or the purchase of the common
                                                  stock on behalf of the underwriters for
                                                  the purpose of fixing or maintaining the
                                                  price of the common stock.

     syndicate covering transaction               a bid for or the purchase of the common
                                                  stock on behalf of the underwriters to
                                                  cover a position where the underwriter
                                                  has sold shares it did not yet own,
                                                  incurred by the underwriters for this
                                                  offering.

     penalty bid                                  an arrangement permitting the
                                                  representatives to reclaim the selling
                                                  concession otherwise payable to an
                                                  underwriter for this offering if the
                                                  common stock originally sold by the
                                                  underwriter is purchased by the
                                                  representatives in a syndicate covering
                                                  transaction and has therefore not been
                                                  effectively placed by the underwriter.
</TABLE>

These transactions may have the effect of stabilizing or maintaining the market
price of the common stock at a level above that which might prevail in the open
market. The representatives have advised us that these transactions may be
effected on the Nasdaq National Market and, if commenced, may be discontinued
at any time.

    Internet Distribution. A limited number of shares will be made available to
the customers of E*TRADE Securities, Inc. E*TRADE Securities will make a copy
of the prospectus in electronic format available on its web site located at
www.etrade.com. E*TRADE will accept conditional offers to purchase shares from
all of its customers that complete and pass an online eligibility profile. If
the demand for shares from the customers of E*TRADE exceeds the number of
shares allocated to it, E*TRADE will use a random allocation methodology to
distribute shares in even lots of 100 shares per customer. There are no plans
to direct shares to particular internet purchasers.

    Directed share program. At our request, the underwriters have reserved up
to 225,000 shares of common stock to be issued by Chordiant and offered for
sale, at the initial public offering price, to directors, officers, employees,
business associates and related persons of Chordiant. The number of shares of
common stock available for sale to the general public will be reduced to the
extent these persons purchase the reserved shares. Any reserved shares that are
not purchased by the identified persons will be offered by the underwriters to
the general public on the same basis as the other shares offered by this
prospectus. We have agreed to indemnify the underwriters against liabilities
and expenses, including some liabilities under the Securities Act of 1933, in
connection with the sales of these shares.

                                 LEGAL MATTERS

    The validity of the issuance of the common stock offered hereby will be
passed upon for us by Cooley Godward LLP, Palo Alto, California. Other
specified legal matters in connection with this offering will be passed upon
for the underwriters by Brobeck, Phleger & Harrison LLP, Palo Alto, California.

                                    EXPERTS

    The consolidated financial statements as of December 31, 1998 and 1999, and
for each of the three years in the period ended December 31, 1999, included in
this prospectus, have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

                                       69
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

    The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Chordiant in connection with
the sale of the common stock being registered. All amounts are estimates except
the SEC registration fee, the NASD filing fee and the Nasdaq National Market
filing fee.

<TABLE>
   <S>                                                                <C>
   SEC Registration Fee.............................................  $   21,859
   NASD Filing Fee..................................................       5,000
   Nasdaq National Market Additional Listing Fee....................      95,000
   Printing.........................................................     140,000
   Legal Fees and Expenses..........................................     500,000
   Accounting Fees and Expenses.....................................     250,000
   Blue Sky Fees and Expenses.......................................      10,000
   Transfer Agent and Registrar Fees................................      10,000
   Miscellaneous....................................................      76,338
                                                                      ----------
     Total..........................................................  $1,108,197
                                                                      ==========
</TABLE>

    We intend to pay all expenses of registration, issuance and distribution.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

    As permitted by Delaware law, our amended and restated certificate of
incorporation provides that no director of Chordiant will be personally liable
to us or to our stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability:

  .  for any breach of duty of loyalty to us or to our stockholders;

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

  .  under Section 174 of the Delaware General Corporation Law; or

  .  for any transaction from which the director derived an improper
     personal benefit.

    Our amended and restated certificate of incorporation further provides that
we must indemnify our directors and executive officers, and may indemnify our
other, officers and employees and agents, to the fullest extent permitted by
Delaware law. We believe that indemnification under our amended and restated
certificate of incorporation covers negligence and gross negligence on the part
of parties that are being indemnified.

    We intend to enter into indemnification agreements with each of our
directors and officers. These agreements will require us to indemnify each
director and officer for expenses, including attorneys' fees, judgments, fines
and settlement amounts, incurred by any of these persons in any action or
proceeding arising out of that person's services as our director or officer,
any subsidiary of ours or any other company or enterprise to which the person
provides services at our request.

    The underwriting agreement, Exhibit 1.1, will provide for indemnification
by the underwriters of Chordiant, our directors, our officers who sign the
registration statement, and our controlling persons for some liabilities,
including liabilities arising under the Securities Act.

                                      II-1
<PAGE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

    Since inception, we have sold and issued the following unregistered
securities:

  (1) From March 13, 1991 through December 31, 1999, we have granted stock
options to purchase 10,372,693 shares of our common stock to employees,
consultants and directors under to our 1999 equity incentive plan. Of these
stock options, 1,731,702 shares have been canceled without being exercised,
816,829 shares have been exercised, 142,981 shares of which have been
repurchased and 7,824,162 shares remain outstanding.

  (2) In April 1991, we issued a total of 5,000,000 shares of common stock to
two purchasers at $0.044 per share, for a total purchase price of $220,000.

  (3) In June 1996, we issued a total of 6,838,905 shares of series A preferred
stock to five purchasers at $1.316 per share, for a total purchase price of
$9,000,000. Shares of series A preferred stock are convertible into shares of
common stock at the rate of one share of common stock for each share of series
A preferred stock owned.

  (5) In June 1997, we issued a total of 5,410,917 shares of series B preferred
stock to thirteen purchasers at $1.70 per share, for a total purchase price of
$9,198,564. Shares of series B preferred stock are convertible into shares of
common stock at the rate of one share of common stock for each share of series
B preferred stock owned.

  (6) In December 1997, we issued a total of 4,199,216 shares of series C
preferred stock to twelve purchasers at $2.56 per share, for a total purchase
price of $10,750,000. Shares of series C preferred stock are convertible into
shares of common stock at the rate of one share of common stock for each share
of series C preferred stock owned.

  (7) In April 1999, we issued $10,000,000 of convertible subordinated debt,
which is convertible into 2,000,000 shares of series D preferred stock at $5.00
per share, to three purchasers. Shares of series D preferred stock are
convertible into shares of common stock at the rate of one share of common
stock for each share of series D preferred stock owned.

  (8) In September 1999, we issued a total of 5,963,155 shares of series E
preferred stock to thirteen purchasers at $3.80 per share, for a total purchase
price of $22,660,000. Shares of series E preferred stock are convertible into
shares of common stock at the rate of one share of common stock for each share
of series E preferred stock owned.

    The sales and issuances of securities described in paragraph (1) were
exempt from registration under the Securities Act by virtue of Rule 701 of the
Securities Act in that they were offered and sold either through a written
compensatory benefit plan or through a written contract relating to
compensation, as provided by Rule 701.

    The sales and issuances of securities described in paragraphs (2) or
through (8) were exempt from registration under the Securities Act by virtue of
Rule 4(2) or Regulation D of the Securities Act. With respect to the grant of
stock options described in paragraph (1), an exemption from registration was
unnecessary in that none of the transactions involved a "sale" of securities as
this term is used in Section 2(3) of the Securities Act.

    Appropriate legends are affixed to the stock certificates issued in the
transactions described in paragraphs (1) through (8). Similar legends were
imposed in connection with any subsequent sales of any of these securities. All
recipients either received adequate information about Chordiant or had access,
through employment or other relationships, to such information.

                                      II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES

<TABLE>
<CAPTION>
 Exhibit
 Number                          Description of Document
 -------                         -----------------------
 <C>     <S>
  1.1    Form of Underwriting Agreement.(1)

  3.1    Amended and Restated Certificate of Incorporation of the Registrant to
         be effective following the closing of this offering.(1)

  3.2    Amended and Restated Bylaws of the Registrant.(1)
  3.3    Amended and Restated Certificate of Incorporation of the
         Registrant.(1)

  3.4    Amendment to Certificate of Incorporation of the Registrant. (1)

  4.1    Reference is made to Exhibits 3.1 through 3.3.

  4.2    Specimen Stock Certificate. (1)

  4.3    Amended and Restated Registration Rights Agreement, dated as of
         September 28, 1999.(1)

  5.1    Opinion of Cooley Godward LLP. (1)

 10.1    Form of Indemnification Agreement.(1)

 10.2    1999 Equity Incentive Plan and form of stock option agreement.(1)

 10.3    1999 Employee Stock Purchase Plan.(1)

 10.4    1999 Non-Employee Directors' Plan and form of stock option
         agreement.(1)

 10.5    Cupertino City Center Net Office Lease by and between Cupertino City
         Center Buildings, as Lessor, and the Registrant, as Lessee, dated June
         11, 1998.(1)

 10.6    Forte Software, Inc. Value-Added ReSeller (VAR) License and Services
         Agreement, dated October 29, 1998.(2)

 10.7    Software License Agreement between Electronic Data Systems Corporation
         and the Registrant, dated July 11, 1998.

 10.8    Employment Agreement of Samuel T. Spadafora, dated April 24, 1998.(1)

 10.9    Severance Agreement of Carol Realini, dated December 9, 1998.(1)

 10.10   Severance Agreement of John Palmer, dated August 23, 1999.(1)

 10.11   Form of Promissory Note executed by each of Samuel T. Spadafora,
         Steven R. Springsteel, Donald J. Morrison and Steven Sherman in favor
         of the Registrant.(1)

 10.12   Form of Stock Pledge Agreement between the Registrant and each of
         Samuel T. Spadafora, Steven R. Springsteel, Donald J. Morrison and
         Steven Sherman.(1)

 21.1    Subsidiaries of the Registrant.(1)

 23.1    Consent of PricewaterhouseCoopers LLP.

 23.2    Consent of Cooley Godward LLP (included in Exhibit 5.1).(1)

 24.1    Power of Attorney (included in signature page).(1)

 27.1    Financial Data Schedule.(1)
</TABLE>
- --------
(1) Filed previously.

(2)  Confidential treatment requested for certain portions of this exhibit.
     Omitted portions have been filed separately with the Securities and
     Exchange Commission.

ITEM 17. UNDERTAKINGS

    The undersigned Registrant hereby undertakes:

      (1) That for purposes of determining any liability under the
  Securities Act, the information omitted from the form of this prospectus
  filed as part of this Registration Statement in reliance upon

                                      II-3
<PAGE>

  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) That for purposes of determining any liability under the
  Securities Act, 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 the securities at that
  time shall be deemed to be the initial bona fide offering thereof.

      (3) Insofar as indemnification for liabilities arising under the
  Securities Act may be permitted to directors, officers and controlling
  persons of the Registrant pursuant to the provisions referenced in Item 14
  of this Registration Statement or otherwise, the Registrant has been
  advised that in the opinion of the Securities and Exchange Commission this
  indemnification is against public policy as expressed in the Securities
  Act and is, therefore, unenforceable. In the event that a claim for
  indemnification against these 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 a 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 of whether the indemnification by it is against
  public policy as expressed in the Securities Act of 1933, and will be
  governed by the final adjudication of this issue.

      (4) To provide to the Underwriters at the closing specified in the
  Underwriting Agreement certificates in the denomination and registered in
  the names required by the Underwriters to permit prompt delivery to each
  purchaser.

                                      II-4
<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 4 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Cupertino, State of California, on February 14, 2000.

                                          CHORDIANT SOFTWARE, INC.

                                          By:  /s/ Steven R. Springsteel
                                             ----------------------------------
                                               Steven R. Springsteel
                                              Chief Financial Officer

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Samuel T. Spadafora and Steven R.
Springsteel, and each of them, his or her true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities, to
(i) act on, sign and file with the Securities and Exchange Commission any and
all amendments (including post-effective amendments) to this registration
statement together with all schedules and exhibits thereto and any subsequent
registration statement filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, together with all schedules and exhibits thereto, (ii) act
on, sign and file such certificates, instruments, agreements and other
documents as may be necessary or appropriate in connection therewith, (iii) act
on and file any supplement to any prospectus included in this registration
statement or any such amendment or any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended and (iv)
take any and all actions which may be necessary or appropriate to be done, as
fully for all intents and purposes as he or she might or could do in person,
hereby approving, ratifying and confirming all that such agent, proxy and
attorney-in-fact or any of his substitutes may lawfully do or cause to be done
by virtue thereof.

    In accordance with the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following
persons in the capacities and on these dates stated:

<TABLE>
<CAPTION>
             Signature                           Title                    Date
             ---------                           -----                    ----

<S>                                  <C>                           <C>
                 *                   President, Chief Executive    February 14, 2000
____________________________________ Officer (Principal Executive
        Samuel T. Spadafora          Officer) and Chairman

    /s/ Steven R. Springsteel        Executive Vice President and  February 14, 2000
____________________________________ Chief Financial Officer
       Steven R. Springsteel         (Principal Financial and
                                     Accounting Officer),
                                     Secretary

                 *                   Chief Technical Officer and   February 14, 2000
____________________________________ Director
        Joseph F. Tumminaro

                 *                   Director                      February 14, 2000
____________________________________
          Oliver D. Curme
                 *                   Director                      February 14, 2000
____________________________________
          Kathryn C. Gould

                 *                   Director                      February 14, 2000
____________________________________
         Mitchell Kertzman
                 *                   Director                      February 14, 2000
____________________________________
         Robert S. McKinney
</TABLE>

                                      II-5
<PAGE>

<TABLE>
<CAPTION>
             Signature                           Title                    Date
             ---------                           -----                    ----

<S>                                  <C>                           <C>
                 *                   Director                      February 14, 2000
____________________________________
          William Raduchel

                 *                   Director                      February 14, 2000
____________________________________
          Carol L. Realini
                 *                   Director                      February 14, 2000
____________________________________
         David R. Springett
</TABLE>

*By:    /s/ Steven R. Springsteel
  -----------------------------
       Steven R. Springsteel
         Attorney-in-Fact


                                      II-6
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number                          Description of Document
 -------                         -----------------------
 <C>     <S>
  1.1    Form of Underwriting Agreement.(1)

  3.1    Amended and Restated Certificate of Incorporation of the Registrant to
         be effective following the closing of this offering.(1)

  3.2    Amended and Restated Bylaws of the Registrant.(1)

  3.3    Amended and Restated Certificate of Incorporation of the
         Registrant.(1)

  3.4    Amendment to Certificate of Incorporation of the Registrant. (1)

  4.1    Reference is made to Exhibits 3.1 through 3.3.

  4.2    Specimen Stock Certificate. (1)

  4.3    Amended and Restated Registration Rights Agreement, dated as of
         September 28, 1999.(1)

  5.1    Opinion of Cooley Godward LLP. (1)

 10.1    Form of Indemnification Agreement.(1)

 10.2    1999 Equity Incentive Plan and form of stock option agreement.(1)

 10.3    1999 Employee Stock Purchase Plan.(1)

 10.4    1999 Non-Employee Directors' Plan and form of stock option
         agreement.(1)

 10.5    Cupertino City Center Net Office Lease by and between Cupertino City
         Center Buildings, as Lessor, and the Registrant, as Lessee, dated June
         11, 1998.(1)

 10.6    Forte Software, Inc. Value-Added ReSeller (VAR) License and Services
         Agreement, dated October 29, 1998.(2)

 10.7    Software License Agreement between Electronic Data Systems Corporation
         and the Registrant, dated July 11, 1998.

 10.8    Employment Agreement of Samuel T. Spadafora, dated April 24, 1998.(1)

 10.9    Severance Agreement of Carol Realini, dated December 9, 1998.(1)

 10.10   Severance Agreement of John Palmer, dated August 23, 1999.(1)

 10.11   Form or Promissory Note executed by each of Samuel T. Spadafora,
         Steven R. Springsteel, Donald J. Morrison and Steven Sherman executed
         in favor of the Registrant.(1)

 10.12   Form of Stock Pledge Agreement between the Registrant and each of
         Samuel T. Spadafora, Steven R. Springsteel, Donald J. Morrison and
         Steven Sherman.(1)

 21.1    Subsidiaries of the Registrant.(1)

 23.1    Consent of PricewaterhouseCoopers LLP.

 23.2    Consent of Cooley Godward LLP (included in Exhibit 5.1).

 24.1    Power of Attorney (included in signature page).(1)

 27.1    Financial Data Schedule.(1)
</TABLE>
- --------
(1)  Filed previously.

(2)  Confidential treatment requested for certain portions of this exhibit.
     Omitted portions have been filed separately with the Securities and
     Exchange Commission.

<PAGE>

                                                                    EXHIBIT 10.6

                             FORTE SOFTWARE, INC.


           VALUE-ADDED RESELLER (VAR) LICENSE AND SERVICES AGREEMENT





VAR               CHORDIANT SOFTWARE, INC
   ____________________________________________________________________________

Address           20400 Stevens Creek Blvd., Ste. 400
       ________________________________________________________________________

City              Cupertino           State         CA          Zip     95014
______________________________________     _____________________   ____________


This Value-Added Reseller (VAR) License and Services Agreement (the "Agreement")
is between Forte Software, Inc., a Delaware corporation located at 1800 Harrison
Street, Oakland, California, 94612 ("Forte"), and the company set forth above,
including any wholly or majority owned subsidiaries (the "VAR") for the purpose
of setting forth the terms and conditions upon which Forte shall grant to the
VAR a license to use and Sublicense the Products listed in Exhibit A attached
hereto. This Agreement shall supersede and replace the Value-Added Reseller
License and Services Agreement dated September 19, 1996 (and all other
agreements and understandings between the parties), which superseded the
Value-Added Reseller License and Services Agreement dated February 1, 1995.

The Effective Date of this Agreement is the last date set forth below.


FORTE:                                      VAR:

FORTE SOFTWARE, INC.                        CHORDIANT SOFTWARE, INC.

Signature: /s/ Bob L. Corey                 Signature: /s/ Steven R. Springsteel

Name: Bob L. Corey                          Name: Steven R. Springsteel

Title: Senior Vice President                Title: EVP/CFO

Date: October 30, 1998                      Date: October 29, 1998

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

TERMS AND CONDITIONS

Forte and the VAR hereby agree that the following terms and conditions will
apply to each license granted and to all services provided by Forte under this
Agreement.

1.       DEFINITIONS

1.1      "Cumulative Sublicense Fees" shall mean the total Sublicense fees,
including Full Use Sublicense Fees, accrued to Forte beginning upon the
Effective Date hereto for Products Sublicensed under this Agreement.

1.2      "Delivery Partners" shall mean a system integrator or other party
engaged to provide services to a Sublicensee or VAR with respect to VAR
Applications.

1.3      "Designated Developer" shall mean a person within the VAR designated by
VAR to develop applications with the Product.

1.4      "Distributors" shall mean Delivery Partners or other third parties
appointed by the VAR to market and grant Sublicenses of the VAR Application as
further set forth in Section 3.1(h) hereto.

1.5      "Documentation" shall mean the user manuals and operator instructions
furnished by Forte in conjunction with the Products.

1.6      "Effective Date" shall mean the date so specified on the signature page
of this Agreement or on the applicable Order Form, Sublicense report, or other
document.

1.7      "Order Form" shall mean Forte's standard form by which the VAR may
order licenses and services for VAR's use under this Agreement. Such Order Form
is attached hereto as Exhibit B.

1.8      "Price List" shall mean Forte's then-current price list for the country
in which a Product license or service is to be used.

1.9      "Product" or "Products" shall mean the computer software program(s)
owned or distributed by Forte for which the VAR is granted a license pursuant to
this Agreement and as further set forth in Exhibit A, whether in printed or
machine readable form and includes Updates (defined in Section 1.16). Forte
agrees that Exhibit A may be amended from time to time by the parties to include
other software Products not currently listed on Exhibit A that Forte licenses to
its customers generally.

1.10     "Runtime Users" shall mean the maximum number of logged-in persons
within a Sublicensee that may use the VAR Application at any one time.

1.11     "Standard Technical Support" shall mean Product technical support
services provided under Forte's policies in effect on the date such services are
ordered.

1.12     "Sublicense" shall mean a nonexclusive, nontransferable right granted
by the VAR or Distributor to use a VAR Application for the Sublicensee's own
internal business purposes and not for any further distribution.

1.13     "Sublicensee" shall mean a third party who is granted a Sublicense by
the VAR or a Distributor.

1.14     "Support Fees" shall mean the fees payable annually for Standard
Technical Support.

1.15     "Supported License" shall mean a Product license for which VAR has a
current order for annual Standard Technical Support.

1.16     "Updates" shall mean updated versions of the Products and Documentation
which encompass logical improvements, extensions and other changes to the
Products which are generally made available to Product licensees who are current
in their payment of Support Fees. Updates shall be governed by the terms of this
Agreement.

1.17     "VAR Application" shall mean the VAR's software program containing
modifiable Product code. A VAR Application shall be developed by the VAR through
use of the Products as further set forth in Section 2.1 hereto. The VAR shall
provide a description of each VAR Application using the form attached as Exhibit
C, and each VAR Application shall be approved in writing by Forte prior to
Sublicensing which approval will not be unreasonably withheld. Forte agrees that
future approved VAR Applications shall be governed by the terms of this
Agreement. Forte hereby approves VAR's CCS Application as described in Exhibit C
attached hereto. Notwithstanding any provision to the contrary in this
Agreement, nothing stated in this Agreement shall preclude VAR from developing
any VAR software program through the use of any third party product.

1.18     "VAR Price List" shall mean the VAR's then-current standard product
list and fee schedule. The VAR shall attach hereto as Exhibit D the initial VAR
Price List which includes the VAR Application. The VAR agrees to notify Forte of
all updates and revisions to such VAR Price List.

2.   VAR LICENSE AND SERVICES

2.1      VAR Development License

(a) Fees. In consideration for the license described in (b) below, VAR shall pay
Forte the VAR license fee set forth on Exhibit A. Additional Designated
Developer and other

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

licenses may be obtained for the applicable fees set forth in Exhibit A.

(b) License Grant. Forte grants to VAR a nonexclusive, worldwide,
    nontransferable and nonassignable (except as otherwise specified herein)
    license to use the Documentation and the Products listed on Exhibit A only
    for the following purposes:

(i)      to market and Sublicense to Sublicensees worldwide (subject to Section
         7.8) VAR Application Development Systems (as defined in Exhibit A) and
         the right to Sublicense such rights through multiple tiers of
         distribution, each for the purposes described below. In connection with
         its license pursuant to this clause, VAR shall limit access to such
         Products to the number of Designated Developers indicated on the
         applicable Order Form.

(ii)     to develop or prototype the VAR Application;

(iii)    to demonstrate the VAR Application to potential Sublicenses;

(iv)     to provide training and technical support to employees and Sublicensees
         solely in conjunction with the VAR Application; and

(v)      in connection with providing consulting services and/or providing or
         modifying VAR Applications to Sublicensees and potential Sublicensees.

In addition to the temporary Sublicenses specified in Section 3.1(c), VAR may
make up to five (5) copies of the Products for demonstration and training
purposes, may make a reasonable number of copies of the Products for archival or
backup purposes. Except as necessary to exercise its license rights or as
otherwise permitted hereunder no other copies shall be made without Forte's
prior written consent. Documentation may be obtained from Forte for the fees
specified in the Price List. All titles, trademarks, and copyright and
restricted rights notices shall be reproduced in such copies. All copies of the
Product(s) and Documentation are subject to the terms of this Agreement.

(c) Limitations on Use. VAR shall not use or duplicate the Products (including
the Documentation) for any purpose other than as specified in the Agreement, or
make the Products available to unauthorized third parties. VAR shall not (i) use
the Products for its internal data processing or for processing customer data;
(ii) except as noted in Exhibit A Section 4(d) rent, or timeshare the Products;
(iii) market the Products by interactive cable or remote processing services or
otherwise distribute the Products other than as specified in this Agreement;
(iv) publish or describe to any third party the results of any benchmark tests
run on the Products without Forte's prior written consent provided, however,
that VAR may publish benchmark tests and comparisons limited in scope to the VAR
Application's features; functionality and performance, so long as such benchmark
tests and comparisons do not directly disclose the functionality, features or
performance of any Product (including without limitation memory utilization,
response time, transaction throughput, relative performance/functionality on
different hardware and/or operating system platforms), or (v) cause or permit
the reverse engineering, disassembly, decompilation, or otherwise attempt to
derive source code of the Products. Transfer of a Product outside the United
States for VAR Application development or support shall be permitted only with
Forte's prior written consent, which shall not be unreasonably withheld, and is
subject to VARs payment of Forte's then current international fee uplift.

2.2.     Development License Support

Subject to VAR's payment of the Support Fees set forth on Exhibit A, and so long
as Forte continues to offer similar support services to its other Product
licensees, Forte will provide annual Standard Technical Support to VAR as
follows:

(a) Telephone Support. Forte will provide telephone consultation at Forte's
service location, to assist VAR in identifying, verifying and resolving problems
in the use and operation of the Product. Telephone assistance services shall be
limited to those VAR personnel indicated on the applicable Order Form, which may
be amended from time to time by VAR upon written notice to Forte.

(b) Problem Resolution. Forte will respond to problem reports concerning the
Products submitted by VAR to Forte, using the form provided by Forte where
possible, including backup material substantiating the Product problem. Upon
proper notification of a failure of the Product to perform correctly, which
failure can be reproduced at Forte's facility or via remote access to VAR's
facility, Forte shall use reasonable efforts to correct the failure and to
provide VAR with correcting Product, a work-around or other solution to the
problem.

Standard Technical Support services will be provided in accordance with the
sections entitled "Types of Assistance Offered" and "How Forte Resolves Your
Call" of the Forte Technical Support Users Guide ("Support Guide"), attached
hereto as Exhibit F or policies that are substantially similar thereto. In the
event of a conflict of inconsistency between this Section 2.2 and the Support
Guide, Section 2.2 shall govern.

(c) Updates. Forte will provide VAR with Updates. For a minimum of 12 months
after the introduction of a new generally available release, Forte will use
reasonable efforts to provide Standard Technical Support for the previous
release of the Product.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

(d) Renewal. Forte will notify the VAR at least 30 days before the annual
support period is scheduled to expire. Fees for annual support are due annually
in advance. Such fees will be those in effect at the beginning of the period for
which the fees are paid. Annual support will terminate unless the VAR renews for
the next year under Forte's then current policies by providing Forte with a
purchase order and/or payment of the next year's fees prior to the expiration
date.

(e) Re-Instatement. VAR may reinstate lapsed support services only upon payment
of the back Support Fees specified in the Price List, plus current year's
Support Fees.

2.3      Consulting and Training Services

Forte will provide on-site consulting services ordered by VAR at Forte's
then-standard consulting rates under the terms and conditions of this Agreement
and any relevant work order; provided, however, that Forte will consider
offering Chordiant a discount on consulting orders of $100,000 or more (such
consulting services to be used within six months of purchase). Scheduled service
dates will be agreed upon mutually, subject to availability of Forte personnel.
Forte's daily consulting rate is based on an eight-hour workday. VAR shall
reimburse Forte for actual, reasonable travel and out-of-pocket expenses
incurred in performing such services. VAR may also order training from Forte
(scheduled classes at Forte's facilities or on-site) at Forte's then-standard
rates under this Agreement. All consulting and training services must be
utilized by VAR within six (6) months following the date ordered by VAR.

Unless otherwise agreed by the parties in writing, Forte consulting services
will be limited to transferring knowledge to and mentoring VAR's staff on "best
practices" concerning the Products, and reviewing and providing input on VAR's
design and implementation of applications developed and deployed using the
Products. Development and deployment of applications will remain at all times
under VAR's control and direction. Ultimate responsibility for development and
deployment of such applications is with VAR, and Forte will not be liable to VAR
or any third party for any delay in completion or non-completion of any
application.

2.4      Ownership and Rights to Developments

(a) Products and Documentation. VAR acquires only the right to use the Products
and Documentation, and does not acquire any rights of ownership. All right,
title, and interest in and to the Products and Documentation, including without
limitation all intellectual property rights therein, shall at all times remain
with Forte and its licensors.

(b) VAR Application. Exclusive of Product, the VAR Application and all other
software that VAR develops (or has developed by a third party), and all changes
or modifications thereto, will remain the sole and exclusive property of VAR.
Exclusive of Product, Forte shall have no interest or acquire any rights in the
VAR Application or other software or in such changes or modifications. Except as
may otherwise be agreed to in writing by the parties under Section 2(d)(i),
Forte irrevocably assigns to VAR all right, title and interest worldwide in and
to any changes or modifications to the VAR Application (exclusive of Product)
and all applicable intellectual property rights related to the VAR Application
(exclusive of Product), including without limitation, copyrights, trademarks,
trade secrets, patents, moral rights, contract and licensing rights.
Notwithstanding the foregoing and as a condition of this Agreement and in
consideration for the licenses granted herein, VAR agrees that it shall not
sublicense or otherwise distribute the VAR Application (containing any Product)
after termination or expiration of this Agreement. Nothing in this Agreement
shall restrict in any way the license by VAR, or require license or other
payments to Forte with respect to products or applications which are not VAR
Applications, or require VAR or any other party to license VAR Applications or
Products.

(c) Developments. Any ideas, know-how, or techniques concerning the Products or
their use which may be developed, conceived or reduced to practice by Forte in
the course of providing services under this Agreement, including without
limitation any enhancements or modifications made to the Products (collectively,
"Developments"), shall be the exclusive property of Forte. Forte may in its sole
discretion develop, use, market, and license any Developments. Forte may create
items similar or related to the VAR Developments or other products which are
developed by Forte for VAR provided such items are independently developed
without use of VAR's Confidential Information or trade secrets. Forte shall not
be required to disclose information concerning any Developments which Forte
deems to be proprietary and confidential. Any ideas, know-how, or techniques
concerning the VAR Applications or Products or their use which may be developed,
conceived or reduced to practice by VAR, including without limitation any
enhancements or modifications made to the VAR Applications (collectively, "VAR
Developments"), shall be the exclusive property of VAR. VAR may in its sole
discretion develop, use, market, and license any VAR Developments. VAR may
create items similar or related to the Products or Developments or other
materials developed by Forte for VAR provided such items are independently
developed without use of Forte's confidential information or trade secrets. VAR
shall not be required to disclose to Forte any information concerning any VAR
Developments.

(d) Custom Work Product. Notwithstanding subsection (c) above, if consulting
services rendered by Forte will by

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

mutual written agreement include the design or development of the VAR
Application, other software, documentation, or other intellectual property
specific to VAR's needs ("Custom Work Product"), then (i) the parties must agree
in writing in each instance on the ownership rights in or to such Custom Work
Product prior to Forte's commencement of such services or (ii) if no such
agreement is reached, VAR shall have sole and exclusive ownership of the Custom
Work Product. Under this subsection (ii), Forte irrevocably assigns to VAR all
right, title and interest worldwide in and to the Custom Work Product and all
applicable intellectual property rights related to the Custom Work Product,
including without limitation, copyrights, trademarks, trade secrets, patents,
moral rights, contract and licensing rights. Forte shall have the right to
create items similar or related to Custom Work Product provided such items are
independently developed without use of VAR's Confidential Information or trade
secrets. Notwithstanding any other provision to the contrary, for any consulting
services Forte provides to VAR which result in Custom Work Product that is
exclusively owned by VAR under subsection (ii) above, Forte shall not be
precluded from using Residuals (defined below) from such Custom Work Product.
"Residuals" shall mean ideas, concepts and understandings related to the Custom
Work Product which would be retained in the memory of an ordinary employee not
intent on appropriating such Custom Work Product when performing such services.
Notwithstanding the parties' agreement that VAR shall own any particular Custom
Work Product, any Developments and any proprietary software or other items
previously developed and/or owned by Forte and included in the Custom Work
Product shall remain the exclusive property of Forte. Forte hereby grants to VAR
a non-exclusive, perpetual, worldwide, fully paid-up license to copy, modify,
Sublicense, distribute and use solely for VAR's exercise of rights granted under
this Agreement all Developments and other Forte-owned items included in the
Custom Work Product. All copies of any Custom Work Product which is wholly or
partially owned by Forte shall include Forte's copyright notice and may not be
provided to third parties without Forte's prior written consent.

3.   SUBLICENSING

3.1  Terms and Conditions

(a) Right to Sublicense. Forte hereby grants VAR a nonexclusive, nontransferable
and nonassignable (except as expressly provided in this Agreement) license to
market and Sublicense to Sublicensees worldwide (subject to Section 7.8) and the
right to Sublicense such rights through multiple types of distribution (e.g.,
system integrators) (i) the Products as an integral part of the VAR Application,
(ii) the Core System Products (as defined in Exhibit A) for use with
applications other than the VAR Application (a "Full Use License"), provided
that a Sublicensee has also received a license to a VAR Application and provided
that a Forte Regional Sales Manager has reviewed and approved all quotations for
any Products above and beyond a Forte Core System prior to being presented to
the proposed Sublicensee. Each Sublicense shall be granted solely through a
written Sublicense agreement which shall include terms substantially similar to
those set forth on Exhibit E hereto. In the event of any Full Use License, Forte
shall promptly ship such Products and Documentation directly to the applicable
Sublicensee as identified on the Order Form. At Forte's request, VAR shall
provide Forte with a copy of VAR's standard Sublicense agreement. VAR may only
Sublicense those Products which VAR has previously licensed from Forte.

(b) Sublicense Fees. VAR shall pay Forte the Sublicense fee set forth on Exhibit
A. Sublicense fees shall be due and payable with each applicable Sublicense
report.

(c) Temporary Sublicenses. VAR and its Distributors shall be entitled to grant
temporary Sublicenses of the VAR Application or Full Use Licenses at no charge,
for evaluation/pilot purposes only, with no Sublicense fees owed to Forte as
long as a maximum of twenty (20) such temporary Sublicenses are in effect at any
one time. The term of each such temporary Sublicense shall be for a period not
to exceed ninety (90) days. VAR shall terminate or pay to Forte the applicable
Sublicense fees for perpetual Sublicenses for any temporary Sublicenses
outstanding in excess of ninety (90) days.

(d) Sublicensee Use. VAR is granted the Sublicensing rights described herein on
the understanding that, except for a Full Use License or where such a
restriction is not permitted by applicable law, Sublicensees will be permitted
use of the Products only in connection with the VAR Application. VAR shall use
reasonable commercial efforts to enforce the terms of its Sublicense agreements
to the extent that they relate to the Products. If VAR is aware that a
Sublicensee without a Full Use License is using a Product beyond the limited
functionality set forth in the VAR Application Sublicense agreement (for
example, use of any Product for development purposes outside of the scope of the
VAR Application), VAR or Distributor shall immediately notify the Sublicensee of
such unauthorized use. If the Sublicensee fails to discontinue such unauthorized
use following notification, VAR or Distributor shall at VAR's option either
terminate the sublicense, or forward to Forte one hundred percent (100%) of the
applicable then current Product full use license fee.

(e) Sublicensing Practices. At all times during this Agreement VAR shall: (i)
avoid deceptive, misleading, illegal, or unethical practices that may be
detrimental to Forte or to the Products; (ii) not make any representations,
warranties, or guarantees to Sublicensees concerning the Product that are
inconsistent with or in addition to those made in this Agreement and (iii)
comply with all

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THE OMITTED PORTIONS.

<PAGE>

applicable laws and regulations with respect to the VAR Application and related
services rendered by VAR.

(f)      Sublicense Reports. Within forty-five (45) days of the last day of each
quarter, VAR shall send Forte a report detailing for the quarter:

         (i) for each VAR Application or Product for a Full Use License shipped
during the prior quarter, Sublicensee name and address, date of shipment,
whether the Sublicense is temporary for evaluation purposes, and total
Sublicense fees due to Forte;

         (ii) for each grant of additional rights to use a VAR Application
previously shipped, a description of such additional rights, and a description
of the applicable Sublicense fees and Support Fees due Forte for such grant; and
the Distributor agreements executed during the prior month, including names and
addresses of the Distributors.

With each sublicense report, VAR shall simultaneously provide Forte with payment
of all fees required under such report. VAR shall require its Distributors to
report the information in clause (i) above to VAR on a quarterly basis and will
include it in the report for the quarter in which VAR received the information.

VAR hereby agrees that the information obtained by Forte pursuant to clause (i)
above, with the prior written consent of the VAR Sales Director, may be used by
Forte for the sole purpose of contacting such new Sublicensee to address any
opportunities outside of the VAR Application solution. Such information shall be
deemed to be Confidential Information as defined in Section 7.1 of this
Agreement. The VAR shall be eligible for compensation on sales by Forte of Full
Use Licenses above and beyond a Full Use Core System License to such customers,
in accordance with the then-current `reverse royalty' or similar program
maintained by Forte.

(g)      Sublicensee Documentation. VAR shall be responsible for providing
documentation for Sublicensees. VAR shall have the right to incorporate portions
of the Documentation into the VAR's documentation subject to the provisions of
Section 7.4 of the Agreement at no additional charge to VAR. Forte shall provide
VAR with electronic copies of all current documentation, in the form of CDs or
such other means as reasonably requested by VAR.

(h)      Distributors. VAR may appoint Distributors to market and Sublicense the
VAR Application under the terms of the Agreement. If a Distributor desires to
make any Product-specific modifications to the VAR Application requiring the
Product, it must do so pursuant to a development license unless such Distributor
already has an appropriate license acquired directly from Forte or other third
party. Each Distributor's agreement with VAR shall allow it to market and
Sublicense the VAR Application only in accordance with the Sublicensing
provisions of this Agreement. Forte shall be deemed a third party beneficiary of
the portions of the Agreement between VAR and such Distributor that relate to
the Products. VAR agrees to use all reasonable efforts to enforce its
Distributor agreements and to inform Forte immediately of any known material
breach thereof related to the Products.

(i)      VAR Audit. VAR shall maintain adequate books and records in connection
with its activity under this Agreement, which shall include but not be limited
to executed Sublicense agreements. Forte may at its expense, retain an
independent third party to audit the relevant accounting books and records of
VAR regarding shipment of VAR Applications or Products to ensure compliance with
the terms of this Agreement. If an audit reveals that VAR has underpaid fees to
Forte; VAR shall promptly pay such fees. Any such audit shall be conducted
during regular business hours at VAR's offices and shall not interfere
unreasonably with VAR's business activities. If the underpaid fees are in excess
of five percent (5%) of the total fees previously paid and then payable from
VAR, then VAR shall pay Forte's reasonable costs of conducting the audit. Audits
shall be made no more than once annually. In addition, each Sublicensee and
Distributor agreement shall permit VAR to conduct a similar audit of VARs
Sublicensees and/or Distributors. VAR shall, upon reasonable evidence that an
audit of a Sublicensee or Distributor is warranted, conduct such audit..

(j)      Indemnification. VAR agrees to use reasonable commercial efforts to
enforce the terms of its Sublicense and Distributor agreements required by this
Agreement to the extent that they relate to the Products and to inform Forte of
any known material breach of such Forte-related terms. VAR will defend and
indemnify Forte against: (i) all direct damages to Forte arising from any use by
VAR, its Distributors or its Sublicensees of any product not provided by Forte
but used in combination with the Products if such claim would have been avoided
by the exclusive use of the Products; and (ii) all direct damages suffered by
Forte as a result of VAR's failure to include or reasonably enforce the required
contractual terms set forth herein in each Sublicense and Distributor agreement,
provided that: (i) Forte promptly notifies VAR in writing of the claim; (ii) VAR
has sole control of the defense and all related settlement negotiations; and
(iii) Forte provides VAR with the assistance, information, and authority
necessary to perform the above; reasonable out-of-pocket expenses incurred by
Forte in providing such assistance will be reimbursed by VAR.

(k)      Federal Government Sublicenses. The Products and Documentation are
commercial computer software and documentation developed exclusively at private
expense, and in all respects are proprietary data belonging solely to Forte.

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Pursuant to DFARS 227.7202 or FAR 12.212, as applicable, the Government's right
to use, reproduce or disclose the Products and Documentation acquired under this
Agreement is subject to the restrictions of this Agreement.

(l)      Inherently Dangerous Applications. The Products are not specifically
developed, or licensed for use in any nuclear, aviation, mass transit, or
medical application or in any other inherently dangerous applications. VAR
agrees to notify each Sublicensee of this limitation. VAR agrees, and each
Sublicensee shall agree, that Forte shall not be liable for any claims or
damages arising from VAR's or a Sublicensee's use of the Products for such
applications. If VAR fails to notify Sublicensee of the limitations specified
above, VAR agrees to indemnify and hold Forte harmless from any claims for
losses, costs, damages, or liability arising out of or in connection with the
use of the Products in such applications.

(m)      Notwithstanding Section 1.12 and Items 2 and 3 of Exhibit E and any
other provision in this Agreement, VAR or Distributor shall have the right to
allow a Sublicensee to transfer or assign a Sublicense granted by VAR or
Distributor hereunder, upon written notice to VAR and such transferee/assignee
agrees to be bound by the terms and conditions of the applicable Sublicense
Agreement.

3.2      Sublicense Technical Support

In consideration for the right to provide technical support services to its
Sublicensees, the VAR agrees to pay Forte the applicable annual technical
support services fee set forth in Exhibit A. Forte shall not be required to
provide any assistance needed to install the VAR Application at Sublicensee
sites. Forte shall not be required to provide any Product technical support,
training and consulting to Sublicensees or Distributors. The VAR shall
continuously maintain Standard Technical Support services from Forte during the
period during which VAR provides technical support services to any Sublicensees.
Any questions from the VAR's Sublicensees or Distributors regarding VAR
Applications will be referred by Forte to the VAR.

3.3      Consulting and Training Services

A Sublicensee may contract directly with Forte for consulting and training
services at Forte's then-current rates. VAR shall have no right to market and/or
sell Forte consulting and training services, but may order Forte consulting and
training to be performed on behalf of a Sublicensee and/or Distributor
hereunder. Forte agrees that VAR may order Forte consulting and training
services under the terms of this Agreement and that no additional agreements
(subcontract or otherwise) would be required by Forte to be perform such
services for VAR or on behalf of VAR for a Sublicensee or Distributor.


4.       INVOICING, PAYMENT & TAXES

(a)      Payment Terms. Invoices for payment of fees shall be payable in U.S.
dollars on the Effective Date of the Order Form or Sublicense Report, as
applicable. All payment obligations identified on executed Order Forms and
Sublicense Reports (as calculated in accordance with Exhibit A) are
noncancellable and, upon payment, are nonrefundable. VAR will provide Forte with
a written purchase order for licenses and support at the time of execution of an
Order Form or submission to Forte of a Sublicense Report, as applicable. Other
applicable fees shall be payable when invoiced. All fees shall be deemed overdue
if they remain unpaid 30 days after the quarterly report date. If the VAR's
procedures require that an invoice be submitted against a purchase order before
payment can be made, the VAR will be responsible for issuing such purchase order
30 days before the payment due date. All overdue amounts shall become interest
at the rate of one and one-half percent (1-1/2%) per month or the maximum legal
rate, if less, however, nothing herein shall limit Forte's right to terminate
this Agreement as set forth herein.

(b)      Taxes. The fees listed in this Agreement do not include taxes. The VAR
shall pay or reimburse Forte for all sales, use, excise, personal property,
value-added, or other applicable taxes, duties or assessments based on the
licenses granted or the services provided under this Agreement or on the VAR's
use of the Products, except that the VAR shall have no responsibility for income
taxes imposed on Forte.

5.       TERM AND TERMINATION

5.1      Term

This Agreement shall commence on the Effective Date hereto and shall be valid
for a period of three (3) years. Each Sublicense granted under this Agreement
shall continue in perpetuity unless terminated as provided in Paragraph 5.2
below.

5.2      Termination

Upon written notice to Forte, VAR may terminate this Agreement and any license
herein at any time. Upon written notice to VAR, Forte may terminate this
Agreement and any license granted herein if VAR materially breaches this
Agreement and fails to correct the breach within thirty (30) days following
written notice from Forte specifying the breach. Notwithstanding the previous
sentence, if the material breach is of such a nature that it cannot be
reasonably be corrected within such 30 days, Forte agrees not to terminate the
Agreement or any license granted herein, provided VAR uses all reasonable

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<PAGE>

and good faith efforts to cure such breach in a timely manner, but not to exceed
90 days from written notice specifying the breach. Forte agrees that it may not
terminate any license that was granted hereunder to a Sublicensee, provided the
license to such Sublicensee was granted in accordance with the terms herein when
licensed and such Sublicensee is not in material breach of the Sublicense
Agreement.

5.3      Effect of Termination

(a)      Upon expiration or termination of this Agreement, all VAR's right to
market, Sublicense, and use the Products as set forth in this Agreement shall
cease, and Forte may declare all sums owed hereunder immediately due and
payable. VAR also agrees that it shall not sublicense or otherwise distribute
the VAR Application (which contains any Product or any portion thereof) after
expiration or termination of this Agreement.

(b)      Unless the expiration or termination of this Agreement is due to a
material breach by VAR, VAR may continue using a single copy of the most recent
release of the Products then in VAR's possession solely for the purpose of
continuing technical support for Sublicenses granted prior to termination. Such
continued use of the Products shall be subject to all the provisions of this
Agreement, including, without limitation, payment of the Support Fees specified
herein.

(c)      The termination of this Agreement or any license acquired hereunder
shall not limit either party from pursuing any other remedies available to it
including injunctive relief, nor shall such termination relieve VAR's obligation
to pay all fees that have accrued or that VAR has agreed to pay under any Order
Form or other similar ordering document under this Agreement. The parties'
rights and obligations under Sections 2.1(c), 2.4, 3.1(d),(e),(f) and (h)
through (m), and Sections 4, 5, 6, and 7 shall survive termination of this
Agreement.

5.4      Return of Products upon Termination

Except as provided in Section 5.3(b) above, upon expiration or termination of a
license hereunder, VAR shall: (i) cease using the applicable Products; and (ii)
represent in writing to Forte within one month after termination that VAR has
destroyed or has returned to Forte the Products, Documentation and all copies
except for a reasonable number of archived copies. This requirement applies to
copies and storage in all forms, partial and complete, in all types of media and
computer memory, and whether or not modified or merged into other materials.

6.       WARRANTIES, REMEDIES, LIMITATION OF LIABILITY

6.1      Infringement Indemnity

(a)      Forte will defend and indemnify VAR against all costs (including
reasonable attorneys fees and Sublicense fees attributable to Sublicenses for
which VAR was required to refund license fees to the applicable Sublicensee due
to such infringement,) arising from a claim that Products furnished and used
within the scope of this Agreement infringe a copyright, patent, trademark, or
other intellectual property right provided that: (i) VAR promptly notifies Forte
in writing of the claim; (ii) Forte has sole control of the defense and all
related settlement negotiations; and (iii) VAR provides Forte with the
assistance, information, and authority necessary to perform the above;
reasonable out-of-pocket expenses incurred by VAR in providing such assistance
will be reimbursed by Forte.

(b)      Forte shall have no liability for any claim of infringement to the
extent based on: (i) use of a superseded or altered release of a Product if such
infringement would have been avoided by the use of a current unaltered release
of the Product that Forte provides to VAR; or (ii) the combination, operation,
or use of any Products furnished under this Agreement with programs or data not
furnished by Forte if such infringement would have been avoided by the use of
the Products without such programs or data.

(c)      In the event the Products are held or are believed by Forte to
infringe, Forte shall have the option, at its expense, to: (i) modify the
Products to be non-infringing; (ii) obtain for VAR a license to continue using
the Products; (iii) substitute the Products with other software reasonably
suitable to VAR; or if (i) - (iii) are not commercially reasonable for Forte,
(iv) terminate the license for the infringing Products and refund the license
fees paid for those Products. This Section 6.1 states Forte's entire liability
for infringement.

6.2      Product Warranty

Except as stated below, for each Supported License Forte warrants that each
Product will perform the functions described in the associated Documentation
when operated on the specified platform for a period of 30 days from the date of
shipment of such Product to VAR.

Forte further warrants that the Products will fully comply with the following
millennium compliance statement when configured and used according to the
Documentation. The definition of compliance is the ability to:

     1. correctly handle date information before, during and after 1 January
     2000 accepting date input, providing date output and performing calculation
     on dates;

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<PAGE>

     2. function according to the Documentation, during and after 1 January
     2000 without changes in operation resulting from the advent of the new
     century;

     3. where appropriate, respond to two digit date input in a way that
     resolves the ambiguity as to century in a disclosed, defined and
     predetermined manner;

     4. store and provide output of date information in ways that are
     unambiguous as to century;

     5. manage the leap year occurring in the year 2000, following the
     quad-centennial rule.

Forte does not warrant that each Product will meet VAR's requirements, that the
Products will operate in the combinations which VAR may select for use or with
all non-Forte software used by VAR, that the operation of each Product will be
uninterrupted or error-free, or that all Product errors will be corrected. Forte
will undertake to correct any reported error condition in accordance with its
then-current Standard Technical Support policies and the terms of this
Agreement, with the terms of this Agreement to prevail in the event of any
conflict. Forte shall have no obligation to undertake correction of errors
caused by VAR modifications to the Product. VAR's sole and exclusive remedy for
Product nonconformity shall be recovery of the license fees paid to Forte for
such non-conforming Product.

As an accommodation to VAR, Forte may supply VAR with (i) preproduction releases
of Products labeled "Alpha," "Beta" or otherwise, which are not suitable for
production use or for development of the VAR Application, or (ii) shareware
items such as "Fshare" containing code developed by Forte and/or its customers
and partners. Notwithstanding anything to the contrary in this Agreement, such
preproduction releases and shareware are provided to VAR "as is" without
warranty of any kind, express or implied, and neither party will be responsible
to the other for any losses, claims or damages of whatever nature arising out of
VAR's use of such items. Forte shall identify at the time of release of any such
preproduction or shareware releases what type of support, if any, is provided by
Forte. Unless stated otherwise, however, no support shall be provided by Forte
for such releases. Standard Technical Support does not include support or
updating of shareware items. VAR will promptly report any error condition
discovered in a preproduction release, and provide Forte with appropriate test
data if necessary to resolve problems encountered by VAR with a preproduction
release.

6.3      Media Warranty

Forte warrants all media delivered to VAR to be free of defects in materials and
workmanship under normal use for 90 days from the Effective Date. Replacement of
media without charge is VAR's sole and exclusive remedy in the event of a media
defect.

6.4      Services Warranty

Forte warrants that its Standard Technical Support, consulting and other
services will be of a professional quality conforming to generally accepted
industry standards and practices. This warranty shall be valid for 90 days from
completion of service. For any breach of the above warranty, VAR's exclusive
remedy and Forte's entire liability shall be: (i) the re-performance of the
services; or (ii) if Forte is unable to perform the services as warranted,
recovery of the fees paid to Forte for such deficient services.

6.6      Limitations of Warranties

         THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.

6.7      Limitation of Liability

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF PROFITS, REVENUE (EXCEPT AS
ALLOWABLE AND DETERMINED TO BE A DIRECT DAMAGE) OR PRODUCT USE, OR LOSS OR
INACCURACY OF DATA, AND IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY EITHER PARTY
OR ANY THIRD PARTY, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EXCEPT WITH RESPECT TO SECTIONS 6.1, 3.1(j) AND TO THE EXTENT
LOSS OF PROFITS AND/OR REVENUE ARE ALLOWABLE AND DETERMINED TO BE DIRECT DAMAGES
DUE TO THE OTHER PARTIES UNATHORIZED COPYING OR DISTRIBUTION OF THE PRODUCT OR
VAR APPLICATION EITHER PARTY'S LIABILITY FOR DAMAGES HEREUNDER, WHETHER IN AN
ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, SHALL IN NO EVENT EXCEED THE
AMOUNT OF FEES PAID BY VAR UNDER THIS AGREEMENT FOR THE RELEVANT LICENSE OR
SERVICE.

The provisions of this Section 6 allocate the risks under this Agreement between
Forte and VAR. Forte's pricing reflects this allocation of risk and the
limitation of liability specified herein.

7.       GENERAL TERMS

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
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7.1      Nondisclosure

By virtue of this Agreement, the parties may have access to information that is
confidential to one another ("Confidential Information"). Confidential
Information shall be limited to the Products and the VAR Application,
information related thereto, all other information clearly marked as
confidential, and other items as agreed by the parties in writing.

A party's Confidential Information shall not include information which (i) is or
becomes a part of the public domain through no act or omission of the other
party; or (ii) was in the other party's lawful possession prior to the
disclosure and had not been obtained by the other party either directly or
indirectly from the disclosing party; or (iii) is lawfully disclosed to the
other party by a third party without restriction on disclosure, or (iv) is
independently developed by the other party.

The parties agree, both during the term of this Agreement and for a period of
five (5) years after termination hereof, to hold each other's Confidential
Information in confidence. The parties agree not to make each other's
Confidential Information available in any form to any third party or to use each
other's Confidential Information for any purpose other than the implementation
of this Agreement. Each party agrees to take all reasonable steps to ensure that
Confidential Information is not disclosed or distributed by its employees or
agents in violation of the provisions of this Agreement.

7.2      Governing Law and Jurisdiction

This Agreement shall be governed and construed under the laws of the State of
California, as applied to agreements executed and performed entirely in
California by California residents. In no event shall this Agreement be governed
by the United Nations Convention on Contracts for the International Sale of
Goods. In any legal action relating to this Agreement each party agrees (i) to
the exercise of jurisdiction over it by a state or federal court in San
Francisco or Alameda County, California; and (ii) that if a party brings the
action, it shall be instituted in one of the courts specified in subparagraph
(i) above.

7.3      Copyrights

VAR acknowledges that the Products and Documentation are proprietary to Forte
and protected by copyright, patent and/or trade secret laws. VAR agrees to
include without alteration, in all copies and reproductions of the Products,
Documentation and VAR Application, reproductions of Forte's restricted rights
notices, copyright notices and other proprietary legends. A copyright notice in
a Product does not, by itself, constitute evidence of publication or public
disclosure.

7.4      Marks

All trademarks, service marks, trade names or logos identifying the Products or
Forte's business (the "Marks") are the exclusive property of Forte or its
licensors. VAR will not take any action that jeopardizes Forte's or its
licensors' proprietary rights or acquire any right in the Marks except as
specifically set forth below. VAR will not register, directly or indirectly, any
trademark, service mark, trade name, copyright, company name or other
proprietary or commercial right which is identical or confusingly similar to the
Marks or which constitute a translation of a Mark into another language. VAR
will use the Marks exclusively to identify the Products and shall not use the
Marks in combination with any trademarks, service marks, or logos of VAR which
would create confusion as to the ownership or identity of the Marks (e.g.
"ForteCCS"). Any such use of the Marks will clearly identify Forte or its
licensors as the owner of the Marks and conform to Forte's then current
trademark and logo guidelines which Forte agrees to supply to VAR at VARS
request. At Forte's request, VAR will deliver to Forte a sample of all
advertisements or promotional materials bearing a Mark. If Forte notifies VAR
that the use of the Mark is inappropriate, in its reasonable judgment, VAR will
not publish or otherwise disseminate the advertisement or promotional materials
until they have been modified to Forte's reasonable satisfaction. VAR will
immediately notify Forte if VAR learns of any potential infringement of the
Marks by a Sublicensee. Forte will determine the steps to be taken under these
circumstances. In connection with any such potential infringement of or by the
Marks, VAR will (a) provide Forte, at Forte's expense, with the assistance that
Forte may reasonably request and (b) not take steps that would prejudice Forte's
rights in the Marks without Forte's prior approval.

7.5      Relationship between Parties

In all matters relating to this Agreement, the VAR will act as an independent
contractor. The relationship between Forte and the VAR is that of
licenser/licensee. Neither party will represent that it has any authority to
assume or create any obligation, express or implied, on behalf of the party, nor
to represent the other party capacity.

7.6      Notice

All notices relating to this Agreement shall be in writing and delivered by
overnight delivery service or first class prepaid mail with return receipt
requested to the address of such party specified above to the attention of its
Chief Financial Officer or such other address specified by such other party in
accordance with this Section.

7.7      Severability/Waiver

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In the event any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions of this Agreement will remain in full
force and effect. The waiver by either party of any default or breach of this
Agreement shall not constitute a waiver of any other or subsequent default or
breach.


7.8      Export Administration; U.S. Government Rights

VAR agrees to comply fully with all relevant laws, regulations and orders of the
United States and other countries to which the Products or VAR Application are
shipped, the U.S. Department of Commerce, and other U.S. and applicable non-U.S.
agencies to assure that all Products, Developments and Custom Work Product and
related media are not exported in violation of the laws of the United States and
other applicable countries.

7.9      Non-assignability and Binding Effect

Notwithstanding Section 2.1(b) or any other provision hereof, the Agreement,
Product and Documentation licenses granted herein may be transferred or assigned
by VAR upon written notice to Forte to (a) any entity that is either directly or
indirectly controlled by VAR ("control" for purposes of this Agreement shall
mean ownership of at least 51% of the voting capital stock of a corporation, or
51% of the voting equity of any non-corporate entity), or (b) the surviving
entity of a merger, acquisition or reorganization of all or substantially all of
VAR's assets, capital stock or other equity, so long as such proposed transferee
or assignee agrees in writing to be bound by the terms and conditions of this
Agreement. Except as provided above, any attempted assignment of the rights or
delegation of the obligations under this Agreement shall be void without the
prior written consent of the non-assigning or non-delegating party. In the case
of any permitted assignment or transfer of or under this Agreement, this
Agreement or the relevant provisions shall be binding upon, and inure to the
benefit of, the successors, executors, heirs, representatives, administrators
and assigns of the parties hereto.

7.10     Force Majeure

Neither party shall be liable to the other for its failure to perform any of its
obligations under this Agreement or any Exhibit, during any period in which such
performance is delayed because rendered impracticable or impossible due to
circumstances beyond its reasonable control, provided that the party
experiencing the delay promptly notifies the other of the delay.

7.11     Remedies

The parties stipulate that the legal remedies of any party in the event of any
default or threatened default by the other party in the performance of or
compliance with any of the terms of this Agreement are not and shall not be
adequate, and that such terms may be specifically enforced by a decree for
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms of this Agreement or otherwise. Except
as specifically provided in this Agreement, no remedies in this Agreement are
exclusive of any other remedies but shall be cumulative and shall include all
remedies available hereunder or under any other written agreement or in law or
equity, including rights of offset.

7.12     Entire Agreement

This Agreement constitutes the complete agreement between the parties and
supersedes all previous agreements or representations, written or oral, with
respect to the Products and services specified herein. This Agreement may not be
modified or amended except in a writing signed by a duly authorized
representative of each party.

It is expressly agreed that any term and conditions of the VAR's purchase order
shall be superseded by the terms and conditions of this Agreement. This
Agreement shall also supersede the terms of any unsigned license agreement
included in a package for Forte-furnished software.

7.13     Escrow

Forte represents that it has deposited with an escrow agent copies of the source
code and reasonable technical documentation for all the most recent versions of
the Products licensed under the Agreement, pursuant to a Technology Escrow
Agreement with such escrow agent, a copy of which has been provided to VAR. Upon
VAR's execution of the instrument enrolling VAR as a party to the Technology
Escrow Agreement attached as Exhibit G, VAR shall be entitled to receive a copy
of the escrowed source code and documentation from the escrow agent in the event
Forte becomes insolvent, is a party to a bankruptcy filing, ceases business
operations generally or ceases to make available maintenance or support services
for the then-current version of the licensed Product. Forte shall pay all
relevant escrow fees to the escrow agent. In the event VAR receives the escrowed
source code and documentation, VAR shall have the royalty-free, nonexclusive,
perpetual right to use such source code solely for use in maintaining and
supporting the licensed Products under the terms of this Agreement. All such
source code, as delivered or modified, shall constitute Confidential Information
of Forte for purposes of Section 7.1 of the Agreement, and VAR shall not
disclose the source code or its modifications to others or permit others to copy
the source code or modifications thereof. Forte shall update the deposited
material within thirty (30) days after each major update to the licensed
Product. Forte

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

acknowledges VAR's right to request and receive verification from
the escrow agent (and/or Forte) confirmation that Forte has deposited source
materials as obligated under this paragraph.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   Exhibit A
                                   ---------

                             Forte Software, Inc.
                             -------------------

                            VAR Fees and Royalties
                            ----------------------



1.       VAR License Fee. The parties agree that this Agreement supersedes the
previous VAR agreement between the parties regarding distribution of the VAR
Application. Forte acknowledges that VAR has previously paid all VAR license
fees owed under such previous agreement. In consideration for payment of such
license fees, the license to VAR pursuant to Section 2.1 is with respect to the
following Products and components:

         Products
         --------
         Forte Application Environment
         Forte Express
         Forte WebEnterprise (previously known as WebSDK)

         Components
         ----------
         5 Designated Developers
         Unlimited Client Environments
         Unlimited Server Environments
         Unlimited RDMBS Development Interfaces
         1 Shared Repository
         1 Documentation Set of Forte (both Hardcopy and CD ROM)

2.       Additional Designated Developer and Other License Fees. The fee for
         ------------------------------------------------------
each additional Designated Developer license is [*]. Other items may be licensed
for the fees set forth in the Price List.

3.       Support Fees. Annual Support Fees for the license pursuant to Section
2.1 shall equal 18% of Forte's then-current Core System (as defined below) list
price (currently $75,000).

Annual Support Fees for Products or license components not listed in Section 1
above shall be the Support Fee then charged by Forte, multiplied by the then-
current list price of the item acquired.

4.       Sublicense Fees. Upon shipment of the VAR Application or invoicing of a
Sublicensee for the license of the VAR Application, whichever occurs first, VAR
agrees to pay Forte a Sublicense fee (due as described in the Agreement) as
follows:

               a.   Standard VAR Application Sublicenses. For each Standard
VAR Application Sublicense (defined below) VAR agrees to pay Forte a Sublicense
fee equal to:

               i)   [*] of VAR's net license revenue from such Sublicense if the
Sublicensee does not purchase a Full Use License (as defined in Section 3.1) for
a Core System (as defined below) from Forte or VAR; or

               ii)  [*] of VAR's net license revenue from such Sublicense if the
Sublicensee purchases a Full Use Core System license (plus first year
maintenance and support) directly from Forte or VAR prior to or simultaneously
and in connection with the VAR Application license (i.e., a then-current Forte
customer who does not buy a Core System license in connection with the VAR
Application would not trigger this clause).

               b.   Extended VAR Application Sublicenses. For each Extended VAR
Application Sublicense (defined below) the following terms shall apply:

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

               i)   VAR shall pay Forte a Sublicense fee equal to [*] of VAR's
net license revenue from such Sublicense, subject to paragraph iv below
regarding Enterprise Customers;

               ii)  the Sublicensee will be also be required to purchase at a
minimum, one Full Use License for a Core System from Forte or VAR, which Forte
agrees to provide at its then-current local list price, plus first year
maintenance and support. This Full Use License is not required if the
Sublicensee or a Delivery Partner has already acquired at least one Full Use
License for a Core System and has unassigned Designated Developer seats
sufficient for the applicable project. If the Sublicensee or Delivery Partner
has already acquired a Core System license, but all Designated Developer seats
have been assigned, the Sublicensee shall only be required to purchase
additional Designated Developer licenses sufficient for the applicable project.

Additional Designated Developer licenses, if needed, can be purchased by the
Sublicensee, VAR and/or the Delivery Partner. If the Delivery Partner has a
re-usable development license arrangement with Forte, additional development
licenses could be obtained for the re-use fee due under that Delivery Partner's
agreement with Forte. However, unless otherwise agreed by Forte and such
Delivery Partner, such reusable development licenses are "project specific" and
may not be used for non-VAR Application development. All additional Designated
Developer licenses require the purchase of first year maintenance and support
from Forte.

               iii) VAR shall not be required to obtain rights to include in
the VAR Application and VAR Application-related functionality created by
Sublicensees or their Delivery Partners, nor shall the Sublicensee be required
to purchase Full Use and/or Runtime licenses to utilize any such new VAR
Application-related functionality. Runtime licenses would, however, be required
for a Sublicensee's deployment of functionality outside the scope of the VAR
Application.

               iv)  in the event VAR or a Distributor grants an Extended VAR
Application Sublicense to any Enterprise Customer (defined below) during the
initial three year term of this Agreement, Forte shall not be entitled to any
Sublicense fees in connection with such VAR Application licenses; provided,
however, that VAR shall remain liable to Forte for annual Technical Support fees
for such Sublicenses on the terms set forth in Section 6 below as if such
Sublicense fees had been paid to Forte. At the request of VAR, Forte shall
provide information regarding a customer to indicate whether such customer is an
Enterprise Customer.

               c.   VAR Application Development System. For each Sublicense
of a VAR Application Development System (defined below) VAR agrees to pay Forte
a Sublicense fee [*] of VAR's net license revenue from such Sublicense. Each VAR
Application Development System Sublicense will expressly state that it does not
include a license to use the Products for development, and that Product licenses
are available directly from Forte.

               d.   Transaction-based or Account-based Sublicenses. For the
initial three years of this Agreement, VAR shall have the right to enter into
"Variable Fee" VAR Application Sublicenses under which VAR receives a recurring
royalty from the Sublicensee based on the number of accounts or transactions
serviced by the VAR Application. Such Variable Fee Sublicenses will have a
maximum term of four years. Forte will receive a Sublicense fee equal to [*] of
cash license fee collected from each such Variable Fee Sublicense for the entire
term of each such Variable Fee Sublicense. On or before the expiration of such
three year term, both companies will evaluate and discuss in good faith the
appropriate revenue sharing and other terms for Variable Fee Sublicenses from
then forward.

         e.    Pre-paid Sublicense Fees. Forte acknowledges and agrees that
VAR currently has a pre-paid Sublicense fee balance of [*], which may be
applied dollar for dollar solely against Sublicense fees due Forte hereunder on
Sublicenses of the VAR Application, but not Core Systems.

5.  Definitions.

         a.    "Standard VAR Application" means the current shipping standard
release of the VAR Application which permits the performance of up to 90
person-days of initial development using the Products. Development performed
without the Products (such as using the VAR Application Workflow editor,
Non-Product generated scripts and tools, C++ programming language or any Java
Software Development Environment) are not counted in the 90 days.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

         b.    "Extended VAR Application" means the current shipping standard
release of the VAR Application where more than 90 person-days of initial
development using the Products will be performed. Development performed without
the Products (such as using the VAR Application Workflow editor, Non-Product
generated scripts and tools, C++ programming language or any Java Software
Development Environment) is not counted in the 90 days.

         c.    "VAR Application Development System" means a VAR Application
licensed by VAR to its customers, global system integrator partners, and/or
Delivery Partners, for end user development, training, demonstration, and/or
vertical application development activities. Product Sublicenses pursuant to
Section 3.1 are not deemed licenses of the VAR Application Development System.

         d.    "Net license revenue" for Standard VAR Application, Extended
VAR Application, and VAR Application Development System transactions means the
net license fee amount invoiced to the applicable Sublicensee net of product
returns and credits. For Variable Fee Sublicenses, it shall mean VAR's net cash
receipts from the applicable Sublicensee.

         e.    A "Core System" shall mean 1 Client Environment, 5 Designated
Developers for the Forte Application Environment, 10 Runtime Users, 1 Server
Environment, 1 Development Server, 1 RDBMS Interface, 1 Shared Repository, 1
Documentation Set on both hard-copy and CD-ROM, and 5 student days of training.

         f.    "Enterprise Customer" is defined as a Forte customer which,
simultaneously with or prior to Sublicensing the VAR Application from VAR, has
obtained Full-Use Product licenses from Forte either (A) under a "site license"
allowing use of unlimited quantities of Product licenses by such customer, or
(B) in a single transaction following December 31, 1996 which included such
customer's payment of at least [*] of recognizable license revenue to Forte
and on which Forte and VAR worked together leading up to such single
transaction. Up to once annually, VAR shall have the right to engage an
independent accountant to audit the accounting books and records of Forte to
verify whether a customer is an Enterprise Customer.

6.  Full Use Licenses.

         a.    For each Full Use License, VAR shall pay to Forte a "Full Use
Sublicense Fee" equal to Forte's then-current Core System list price in the
country or countries in which the Full Use Sublicense will be used. The current
Forte Price List is attached hereto as Exhibit I. Full Use Sublicense Fees are
due net 30 days from the Shipment Date of the applicable Core System Product. If
VAR issues a written Full Use Sublicense quote and such quote is accepted by the
applicable Sublicensee, for a period of ninety (90) days after the date of
submission of the quote to the Sublicensee, the Full Use Sublicense Fee payable
by VAR with respect to the Products identified in the quote shall be based on
the Forte Price List in effect on such date.

         b.    VAR is free to determine unilaterally the Full Use Sublicense
Fees; provided that all Full Use Sublicenses shall otherwise comply with Forte's
then current internal pricing and configuration guidelines.

         c.    Forte shall not be required to provide primary technical support
to Sublicensees receiving a Full Use Sublicense in accordance with Section 3.2
of the Agreement with respect to use of the VAR Application; provided, however,
that if such Sublicensee uses the Core System outside the scope of the VAR
Application, such Sublicensee will be required to obtain and pay for technical
support directly from Forte pursuant to a separate Support Agreement between
Forte and the Sublicensee. VAR shall refer all support inquiries on projects
outside the scope of the VAR Application to Forte.

7. Technical Support for Sublicenses. On September 1 of each year during the
   ---------------------------------
term of this Agreement VAR shall pay Forte an annual technical support services
fee [*] of the then current Cumulative Sublicense Fees (including Full Use
Sublicense Fees) paid or owed by VAR attributable to all actively supported
Sublicensees that have acquired annual technical support services for the VAR
Application as of such date.

8. VAR/MCI Agreement. VAR acknowledges that on or around December 31, 1997 it
   -----------------
entered into an agreement with MCI Systemhouse ("MCI Agreement"). Within two
months from the Effective Date of this Agreement, VAR agrees to allow Forte's
counsel the one-time right to review (on VAR's premises) those portions of the
MCI Agreement that are potentially relevant to the Products. Thereafter and for
the term of this Agreement, VAR agrees

- ----------
[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

to allow Forte's counsel the right to review the "pre-payment" provisions of the
MCI Agreement. Forte agrees that the MCI Agreement is VAR Confidential
Information.

9. Joint Marketing and Seminars. The parties agree to engage in joint marketing
   ----------------------------
activities and to conduct joint seminars for prospective customers, pursuant to
a program to be mutually defined and implemented by the parties.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   Exhibit B
                                   ---------

                                  Order Form
                                  ----------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   Exhibit B

                                   ORDER FORM
              VALUE-ADDED RESELLER LICENSE AND SERVICES AGREEMENT
<TABLE>
<CAPTION>
VAR INFORMATION
<S>                                         <C>                                   <C>
Sold To:                                    Ship To:  Same as Sold To             Bill To:  Same as Sold To
Address:                                    Address:                              Address:
City:                                       City:                                 City:
State:          Zip:                        State:               Zip:             State:                  Zip:
Country:                                    Country:                              Country:
Contact:                                    Contact:                              Contact:
Phone:                                      Phone:                                Phone:
Fax:                                        Fax:                                  Fax:
</TABLE>

<TABLE>
<CAPTION>
TECHNICAL SUPPORT CONTACTS
<S>                                         <C>
Primary:                                    Secondary
Name:                                       Name:
Address:                                    Address:
City:                 State:                City:                      State:
Country:        Zip Code:                   Country:             Zip Code:
Contact:                                    Contact:
Phone:                                      Phone:
Fax:                                        Fax:
</TABLE>

<TABLE>
<CAPTION>
LICENSES
Product                                             Qty.            Price/Unit  Line Total
                                                                    $           $
<S>                                                 <C>             <C>         <C>
VAR License
     Forte Application Environment
     Forte Express, Forte Web SDK
(Includes Five Developers, and Unlimited Client
 Environments, Server Environments and RDBMS's)
Other:_____________________________
LICENSES TOTAL                                                                  $________________
</TABLE>
<PAGE>

                                   ORDER FORM
              VALUE-ADDED RESELLER LICENSE AND SERVICES AGREEMENT

<TABLE>
<CAPTION>
SERVICES
<S>                                                       <C>                          <C>

TECHNICAL SUPPORT                                         $                             $

Consulting*                                               $                             $
Training*                                                 $                             $

     License and Services Subtotal:                                                     $_______
     Sales Tax (where applicable)                                                       $_______
GRAND TOTAL                                                                             $_______
</TABLE>

ADDITIONAL TERMS:

*  Consulting and training must be utilized within 6 months of the Effective
Date of this Order Form.

This order is placed subject to the terms and conditions of the Value-Added
Reseller License and Services Agreement dated:______.

The Effective Date of this Order Form is:______________.
<TABLE>
<CAPTION>
<S>                                             <C>
Executed by VAR                                 Executed by Forte Software, Inc.

Signature:_________________________________     Signature:_____________________________________

Name:______________________________________     Name:__________________________________________

Title:_____________________________________     Title:_________________________________________
</TABLE>
<PAGE>

                                   Exhibit C
                                   ---------

                          VAR Application Description
                          ---------------------------


         The VAR Application is VAR's CCS product, as described below.

I.       CHORDIANT CCS PRODUCT DESCRIPTION

Chordiant CCS - Customer Communications Solution(TM) - integrates customer
communications points and customer facing applications with legacy databases,
the web server, email/fax systems, telephony systems and existing business
critical applications to create an enterprise-wide solutions serving multiple
business units and customer types.

Chordiant CCS(TM) includes a set of applications, business services, distributed
workflow engine called "Workflow Sequencing Object Processing - WSOP(TM)", and
system services, interfaces and data management. The Chordiant CCS(TM) 1.4 and
1.5 releases are packaged and delivered as a system which includes the Chordiant
CCS ChorApps(TM), Chordiant CCS ChorObjects(TM), and Chordiant CCS
ChorServices(TM). The ChorObjects(TM) and ChorServices(TM) are also referenced
as the Chordiant CCS Foundation System.

Chordiant CCS ChorApps(TM) (Applications) consist of the customer facing
applications, business management applications, operational management
applications, system administration and a variety of self-serve applications
designed for integration with web sites and telephony devices. Chordiant CCS(TM)
applications are dynamically created at time of customer inquiry and transaction
based on the customer profile and request; applicable customer and business
processes; together with the supporting business services and customer data. The
dynamic ability to create applications is called P3 Active(TM) and is a result
of technology provided by the Chordiant CCS Workflow Sequencing Object
Processing(TM) (WSOP(TM)) system.

Chordiant CCS(TM) applications are role-based and cover all the functionality
required by the CR (Customer Representative) for customer information, service,
marketing and selling functions; the Business Analyst/Management for defining
and managing business processes, workflows and transactions; Marketing
Management for management of campaigns, offerings and customer information; and
the call center Operational Management for data maintenance, center operations,
human resource scheduling, and system administration. Chordiant applications are
workflow driven and are built from the hundreds of business services and objects
provided in Chordiant CCS(TM), along with third party services provided by
Chordiant's customers, system integration partners and technology partners.

Chordiant CCS ChorObjects(TM) (Business Services, Objects and Workflow system)
contains the business objects integrating your best customer and business
practices together with the WSOP(TM) system, workflow components, workflow
management, a workflow editor and management functions. This layer provides the
rich set of business objects that are common across industries which when
attributed and data enabled for a particular company reflect the company's
specific customer and business processes, policies and transactions.

Chordiant CCS ChorServices(TM) provides the business services to create the IT
infrastructure for Chordiant CCS(TM) and to provide connectivity to telephony
systems, internet, data networks, data base systems and transaction systems.
ChorServices(TM) provides the services enabling customer communications; data
access, management and routing; access and data interfaces to enterprise legacy
and transaction systems and the ability to create customer interfaces into
third-party applications and systems to enable financial transactions, order
processing, billing, payment and other financial and business services. The
ChorServices(TM) commonly integrate and communicate with a customer's telephony
equipment, web servers, other application servers, legacy systems and
transactional applications systems.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   EXHIBIT D


                          CHORDIANT CCS - RELEASE 1.5
                           NORTH AMERICA PRICE LIST

<TABLE>
<CAPTION>
                                                                                     License Fees
                        End-User License                        ----------------------------------------------------
                      Product Description                                 Required                  Optional
- --------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                       <C>
Chordiant CCS Foundation (Notes 1, 3)                                     $900,000
   .  Chordiant CCS ChorObjects (Business Services)
   .  Chordiant CCS ChorServices (System Services)
      Includes these Components:
      .  Server Platform
      .  Telephony and Communications Platform
      .  Database Management Platform
      .  Electronic Gateways
Distributed Service Centers Deployment Option (Note2)
   .  First Additional Center                                                                          $375,000
   .  Second & Subsequent Additional Centers                                                           $187,500
Additional Components (Note 2)
   .  Server Platform                                                                                  $ 25,000
   .  Telephony Platform                                                                               $ 50,000
   .  Database Platform                                                                                $ 25,000
   .  Electronic Gateways                                                                              $ 50,000
- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS ChorApps (Applications) (Note 1)                            $600,000
- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS Runtime Client Licenses
      1 - 50                                                                                           $    950
      51 - 100                                                                                         $    850
      101 - 200                                                                                        $    750
      201 - 500                                                                                        $    650
      501 - 1,000                                                                                      $    600
      1,001 - 2,000                                                                                    $    550
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       8.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                            NORTH AMERICA PRICE LIST

<TABLE>
<CAPTION>
                                                                                     License Fees
             Global System Integrator License (GSI)               --------------------------------------------------
                      Product Description                                 Required                  Optional
- --------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                       <C>

Chordiant CCS Development System for GSI Centers (Note 4)                 $550,000
   .  Chordiant CCS ChorObjects (Business Services)
   .  Chordiant CCS ChorServices (System Services)
      Includes these Components:
          .  Client Platform
          .  Server Platform
          .  Telephony and Communications Platform
          .  Database Management Platform
          .  Electronic Gateways
   .  Chordiant CCS Delivery Model (Note 5)
   .  Chordiant CCS Developer Training
      Includes one developer training class for 10 developers

GSI Distributed Service Centers Deployment Option (Note 6)
   .  First Additional GSI Center                                                                   $300,000
   .  Second & Subsequent Additional GSI Centers                                                    $150,000
      Includes one developer training class for each center

- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS Reference Applications                                      $100,000
- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS Development System Client Licenses
          1 - 50 (per client license fee)                                                           $   2000
          51 - 100                                                                                  $   1500
          10l- 200                                                                                  S   1250
          201- 500                                                                                  $   I000

- --------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       9.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                           NORTH AMERICA PRICE LIST


<TABLE>
<CAPTION>
                         Description of Services                                              Service Fees
<S>                                                                                  <C>
Chordiant CCS Annual Maintenance and Support (Note 7)
   .  Premier End-User Support for Chordiant CCS                                     25% of Chordiant CCS
      Product License Fee                                                            Product License Fee
      (12 Months of 7 Days x 24 hours support)
   .  Standard End-User Support for Chordiant CCS                                    20% of Chordiant CCS
      Standard Product                                                               Product License Fee
      (12 Months of Monday - Friday, 24 hours support)
   .  Developer Support for Chordiant CCS                                            $14,000.  Per Client License
      Development System Support - 12 Months
   .  Developer Support for Chordiant CCS                                            $ 8,500.  Per Client License
      Development System Support - 6 Months
- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS Professional Services
   .  Chordiant Systems Integration                                                  Quote
   .  Chordiant Installation and Deployment                                          Quote
   .  Chordiant Application Consulting                                               Quote
   .  Chordiant Business Analysis Consulting                                         Quote
   .  Chordiant Development Facility Use                                             $ 2,500 Per Day, Per Seat
- ------------------------------------------------------------------------------------------------------------------------------
Chordiant Gold Team Assessment Service
   .  Chordiant Gold Team Assessment                                                 $80,000 Per Engagement

- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS University (Note 3)
   .  CCS Enablement Training                                                        $ 500 Per Day, Per Student
   .  CCS User Training                                                              $ 325 Per Day, Per Student

- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS Documentation
   .  Complete Documentation Sets (Additional)                                       $ 1,000 Each
   .  Single Library Set                                                             $ 500 Each
   .  Single Book                                                                    $ 150 Each

- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      10.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                           NORTH AMERICA PRICE LIST

PRICE LIST NOTES:

1.  License Fees for Chordiant CCS Foundation and Chordiant CCS Applications
    Chordiant CCS Foundation is licensed for a single customer service center
    and a single development site within one corporate subsidiary and/or
    business unit. Chordiant CCS Foundation includes; ChorServices and
    ChorObjects and one license of the telephony, database and web/electronic
    services components. Each corporate subsidiary and/or business unit is
    required to license a complete Chordiant CCS Foundation and Reference
    Application license.

2.  License Fees for Additional Service Center Sites
    Additional license(s) for second and subsequent Distributed Service Center
    Sites are required within a single corporate subsidiary and/or business
    unit where users in those sites are accessing Chordiant CCS.

3.  Chordiant CCS End-User Development Tools
    Chordiant CCS 1.5 includes development tools for End-User development
    purposes.
    Chordiant CCS 1.5 includes the Chordiant CCS Workflow Editor, Chordiant CCS
    Business Services, Chordiant CCS Reference Applications and one copy of the
    Forte TOOL development system. Additional licenses and copies of Forte TOOL
    Development System and Tools are available directly from Forte Software.

4.  License Fees for Chordiant CCS Development System for GSI Partners
    Chordiant CCS Development System License for Chordiant contracted Global
    System Integrator (GSI) partners is a single development center site license
    in support of the GSI Partner's training, demonstration and vertical
    application development activities. This license is not applicable to end-
    user development work, end-user development projects require the Chordiant
    CCS End-User Development System product and license. The development system
    software includes one copy of the Chordiant CCS supported client, server,
    telephony and database objects and one electronics services facility. The
    Forte Development System and Tools are not included with the Chordiant CCS
    Development System. The Forte Development System and Tools is available
    directly from Forte Software.

5.  License of Chordiant CCS Delivery Model
    Chordiant CCS GSI Development System and license for use on the specified
    end-user development project only.

6.  License Fees for Additional GSI Development Center Sites
    License(s) for additional GSI Development Center Sites where Chordiant CCS
    Development System is deployed to serve the GSI Partner's training,
    demonstration and vertical application development activities.

                                      11.
<PAGE>

    This license(s) is not applicable to end-user development work, end-user
    development projects require the Chordiant CCS End-User Development System
    product and license.

7.  Chordiant CCS Annual Maintenance and Support
    Chordiant CCS Annual Maintenance and Support services are provided and
    billed on an annual basis under separate agreement.

8.  Chordiant CCS University Training Classes
    The indicated fees apply to Chordiant CCS training conducted at Chordiant
    Software, Inc. Chordiant CCS University in Cupertino, California. Training
    at client locations can be made available by arrangement.

9.  North America and International Price Lists
    This Price List is for use with customers and partners in North America. See
    our international price list for regions outside of North America.

                                      12.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                           INTERNATIONAL PRICE LIST

<TABLE>
<CAPTION>
                                                                                     License Fees
                                                                                    (U.S. Dollars)
                        End-User License                          --------------------------------------------------
                      Product Description                                 Required                  Optional
- --------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                       <C>
Chordiant CCS Foundation (Notes 1, 3)                                    $1,350,000
   .  Chordiant CCS ChorObjects (Business Services)
   .  Chordiant CCS ChorServices (System Services)
     Includes these Components:
     .  Server Platform
     .  Telephony Platform
     .  Database Platform
     .  Electronic Gateways
Distributed Service Centers Deployment Option (Note2)
   .  First Additional Center                                                                        $562,500
   .  Second & Subsequent Additional Centers                                                         $281,250
Additional Components (Note 2)
   .  Server Platform                                                                                $ 37,500
   .  Telephony Platform                                                                             $ 75,000
   .  Database Platform                                                                              $ 37,500
   .  Electronic Gateways                                                                            $ 75,000
- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS ChorApps (Reference Applications) (Note 1)                 $  900,000

- --------------------------------------------------------------------------------------------------------------------
Chordiant CCS Runtime Client Licenses
      1 - 50                                                                                         $  1,625
      51 - 100                                                                                       $  1,475
      101- 200                                                                                       $  1.325
      201- 500                                                                                       $  1,150
      501 - 1,000                                                                                    $  1,075
      1,001 - 2,000                                                                                  $  1,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      13.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                           INTERNATIONAL PRICE LIST


<TABLE>
<CAPTION>
                                                                                           Service Fees
                     Description of Services                                              (U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>
Chordiant CCS Annual Maintenance and Support (Note 7)
   .  Premier End-User Support for Chordiant CCS                                     25% of Chordiant CCS
      Standard Product                                                               Product License Fee
      (12 Months of 7 Days x 24 hours support)
   .  Standard End-User Support for Chordiant CCS                                    20% of Chordiant CCS
      Standard Product                                                               Product License Fee
      (12 Months of Monday - Friday, 24 hours support)
   .  Developer Support for Chordiant CCS                                            $18,000 Per Client License
      Development System Support - 12 Months
   .  Developer Support for Chordiant CCS                                            $11,250 Per Client License
      Development System Support - 6 Months
- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS Professional Services
   .  Chordiant Systems Integration                                                  Quote
   .  Chordiant Installation and Deployment                                          Quote
   .  Chordiant Application Consulting                                               Quote
   .  Chordiant Business Analysis Consulting                                         Quote
   .  Chordiant Development Facility Use                                             $ 2,500 Per Day, Per Seat
- ------------------------------------------------------------------------------------------------------------------------------
Chordiant Gold Team Assessment Service
   .  Chordiant Gold Team Assessment                                                 $80,000 Per Engagement

- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS University (Note 5)
   .  CCS Enablement Training                                                        $ 500 Per Day, Per Student
   .  CCS User Training                                                              $ 400 Per Day, Per Student

- ------------------------------------------------------------------------------------------------------------------------------
Chordiant CCS Documentation
   .  Complete Documentation Sets (Additional)                                       $ 1,200 Each
   .  Single Library Set                                                             $ 500 Each
   .  Single Book                                                                    $ 150 Each

- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      14.
<PAGE>

                          CHORDIANT CCS - RELEASE 1.5
                           INTERNATIONAL PRICE LIST

PRICE LIST NOTES:

1.   License Fees for Chordiant CCS Foundation and Chordiant CCS Applications
     Chordiant CCS Foundation is licensed for a single customer service center
     and a single development site within one corporate subsidiary and/or
     business unit.  Chordiant CCS Foundation includes; ChorServices and
     ChorObjects and one license of the telephony, database and web/electronic
     services components.  Each corporate subsidiary and/or business unit is
     required to license a complete Chordiant CCS Foundation and Reference
     Application license.

2.   License Fees for Additional Service Center Sites
     Additional license(s) for second and subsequent Distributed Service Center
     Sites are required within a single corporate subsidiary and/or business
     unit where users in those sites are accessing Chordiant CCS.

3.   Chordiant CCS End-User Development Tools
     Chordiant CCS 1.5 includes development tools for End-User development
     purposes.  Chordiant CCS 1.5 includes the Chordiant CCS Workflow Editor,
     Chordiant CCS Business Services, Chordiant CCS Reference Applications and
     one copy of the Forte TOOL development system.  Additional licenses and
     copies of Forte TOOL Development System and Tools are available directly
     from Forte Software.

4.   Chordiant CCS Annual Maintenance and Support
     Chordiant CCS Annual Maintenance and Support services are provided and
     billed on an annual basis under separate agreement.

5.   Chordiant CCS University Training Classes
     The indicated fees apply to Chordiant CCS mining conducted at Chordiant
     Soft, rare, Inc. Chordiant CCS University in London, England and Cupertino,
     California.  Training at client locations can be made available by
     arrangement.

6.   International Price List
     This Price List is for use with customers and partners in Europe, Middle-
     East, Africa, South America, Pacific Rim and Asia regions.  All prices are
     in U.S. Dollars.

                                      15.
<PAGE>

                            Runtime Server Pricing
    To use these charts, find the number of concurrent users at runtime and
         then read down the column to find the runtime server pricing.

<TABLE>
<CAPTION>
<S>       <C>          <C>          <C>          <C>          <C>          <C>          <C>        <C>         <C>           <C>
Users       0           51          101          151          201          251          301        351         401           451
           50          100          150          200          250          300          350        400         450           500
- ---------------------------------------------------------------------------------------------------------------------------------
Servers
        -------------------------------------------------------------------------------------------------------------------------
      1  $15,000                                                                   Below        Initial         Runtime
                                                                                   Server Charge
      2  +$8K/svr    $30,000                                                       Pricing fixed at first value in column

      3              +$8K/svr    $45,000

      4                          +$8K/svr     $60,000

      5                                       +$8K/svr     $75,000

      6                                                    +$8K/svr     $90,000

      7                                                                 +$8K/svr     $105,000

      8                                                                              +$8K/svr     $120,000

      9                                                                                           +$8K/svr     $135,000

     10                                                                                                        +$8K/svr    $150,000

     11                                                                                                                    +$8K/svr


Users      501          551          601          651          701          751          801        851         901           951
           550          600          650          700          750          800          850        900         950           1000
- -----------------------------------------------------------------------------------------------------------------------------------
Servers
        ---------------------------------------------------------------------------------------------------------------------------
     11  $165,000                                                                  Below        Initial
                                                                                   Server Charge
     12  +$8K/svr     $180,000                                                     Pricing fixed at first value in column

     13               +$8K/svr    $195,000

     14                           +$8K/svr     $210,000

     15                                        +$8K/svr     $225,000

     16                                                     +$8K/svr     $240,000

     17                                                                  +$8K/svr    $255,000

     18                                                                              +$8K/svr    $270,000

     19                                                                                          +$8K/svr      $285,000

     20                                                                                                        +$8K/svr   $300,000

     21                                                                                                                   +$8K/svr
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Initial Runtime Server Charge licenses an increasing number of servers as
the number of users increases.  This gives sites great flexibility for
satisfying their server needs.  For example, for 500 users, the Initial Server
Runtime Charge licenses the site for up to 10 servers at an Initial Runtime
Server Charge of $150,000.  The customer has the option of implementing their
system as a single, large server or up to 10 different servers -- all for the
same price.  Additional servers licenses for this site, beyond the included 10
Servers, are available for $8,000 per Runtime Server.

For sites with greater than 1,000 users, the Initial Runtime Server Charge is
$15,000 per 50 Runtime Users.  For sites with 1000 users, the site is licensed
for up to 20 servers at an Initial Server Charge of $300,000.  For every
additional 50 Runtime Users, the site is authorized for an additional Runtime
Server.  Sites with greater than the number of servers covered by the Initial
Server Charge must purchase licenses for the additional servers at $8,000 per
server.

Note:  Each Runtime Server License includes:
       .  Right-to-copy server runtime license
       .  Right-to-copy database runtime licenses
       .  Right-to-copy network protocols

                                      16.
<PAGE>

Basic Guidelines

1.  Each separate development site must buy a Core System.

2.  For each different platform used for deployment, at least one such
    development environment must be purchased.

3.  Developers are "designated licenses", not "concurrent licenses". See
    definition of Forte Developer License.

4.  The server development license included in the Core System is for
    development only. If the same machine will be used for deployment, Runtime
    Server licenses are required (per Runtime Server matrix).

5.  Volume discounts on Developers and Runtime Users are only available when
    purchased as part of a single order. For example, if a customer purchases
    200 concurrent Runtime User licenses and two years later wants to purchase
    another 200 Runtime User licenses, the second 200 Runtime Users would not
    qualify for the next highest discount rate.

6.  International Uplift can be waived on deployment licenses that will be
                                          ----------
    deployed outside the U.S. and Canada but will be supported internally by the
    customer's U.S. or Canadian support organization and Forte's U.S. tech
    support group.

Support & Maintenance

1.  Telephone support and on-going product maintenance are 18% of the list price
    of the product(s). Support and maintenance charges are due in advance,
    annually.

2.  Contact with Forte telephone support must be made through one of three
    designated support contacts.

                                      17.
<PAGE>

                                   Exhibit E
                                   ---------
                   Sublicense Agreement Required Provisions
                   ----------------------------------------

Each Sublicense agreement shall refrain from making any warranty on Forte's
behalf, and shall include, at a minimum, contractual provisions which:

1)    Except for a Full Use License or where such a restriction is not
      permitted by applicable law, prohibit use of the Products except in
      connection with the Sublicensee's use of the VAR Application.

2)    Prohibit duplication (beyond the number of licensed copies) of the
      Products except for temporary transfer in the event of CPU malfunction
      and a reasonable number of backup or archival copies.

3)    Prohibit timesharing, except for transaction-based or account-based
      Sublicenses as permitted under Section 4(d) of Exhibit A; or rental of
      the Products.

4)    Prohibit reverse engineering, disassembly, decompilation, or other
      attempt to derive source code of the Products, except and as to the
      extent permitted by applicable law.

5)    Prevent title from passing to the Sublicensee.

6)    To the extent legally possible, disclaim Forte's liability for any
      indirect, incidental, or consequential damages arising from the use of
      the Products.

7)    Require the Sublicensee, at the termination of the Sublicense, to
      discontinue use and destroy or return to the VAR the Products,
      Documentation and all archival or other copies of the Product except
      for a reasonable number of archival copies.

8)    Require the Sublicensee to comply fully with all relevant export laws
      and regulations of the United States and of other countries in which
      the Products will be used to assure that neither the Products, not any
      direct product thereof, are exported, directly or indirectly, in
      violation of United States or other applicable law.

9)    Allow VAR to audit the Sublicensees use of the VAR Application and
      the Products.

10)   Allow VAR to comply with Section 3.1 (l) of this Agreement.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   Exhibit F
                                   ---------
                      Forte Technical Support Users Guide
                      -----------------------------------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                            FORTE TECHNICAL SUPPORT
                                  USER'S GUIDE


                                      1.
<PAGE>

Table of Contents

Welcome to Forte Technical Support.................   3
     How to Register for Technical Support.........   3
     Your Technical Contacts.......................   3
     How to Reach Technical Support................   4
     How to Change License Information.............   4
Types of Assistance Offered........................   4
     Problem Description/Troubleshooting...........   5
     Support Limitations...........................   5
How To Make A Support Call.........................   6
     Before You Call...............................   6
     Describing the Problem........................   6
     Making the Call...............................   7
     Call Tracking System..........................   7
     Modem Access..................................   8
How Forte Resolves your Call.......................   8
     Call Ranking and Response Time................   8
     Calling Us Back...............................  10
     Call Escalation...............................  10
     Call Resolution...............................  11
     Making Test Cases.............................  11
     Fixing a Defect...............................  11
     Release Management Process....................  12
     Feedback on the Quality of Technical Support..  12
Other Forte Services Offered.......................  12
     Training......................................  12
     Consulting....................................  13
     Documentation.................................  13
     Special Interface Projects....................  14
     Ordering more copies..........................  14

Appendix
Forte Technical Support Call Log Form
Forte Technical Support Registration Form
Forte Sales Office Locations - USA
Forte Sales Office Locations - International


                                      2.
<PAGE>

                                   EXHIBIT F

                            FORTE TECHNICAL SUPPORT
                                  USER'S GUIDE

Welcome to Forte Technical Support

     At Forte, we believe that service, technical support, training, and
     consulting are just as important as the features and functions you receive
     when you purchase our software products.  We can provide you with a
     spectrum of support--when you need it, whom you need it, and in the format
     that best suits your requirements.  This guide provides you with everything
     you need to know about Forte Technical Support.

     How to Register for Technical Support

     Once you have purchased a support agreement from Forte, you will need to
     fill out a Technical Support Registration form and fax it to us at 510-869-
     2010.  This form provides us with the details of your site and the names of
     the personnel you have authorized to call Technical Support.  This is where
     you will list your Primary Technical Contact (see below).  This form is
     included in the appendix of this booklet and another form will be mailed to
     you after you purchase support,

     Your Technical Contacts

     You should designate one primary technical contact and two backup contacts
     for each Forte license.

     The primary contact is the focal point for contact with Forte Technical
     Support as well as internal support within your organization.  This person
     should:

     .    Be your Forte expert

     .    Have the opportunity to gain Forte expertise over a wide range of uses

     .    Be able to determine whether a particular issue should be referred to
          Forte Technical Support

     .    Be accessible to all Forte users within your organization

     .    Be able to provide timely response

     Each backup contact should be a co-worker of the primary technical contact,
     he at the same location, and be able to perform these duties in the absence
     of the primary contact.

     We feel it is essential that the primary and backup technical contacts (and
     preferably all Forte users) complete the full recommended Forte Training as
     outlined in the Forte Education Brochure.

                                      3.
<PAGE>

     The ability of your primary or backup contact to communicate effectively
     with Forte Technical Support will ultimately determine how effective our
     service is for your organization.

     These arrangements ensure your organization has information on, and control
     of your important technical relationship with Forte.  When you contact
     Forte, we know you have already cried to resolve the issue and see the
     issue as important to your organization.

     How to Reach Technical Support

          Technical Support Hotline (510) 451-5400

     The Technical Support Center is available from 8:00 a.m. to 6:00 p.m.
     Pacific time Monday through Friday, excluding United States public
     holidays.

     You will speak to a Technical Support dispatcher, who will take your call
     details and the initial problem description.  The dispatcher will also tell
     you your call number and your call will then be transferred to a Technical
     Support Specialist, if one is available.  If you call during a time when
     the Support Center is not available, you will be prompted to leave us
     voicemail and your call will be logged when the Support Center opens in the
     morning.

          Fax Number (510) 869-2010

     This is the fax number for Forte Technical Support in case we require you
     to fax us some information about your problem.  We recommend that you fax
     this information to us after you have called the Technical Support Hotline
     and received a call reference number, which you should include on the fax.

          Internet Address [email protected]

     This is the interact address for Forte Technical Support should you decide
     to e-mail your question rather than use the telephone.  If you send us a
     question via e-mail, your Forte call number will be e-mailed back to you.

     Please note that Forte provides an Internet Call Form on your product
     release media.  Please complete the form with as much detail as possible so
     that we will have enough information to begin working on your call.

     How to Change License Information

     If you move, change phone numbers, or have personnel changes relating to
     your designated Technical Support contacts, please let us know so we can
     update our database.  To make any changes, call Forte Technical Support and
     give us the new information.  We will update the customer database and
     inform the other Forte department.

Types of Assistance Offered


                                      4.
<PAGE>

     Technical Support provides the following assistance to Forte licensees
     related to their use of the current release of the licensed software, and
     subject to the terms and conditions in the Forte Software License and
     Services Agreement.

<TABLE>
<CAPTION>
          Assistance Provided                                Task Performed
- -----------------------------------      ---------------------------------------------------------
Problem Determination                    Analyze error messages.
<S>                                      <C>
                                         Identify and isolate the source of the problem.
                                         Provide technical information and technical status on
                                         open problems.

Problem Resolution and Recovery          Provide problem workarounds.
Assistance                               Provide advice and guidance for operating system
                                         environment workaround.
                                         Escalate problem for immediate or scheduled fix.

Product Usage Questions                  Assist with the configuration of your operating
                                         system environment related to Forte.
                                         Product operation or functionality issues.
                                         Provide current release information such as
                                         Compatibility, enhancements, fixes, and any
                                         restrictions.
</TABLE>

     Answering "product usage questions" may be limited to 30 minutes if we feel
     the questions could be answered by having the caller attend the relevant
     Forte training course.  However, this time limit might be extended if the
     Support Center personnel have the time available, More extensive assistance
     for these questions is available by purchasing Forte Consulting (see
     section titled Other Forte Services for details).

     Problem Description/Troubleshooting

     Because the information you provide to Technical Support is vital to the
     process of problem resolution, it is important that you have prepared the
     problem description and supporting data, and reproduced the symptoms in a
     simple form.

     Forte Technical Support expects you to make a reasonable attempt to verify
     the error in your environment.  We will always ask for the full error
     number that occurs; other common information that we will ask for depends
     on the nature of the problem.

     Support Limitations

     .    We do not support Forte on uncertified hardware, compilers, or
          operating systems, We will talk to you about any problems you have,
          especially when it comes to using a new operating system. However, we
          do not guarantee Forte will work in environments other than those we
          explicitly support.

                                      5.
<PAGE>

     .    We only support Forte software products. For instance, we do not
          support your computer's operating system. If you need help doing
          something on your operating system, you need to speak to whomever
          supports it.

     .    We will not debug your application code, or application code that you
          have gotten from someone else. This restriction applies to third party
          software, software written by consultants, and so forth. If you
          believe you have run into a defect in a Forte software product, you
          need to establish that the problem lies in our Software.

     .    We do not provide free training or consulting, although we do offer
          them as optional purchases. We can answer simple how-to questions and
          we can talk to you about other topics to a limited extent, but we will
          not answer questions such as "flow do I design my Forte application?"

     .    We support techniques or workarounds given to you by members of Forte
          Technical Support, unless we tell you explicitly that they are
          unsupported. We can talk to you about workarounds given to you by
          others, including other Forte employees, and if them is a problem, we
          can help you to understand the cause, However, we cannot guarantee
          that using these workarounds will not cause other problems.

How To Make A Support Call

     If you are using Forte Technical Support for the first time, you will find
     this section particularly useful.  Please read it carefully so you will
     feel comfortable with the process we use to assist you.

     We advise you to keep a copy of your license and have your customer number
     available, in case you are asked for it when calling Technical Support.

     Before You Call

     Before you call for technical support, take a few minutes to gather The
     information you'll need to give the Forte Technical Support Specialist who
     takes your call.  If you don't have the information, the resolution of your
     problem might be delayed.

     Describing the Problem

     Make some notes about the problem you are having.  If possible, note the
     sequence of events leading up to the problem.  Here are some questions to
     get you started:

     .    What were you trying to accomplish?

     .    What did you do? What commands did you enter? Provide exact syntax if
          possible.

     .    What did you expect to happen?

     .    What happened instead? Please provide exact syntax.

                                      6.
<PAGE>

     .    Why do you think this is a problem with Forte?.

     .    What have you tried to do to correct or understand this problem?

     .    If your screen displayed any error messages, what ware they? Note the
          error number first then the error text,

     .    Which manuals did you consult? Titles, publication dates, versions,
          and page numbers are important.

     Making the Call

     Now you are ready to call Forte Technical Support.  This section describes
     how your call is handled.

     1.   The Technical Support dispatcher first asks you whether your call is
          new or a follow, up to a previous call.

     .    If it is a follow-up call, give the dispatcher your call reference
          number. He or she attempts to connect you to the person working on the
          call.

     .    If it is a new call, the dispatcher enters your name into our call
          tracking system, You might be asked to confirm your operating system,
          Forte version, or other relevant information about your site.

     2.   As you describe your issue or question, the dispatcher enters the
          details into our call tracking system.  If you encountered error
          messages, plebe tell the dispatcher the error number first and the
          error message text, so that ii can be entered correctly.

     3.  The dispatcher discusses the impact of the problem and asks you to help
          determine an appropriate priority for your call.  Call priority is
          outlined in detail in the section rifled How Forte Resolves Your Call.

     4.   The dispatcher tells you your call number and either connects you
          directly with a Technical Support Specialist, or gives you the
          timeframe during which you should expect a call back.

     All this usually takes only a few minutes.  While you are on the phone with
     the dispatcher, please use your Forte Technical Support Call Log Form
     (locked in the Appendix) to record the details of your question and call
     number for your own reference.

     Call Tracking System

     Forte's call tracking system tracks information about each customer call.
     Afar verifying your customer information, the dispatcher enters the problem
     information into the system.  From then on any of our Technical Support
     Specialists or dispatchers can view:

                                      7.
<PAGE>

     .  A permanent record of your initial problem statement

     .  Details of subsequent research carried out

     .  Detail of further communication with you

     .  The current status of your call

     Modem Access

     We recommend that our customers provide us with modem access to their
     machines.  This access, with the ability to transmit the troublesome code
     to Forte machines, can speed up the resolution of the problem.

How Forte Resolves your Call

     After speaking with you, the Technical Support Specialist establishes if
     the problem is:

     .  the result of a Forte product error

     .  the result of a user type error

     .  a product usage question

     We might ask you to send us a test case to assist in the diagnosis.  If the
     problem is identified as being the result of a Forte product error, the
     test case and the diagnostic notes are immediately sent to Forte
     Engineering.

     Call Ranking and Response Time

     Forte Technical Support prioritizes calls based on the urgency of need, We
     have three ranking: of calls: Standard (Rank 3), Time Critical (Rank 2) and
     Emergency (Rank 1).

     Calls generally arise from two very different kinds of situations:

     .  One or more programmers experience a problem during the application
        development process.

     .  An established production installation suddenly loses some or all of its
        functionality, threatening data integrity or data access.

     Problems at production installations usually take top priority, but not
     always.  The problems a team of programmers encounters during a development
     could conceivably outweigh the problems a single user encounters in a
     production environment.

     Please assist us by letting us know the impact of the problem on your
     business and inform us of what you think the priority should be.  Response
     time goals are listed for each priority of call, but if a Technical Support
     Specialist is available at the time of your call, we will try to respond
     immediately.

                                      8.
<PAGE>

          Standard Calls (Rank 3)

     Standard calls generally occur while using Forte during development,
     including "what if" and "how to" questions.  The product Software is
     usable, but one or more functions might not operate as you expected.  The
     problem may be one related to understanding Forte features or
     documentation.  If a workaround exists, it is comparatively easy for you to
     implement.

     A production example of a Rank 3:

          The workstation for one of many end users is failing to properly
          redraw the screen

     A development example of a Rank 3:

          A programmer needs help understanding syntax errors encountered while
          developing an application.  The "save" option does not work, and the
          workaround is to use the "save as" option.

     Our response time goal for Rank 3 calls is 24 business hours.

          Time Critical Calls (Rank 2)

     In time critical calls, the product software is usable, but functionality
     is degraded or restricted.  In the case of production systems, the
     applications and some Forte modules remain usable, but the use of the
     production application itself is restricted.  In the case of development
     systems, Forte and the development applications are unusable, or
     inaccessible.  If a work, around exists, it is somewhat inconvenient to
     implement and will not be sufficient for the long term.

     A production example of a Rank 2:

          You can use parts of the production application and parts of the Forte
          product.

     A development example of a Rank 2:

          Development has been reduced to a minimum due to problems with the
          Forte development environment

          Our response time goal for Rank 2 calls is eight (8) business hours.

          Emergency Calls (Rank 1)

     Emergency calls take the highest priority.  These are urgent cases where
     immediate he{p is needed.  The production software is totally or partially
     inoperative, and the inability to use the software has a critical impact on
     your production operations.  If there are known workarounds, they would be
     quite costly to implement.

     A production example of a Rank 1:

                                      9.
<PAGE>

          Your financial transaction system is inoperable.

     A development example of a Rank 1:

          Your development environment is totally corrupted, thus placing
          critical short term projects in jeopardy.

          Our response time goal for Rank I calls is four (4) business hours.
          However, we will make every effort to respond immediately.

NOTE:     In a Rank I situation, the first actions taken by the Technical
          Support Specialist, in agreement with you, are to judge whether the
          most critical action is to get the system up and working. If both
          parties agree that getting the system up and working is the top
          priority, be aware that you might lose diagnostic information that
          could help establish the cause of the problem, thus making the process
          of determining the cause more difficult. In the event that this
          diagnostic information is lost, Forte Technical Support will still
          make reasonable efforts to help you to determine the cause of the
          problem.

     If You and the Technical Support Specialist agree that there is time to
     collect the diagnostic information, this action will be carried out
     immediately.

     Calling Us Back

     Although we make every effort to keep you updated about the progress of
     your call, we also invite you to call to get the latest information and
     status.  When you return a call to Forte Technical Support, please give us
     your call number so that we can retrieve your call status, If your call has
     changed in priority, please let us know so your call can be upgraded.  If
     you have been able to solve the problem on your own, and the call can be
     closed, we would appreciate that information, tool.

     Call Escalation

     When a call is not being fixed within the agreed-upon time frame, the
     Director of Services and Support can activate the following procedure:

     .  Assign sufficient skilled personnel to investigate the problem.

     .  Notify senior Forte personnel that the error has been reported and that
        the escalation procedure has been activated. Technical Support will
        notify the relevant Forte Sales Representative, Sales Manager, and
        senior Pre-sales Representative, and will work with these people to
        ensure that a business focus as well as a technical focus is maintained
        until the error is brought under control.

     .  Work with the customer to build an action plan to resolve the issues.

     During the period of the escalation Forte will provide regular updates to
     the customer at both a management and a technical level.

                                      10.
<PAGE>

     Call Resolution

     We close a call when we have confirmed with you that the call is resolved.
     A call is considered resolved when:

     .  The problem is known not to recur or the defect has been rectified.

     .  The apparent problem has been found to not really exist -- a
        misunderstanding or short term difficulty has ceased m exist.

     .  The call occurred because of user inexperience and this is in the
        process of being rectified. In this instance. Forte strongly recommends
        the user attend the appropriate Font Training course,

     Making Test Cases

     In the process of diagnosing your problem, you might need to create a test
     case, especially if you think you have found a defect in our product.

     Please make the test case as small as possible and design it for
     portability.  A test case should not include an entire application.  It
     should be a subset of the application code -- for example, five to fifty
     lines -- and contain a small amount of data.

     In the come of narrowing down the problem, you isolate the code that causes
     the defect and you might realize that the problem is not a defect, but
     rather user error.

     When the Technical Support Specialist reports to Forte Engineering, the
     test case helps to ensure that when a fix is made, the fix will address
     your specific problem.

     Any changes to our code will be tested against your test case,

     Fixing a Defect

     Should a defect occur in a release, Forte will attempt to find a workaround
     for the problem.  If a workaround exists, we will supply it immediately,
     The defect will be logged to the attention of Engineering and we will
     request that a fix be made in the next new feature production release,
     maintenance release, or customized emergency patch.  When requesting a fix
     from Engineering, the Technical Support Specialist may ask you for help
     with certain information, such as:

    .  How docs the defect affect your site?

    .  What turnaround time do you request for the fix?

    .  Have you tried all suggested workarounds, and if so, have they proven to
       be to difficult to implement?

                                      11.
<PAGE>

     This information ensures that Engineering understands the impact on
     customer business, as well as the technical nature of the problem.  Out
     Engineering resources can then be allocated on a priority basis.

     If you should discover a defect of a "showstopper" type and a workaround is
     not available, we can "emergency patch" the codeline for your site, Due to
     time constrains, this patch will undergo minimal testing, but it will be
     tested against your submitted test case to ensure that it meets your
     requirements.  This patch will also be made available to or.  her customers
     who have experienced the same reported problem.

     Release Management Process

     Forte's product plan provides for a new feature product release every 15
     months or so, with a maintenance release in between.  With this schedule, a
     great deal of dine and effort goes into testing for product quality.
     Therefore, it is our policy to emergency patch the codeline as little as
     possible, since required changes will normally be made in the maintenance
     and new feature releases, which are then made available to our full
     customer base.

     It is important that you understand the release model outlined above, and
     use it in the planning of your own application development schedules.  You
     should plan to do some level of testing as early as possible before each
     maintenance or new feature production release.  You need to work
     proactively with Forte Technical Support to ensure that your issues are
     raised and fixed within a timeframe that allows them to be incorporated
     into the new release schedule.  In this way, we can work together to ensure
     your success.

     Feedback on the Quality of Technical Support

     The management and staff of the Forte Technical Support Center are
     committed to providing you with world class quality and responsive service.
     We are always interested in meeting your needs and expectations.  Your
     suggestions for enhancing the function and effectiveness of our service are
     always welcome.  Any comments or suggestions may be sent to the Director of
     Customer Services and Support or to your local sales representative.

Other Forte Services Offered

     There are other services that Forte can provide to complement Forte
     Technical Support.

     If you would like to order any of these services or need additional
     information about them, please contact your local Forte Sales Office.

     Training

     The Education Services group provides Forte users with an ever-expanding
     range of instruction.  Classes are taught at our training centers or at
     customer locations.  Course descriptions and current schedules are
     available by calling the Training Registrar at:

                                      12.
<PAGE>

     (510) 869-2050

     or by calling your Forte sales office.

     Consulting

     Forte provides a number of on-site consulting services.  In addition, Forte
     works closely with many integrator companies who are skilled in providing
     Forte application development services.

     Our consulting staff can assist you directly or in conjunction with an
     integrator.  We offer product installation, a range of quality assurance
     services, technical product consulting, and Forte performance tuning, all
     of which are designed to help you achieve success in your system
     development projects.

     The Forte Consulting group can also provide specialist services and on-site
     technical product consulting as a partner of both the integrator and your
     organization.

     The benefits of using Forte Consulting Services are:

     .  We provide you with an independent, experienced evaluation of your
        application architecture and system design to ensure that your business
        objectives are achieved by:

        .  Correcting design problems prior to major system development to
           reduce costs and development time, and increase flexibility.

        .  Evaluating your design techniques and approaches. Our consultants can
           offer ideas that might not have been considered.

     .  We ask the "hard" questions and raise issues which might be difficult
        for your project team m address, While you retain the responsibility for
        the ultimate decision, alternative recommendations provide a basis for
        resolution.

     .  We recommend design techniques for improving performance, flexibility,
        and productivity.

     .  We assist your management with strategic planning as well as technical
        direction.

     .  We provide on-the-job knowledge transfer to your staff by working with
        you on design problems. This type of training enhances the current
        project and the techniques you learn will be valuable in future design
        efforts.

     To discuss how Forte Consulting can help you, please contact your Forte
     Sales Office or the Director of Services and Support.  We will discuss your
     requirements and develop a "deliverables schedule/" /to meet your
     objectives.

     Documentation


                                      13.
<PAGE>

     The Forte Technical Publications group, which is part of our Engineering
     organization, writes and publishes all documentation manuals which are
     distributed with the product.  Problems with documentation and suggestions
     to improve the manual set can be addressed to Forte Technical Support.

     If you need more copies of any Forte documentation or want pricing
     information, please contact your local Forte Sales office.

          Forte Manuals

     Forte has an ever-expanding list of product manuals.  The manuals currently
     available are:

     .  Accessing Databases

     .  A Guide to the Forte Workshops

     .  Building International Applications

     .  Display Library

     .  Forte Installation Guide

     .  Framework Library

     .  Integrating with External Systems

     .  System Management Guide

     .  SystemMonitor Library

     .  TOOL Reference Manual

     .  Using Forte Express (available in early 1996)

     Special Interface Projects

     Our experienced specialists can help you with any Forte specific technical
     issues not covered in the services outlined above.  If you require a
     special Forte interface for your site, or other specialized assistance with
     Forte we can help.  For more information, please call your local Sales
     Office.

     Ordering more copies

     If you would like more copies of this guide, please call Forte Technical
     Support at: (510) 451-5400 or fax us at (510) 869-2010

     In this section:


                                      14.
<PAGE>

     .  Forte Technical Support Call Log Forms

     .  Forte Technical Support Registration Form

     .  Forte Sales Office Locations
<PAGE>

Forte Technical Support Call Log Form

 Call Ref.     Date Opened     Date Closed             Problem Summary
 Number
- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

                                      16.
<PAGE>

Forte Technical Support Registration Form

Please complete and fax co Technical Support at (510) 869-2010.

Company Name:________________________________________________________________

Company Address:_____________________________________________________________
                _____________________________________________________________
                _____________________________________________________________

Phone Number:   _________________________             Fax Number:____________

Management Contact:__________________________________________________________

Phone Number:   _________________________             Fax Number:____________

Primary Technical Contact:___________________________________________________

Phone Number:   _________________________             Fax Number:____________

Secondary Technical Contact:_________________________________________________

Phone Number:   _________________________             Fax Number:____________

Secondary Technical Contact:_________________________________________________

Phone Number:   _________________________             Fax Number:____________

Computer System Detail:

Management Contact:__________________________________________________________

Server Platform:    _______________________               GUI:_______________

Platform:    _______________________                    OS:__________________

Network Protocol: _______________________               Database:____________


                                      17.
<PAGE>

Forte Sales Office Location - USA

<TABLE>
<S>                                             <C>
CALIFORNIA                                      MINNESOTA

Forte Software, Inc.                            Forte Software, Inc.
Corporate Headquarters                          8400 Normandale Lake Blvd., Suite 920
Harrison Street                                 Minneapolis, MN  55437
Oakland, CA  94612                              612-921-8242
510-869-3400

Forte Software, Inc.                            NEW JERSEY
80 Pacific Concourse Drive                      Forte Software, Inc.
Suite 200                                       33 Wood Avenue South, Suite 600
Los Angeles, CA  90045                          Iselin, NJ  08830
643-4494                                        908-603-5283

COLORADO                                        NEW YORK

Forte Software, Inc.                            Forte Software, Inc.
Interstate North Parkway                        90 Park Avenue, Ste. 1600
Suite 700                                       New York, NY 1600
Atlanta, GA  30339                              212-984-1854
980-6745

GEORGIA                                         TEXAS

Forte Software, Inc.                            Forte Software, Inc.
Interstate North Parkway, Ste. 700              5001 LBJ Freeway, Suite 700
Atlanta, GA 30339                               Dallas, TX  75244
980-6745                                        214-387-5257

ILLINOIS                                        VIRGINIA

Forte Software, Inc.                            Forte Software, Inc.
W. 22nd Street                                  2010 Corporate Ridge, 7th Floor
Tower Floor                                     McLean, VA  22102
Oakbrook, IL  60512                             703-749-1445
684-2255

MASSACHUSETTS                                   WASHINGTON

Forte Software, Inc.                            Forte Software, Inc.
Burlington Mall Road                            500 108th N.E., Suite 800
Suite 300                                       Bellevue, WA  98004
Arlington, MA  01803                            206-688-3545
270-0672
</TABLE>


                                      18.
<PAGE>

Forte Sales Office Location - International

FRANCE                                          GERMANY

Forte Software, Inc.                            Forte Software, Inc.
Avenue Charles de Gaulle                        RHESSENSTRASSE 64
Neuilly sur Seine                               Frankfurt am Main
France                                          Germany
33-1-41-43-01-80                                49-172-692-3365

UNITED KINGDOM

Forte Software (UK) Ltd.
London Road
Berkshire
United Kingdom
44-1344-4821-00


                                      19.
<PAGE>

                                   Exhibit G
                                   ---------
                    Technology Escrow Agreement Enrollment
                    --------------------------------------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                          TECHNOLOGY ESCROW AGREEMENT

     THIS TECHNOLOGY ESCROW AGREEMENT including any Appendices and Exhibits
("Agreement") is effective this 12th day of July 1995, by and among FILESAFE, a
California limited partnership ("Escrow Agent"), FORTE SOFTWARE, INC., a
California corporation ("Depositor"), and each of the Depositor's licensees who
execute an Exhibit A to this Agreement from time to time (a "Registrant").

     WHEREAS, Depositor has entered or will enter into a contract with the
Registrant (the "License Agreement") regarding certain proprietary technology
and other materials of Depositor (the "Licensed Product");

     WHEREAS, Depositor and Registrant desire the Agreement to be supplementary
to said contract pursuant to 11 United States Code Section 365 (n);

     WHEREAS, availability of or access to certain proprietary data related to
certain proprietary technology and other material is important to Registrant in
the conduct of its business;

     WHEREAS, Depositor has deposited or will deposit with escrow Agent the
related proprietary data to provide for retention and controlled access for
Registrant under the conditions specified herein;

     NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in consideration of the promises, mutual covenants and
conditions contained herein, the parties hereto agree as follows:

     1. Establishment of Deposit Account. Following the execution and delivery
of the Agreement and the payment of the escrow fee to Escrow Agent, Escrow Agent
shall open a deposit account ("Deposit Account") for Depositor. The opening of
the Deposit Account means that Escrow Agent shall establish an account ledger in
the name of Depositor and request the initial deposit ("Initial deposit") from
Depositor. Unless or until Depositor makes the Initial Deposit with Escrow
Agent, Escrow Agent shall have no further obligation to Depositor except as
defined by this section.

     Depositor agrees to designate one individual to receive notices from Escrow
Agent and to act on behalf of Depositor in relation to the performance of its
obligations as set forth in the Agreement and to notify Escrow Agent immediately
in the event of any change from one designated representative to another in the
manner stipulated in Exhibit B.

     2. Deposit Submissions. Depositor must submit material to Escrow Agent for
retention and administration of the Deposit Account together with a completed
document describing the deposit material ("Deposit"), called a "Description of
Deposit Materials", hereinafter referred to as an Exhibit C. Each Exhibit C
should be signed by Depositor prior to submittal to Escrow Agent and will be
signed by Escrow Agent upon completion of the Deposit inspection.


                                      1.
<PAGE>

     3. Deposit Inspection. Upon receipt of an Exhibit C and Deposit, Escrow
Agent will visually match the listed items on the Exhibit C to the labeling of
the material ("Deposit Inspection"). Escrow Agent will not be responsible for
the contents or for validating the accuracy of Depositor's labeling. Acceptance
will occur when Escrow Agent concludes that the Deposit Inspection is complete.
Upon acceptance Escrow Agent will sign the Exhibit C and assign the next
sequential number to the Exhibit C.

     4. Storage Unit. Escrow Agent will store the Deposit in a defined unit of
space, called a storage unit. The cost of the first storage unit is included in
the escrow fees.

     5. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to Escrow Agent. Escrow Agent shall issue a copy
of the Exhibit C to Depositor and Registrant with{n ten (10) days of acceptance
of the Initial Deposit by Escrow Agent. Escrow Agent shall identify the Initial
Deposit beginning with Exhibit C/1.

     6. Deposit Obligation of Confidentiality. Escrow Agent agrees to establish
a locked receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of one or more of its officers, selected by
Escrow Agent, whose identity shall be available to Depositor and Registrant at
all times. Escrow Agent shall exercise a professional level of care in carrying
out the terms of the Agreement.

     Escrow Agent acknowledges Depositor's assertion that the Deposit shall
contain proprietary data and that Escrow Agent has an obligation to preserve and
protect the confidentiality of the Deposit.

     Depositor grants Escrow Agent the irrevocable right to duplicate the
Deposit only as necessary to preserve and safely store the Deposit and to
provide a copy thereof as authorized herein to Registrant.  Escrow Agent shall
reproduce on all copies of the Deposit made by Escrow Agent any proprietary or
confidentiality notices contained in the Deposit.  Except as provided for in the
Agreement, Escrow Agent agrees that it shall not divulge, disclose, make
available to third parties, or make any use whatsoever of the Deposit.

     7. Deposit Disposition after Expiry. Upon non-renewal or other termination
of this Agreement, if Depositor requests the return of the Deposit, Escrow Agent
shall return the Deposit to Depositor only after all outstanding invoices and
the Deposit return fee are paid. If the fee(s) are not received by the
anniversary date of the Agreement, Escrow Agent may, at its option, destroy the
Deposit.

     8. Registration Account. Following the execution and delivery of the
Agreement and the payment of the escrow fee to Escrow Agent, Escrow Agent shall
open a registration account ("Registration Account") for Registrant. The opening
of the Registration Account means that Escrow Agent shall establish an account
ledger in the name of Registrant entitling the Registrant to a copy of the
Initial Deposit pursuant to Section 14. Unless and until Depositor makes the
Initial Deposit with Escrow Agent, Escrow Age, at shall have no obligation to
Registrant except as defined by this section.

     Registrant agrees to designate one individual to receive notices from
Escrow Agent and to act on behalf of Registrant in relation to the performance
of its obligations as set forth in the


                                      2.
<PAGE>

Agreement and to notify Escrow Agent immediately in the event of any change from
one designated representative to another.

     Escrow Agent shall have no obligation to any party who has not signed the
Agreement.  Escrow Agent, Depositor, and Registrant shall have the right to
modify or cancel the Agreement without the consent of any third party.

     9. Deposit Changes. "Deposit" means and includes the Initial Deposit and/or
supplement(s) and/or replacement(s) accepted by Escrow Agent. Unless otherwise
provided by the Agreement, Depositor has the obligation to keep the Deposit
updated with current materials.

     Depositor hereby agrees to update the Deposit held by Escrow Agent with
replacement technology releases within thirty (30) days of distribution of a
major update.

     10. Replacement. "Replacement" means and includes any material which
replaces the Deposit or portions of the Deposit defined by Exhibit C(s).

     Within ten (10) days of receipt of a Replacement by Depositor, Escrow Agent
will send a notice to Registrant stating that Depositor has replaced the
Deposit, and Escrow Agent will include a copy of the Exhibit C defining the new
material.

     Escrow Agent will either destroy or return to Depositor all material that
is replaced by the Replacement as instructed in writing by Depositor.

     11. Verification Rights. At Registrant's sole cost and expense, Depositor
grants to Registrant the option to verify the Deposit for accuracy, completeness
and sufficiency. Depositor agrees to permit at least one employee of Escrow
Agent or an independent consultant reasonably acceptable to Depositor, at
Registrant's election to be present at Depositor's facility to verify, audit,
and inspect the Deposit to be held by Escrow Agent to confirm the quality and/or
content of the Deposit for the benefit of Registrant. If Escrow Agent is
selected to perform the verification Escrow Agent will be paid according to its
then current fees.

     12.  Certification by Depositor.  Depositor represents to Registrant that:

          (a) The Deposit delivered to Escrow Agent consist of source code
deposited on computer magnetic media or CD-ROM and all available technical
documentation which will enable Registrant to create and maintain the Product.

          (b)  The Deposit will be defined in the Exhibit C(s).

These representations shall be deemed to be made continuously throughout the
term of the Agreement.

     13. Term of Agreement. The Agreement will have an initial term of one year,
commencing on the Effective Date. The Agreement may be renewed for additional
one-year periods upon receipt by Escrow Agent of the specified renewal fees
prior to the last day of the term ("Expiration Date"). In the event that renewal
fees are not received thirty (30) days prior to the Expiration Date, Escrow
Agent shall so notify Depositor and Registrant. If the renewal fees


                                      3.
<PAGE>

are not received by the Expiration Date, Escrow Agent may terminate the
Agreement without further notice and without liability of Escrow Agent to
Depositor or Registrant. Registrant has the right to pay renewal fees and other
related fees for so long as Depositor is required to maintain, the Deposit. In
the event Registrant pays the renewal fees and Depositor is of the opinion that
any necessary condition for renewal is not met, Depositor may so notify Escrow
Agent and Registrant in writing. The resulting dispute will be resolved pursuant
to the dispute resolution process defined in Section 19.

     14. Expiry. If the Agreement is not renewed or is otherwise terminated, all
duties and obligation of Escrow Agent to Depositor and Registrant will
terminate.

     15. Filing For Release of Deposit by Registrant. Upon notice to Escrow
Agent by Registrant of the occurrence of a release condition as defined in
Section 17 and payment of the release request fee, Escrow Agent shall notify
Depositor by certified mail or commercial express mail service with a copy of
the notice from Registrant. If Depositor provides contrary instruction within
thirty (30) days of the mailing of the notice to Depositor, Escrow Agent shall
not deliver a copy of the Deposit to Registrant. "Contrary Instruction" means
the filing of an instruction with Escrow Agent by Depositor stating that a
Contrary Instruction is in effect. Such Contrary Instruction means an officer of
Depositor warrants that a release condition has not occurred or has been cured.
Escrow Agent shall send a copy of the instruction by certified mail or
commercial express mail service to Registrant. Escrow Agent shall notify both
Depositor and Registrant that there is a dispute to be resolved pursuant to
Section 19. Upon receipt of Contrary Instruction, Escrow Agent shall continue to
store the Deposit until directed by Depositor and Registrant jointly, resolved
pursuant to Section 19, by order by a court of competent jurisdiction, or
termination of the Agreement.

     16. Release of Deposit to Registrant. If Escrow Agent does not receive
Contrary Instruction from Depositor, Escrow Agent is authorized to release the
Deposit, or if more than one Registrant is registered to the Deposit, a copy of
the Deposit, to the Registrant filing for release following receipt of any fees
due Escrow Agent including Deposit copying and delivery fees.

     17.  Release Conditions of Deposit to Registrant.  Release conditions are:

          (a) Depositor or its successor or assign hereunder files a petition
under Chapter 7 of the Bankruptcy Code, 11 U.S.C. 701 et seq, or otherwise
ceases business operations generally;

          (b) Depositor ceases to make available maintenance or support services
for the then-current version of the Licensed Product, except as a result of a
natural disaster or Act of God, government or other acts beyond the reasonable
control of Depositor, and except when Registrant terminates or is no longer
entitled to maintenance or support services for such version.

     18. Conditions Following Release. Following a release and subject to
payment to Escrow Agent of all outstanding fees, Registrant shall have the right
to use Deposit only as specified in the License Agreement between Depositor and
Registrant. Additionally, Registrant shall be required to maintain the
confidentiality of the released Deposit.

                                      4.
<PAGE>

     19. Disputes. In the event of a dispute, Escrow Agent shall so notify
Depositor and Registrant in writing. Such dispute will be settled by arbitration
in accordance with the commercial rules of the American Arbitration Association
("AAA"). Unless otherwise agreed to by Depositor and Registrant, arbitration
will take place in Oakland, California.

     20. Indemnification. Depositor and Registrant agree to defend and indemnify
Escrow Agent and hold Escrow Agent harmless from and against any and all claims,
actions and suits, whether in contract or in tort, and from and against any and
all liabilities, losses, damages, costs, charges, penalties, counsel fees, and
other expenses of any nature (including, without limitation, settlement costs)
incurred by Escrow Agent as a result of performance of the Agreement except in
the event of a judgment which specifies that Escrow Agent acted with gross
negligence or willful misconduct or improper release of any deposit.

     21. Audit Rights. Escrow Agent agrees to keep records of the activities
undertaken and materials prepared pursuant to the Agreement. Upon reasonable
notice and during normal business hours during the term of the Agreement,
Depositor and Registrant will be entitled to inspect the records of Escrow Agent
with respect to the Agreement, and accompanied by an employee of Escrow Agent,
inspect the physical status and condition of the Deposit (provided that only
Depositor shall be entitled to review the Deposit). The Deposit may not be
changed by Depositor or Registrant during the audit.

     22. General. Escrow Agent may act in reliance upon any written instruction,
instrument, or signature believed to be genuine and may assume that any person
giving any written notice, request, advice or instruction in connection with or
relating to the Agreement has been duly authorized to do so. Escrow Agent is not
responsible for failure to fulfill its obligations under the Agreement due to
causes beyond Escrow Agent's control.

     Notices to Depositor and Escrow Agent should be sent to the parties at the
addresses identified in the attached Exhibit B. Notices to Registrant should be
sent to the party(s) at the address(s) identified for each such Registrant in
the attached Exhibit D.

     The Agreement is to be governed by and construed in accordance with the
laws of the State of California.

     The Agreement may only be amended in a writing signed by all of the
parties.

     If any provision of the Agreement is held by any court to be invalid or
unenforceable, that provision will be severed from the Agreement and any
remaining provisions will continue in full force.


                                      5.
<PAGE>

FORTE SOFTWARE, INC.                 FILESAFE, A California Limited Partnership
                                     DBA SourceFile

DEPOSITOR                            ("ESCROW AGENT")

Name:_________________________       Name:___________________________

Print Name:___________________       Print Name:_____________________

Title:________________________       Title:__________________________


                                      6.
<PAGE>

                                   EXHIBIT A

                          TECHNOLOGY ESCROW AGREEMENT

                              Account Number: 7196

                         Registrant Number:  7196-____

The undersigned Registrant hereby enters into the Technology Escrow Agreement
dated 12 July, 1995 (the "Agreement"), among Forte Software, Inc., a California
corporation ("Depositor"), FileSafe, Inc., a California corporation ("Escrow
Agent"), and Registrant.

The term "Agreement" shall mean this Exhibit and the attached Technology Escrow
Agreement, Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Technology Escrow Agreement.

Notices to referred Registrant regarding Agreement terms and conditions should
be addressed to:

Registrant:                ____________________________
Address:                   ____________________________
                           ____________________________

Designated Representative: ____________________________
Telephone:                 ____________________________
Facsimile:                 ____________________________

This Exhibit is effective this _______ day of ___________, 199__.  Depositor,
Registrant, and Escrow Agent hereby acknowledge and agree to be bound by the
terms and conditions of the Agreement.

<TABLE>
<CAPTION>                                                        Filesafe, a California
Forte Software, Inc.                                             Limited Partnership
- --------------------            -----------------                -------------------
<S>                            <C>                               <C>
Depositor                       Registrant                       Escrow Agent


By:________________________     By:_______________________       By:________________________

Name:______________________     Name:_____________________       Name:______________________

Title:_____________________     Title:____________________       Title:_____________________

Date:______________________     Date:_____________________       Date:______________________
</TABLE>

                                      1.
<PAGE>

                                   EXHIBIT B

                          TECHNOLOGY ESCROW AGREEMENT

                                Account Number:

                    DESIGNATED REPRESENTATIVES AND LOCATIONS

Notices to Depositor regarding Agreement terms and conditions should be
addressed to:

Depositor:                     Forte Software, Inc.
                               1800 Harrison Street
                               Oakland, CA 94612

Designated Representative:     Marcia S Ware
Telephone:                     510-986-3509
Facsimile:                     510-869-2002

Notices to Escrow Agent regarding Agreement terms and conditions should be
addressed to:

Escrow Agent:                  FileSafe, L.P.
Address:                       50 Crisp Plaza, Suite 700
                               San Francisco, CA 94124-2924

Designated Representative:     Ms. Beth Stearns
Telephone:                     415-715-2733
Facsimile:                     425-822-4302

                                      1.
<PAGE>

                                   EXHIBIT C

                        DESCRIPTION OF DEPOSIT MATERIALS

Deposit Account No:  7196

Account Name:        FORTE SOFTWARE, INC

Depositor, pursuant to a specific Escrow Agreement between the parties, hereby
deposits the below described materials into the above referenced Deposit Account
by transferring them to Escrow Agent.

DEPOSIT MATERIALS:

I certify that the above described materials  Received the identified materials:
 were delivered/sent to Escrow Agent

By:____________________________________       By:_______________________________
Name:__________________________________       Name:_____________________________
Title:_________________________________       Title:____________________________
For:___________________________________       For:______________________________
Date:__________________________________       Date:_____________________________
                                              Exhibit C No:_____________________


                                      1.
<PAGE>

                                   EXHIBIT D

                          TECHNOLOGY ESCROW AGREEMENT

                    REGISTRATION DEPOSIT ACCOUNT ENROLLMENT

      DEPOSIT ACCOUNT NAME                           DEPOSIT ACCOUNT NUMBER
- ----------------------------------------      ---------------------------------

    FORTE SOFTWARE INC                                       7196


                                      1.
<PAGE>

                            Exhibit H Reserved/Open
                            -----------------------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>


                                   Exhibit I
                                Forte Price List


                                     FORTE
                                    PRICING
                                     GUIDE



                                    ED HORST
                                  MARK HERRING



                                 FORTE SOFTWARE


                               INTERNAL USE ONLY

                                       1.
<PAGE>

                                                               Product Packaging
                                                                             And
                                                                     Definitions
================================================================================

Forte Application Environment

A Core System is the starting point for any site.  This Core System sells as a
bundle for a fixed price and includes:

     1  Client Environment
     5  Forte Developer Licenses
     10 Runtime User Licenses
     1  Server Environment
     1  Server Development License
     1  RDBMS Development Interface
     1  Shared Repository
     1  Documentation Set on both hardcopy and CD-ROM
     5  Student-days of Training

Notes:

     1.   All clients (development and runtime) must be for the same platform.
     2.   All server components (development and repository) must be for the
          same platform.
     3.   The database interface must be on the server platform.
     4.   The license for all supported networking protocols is included in each
          platform license.
     5.   The server license included in this package is for development
          purposes only.  If the same machine will also be used for use in a
          deployed application, a separate runtime license is required.

Platform -- A given hardware and operating system combination.  In the case of
client platforms, it also includes a graphical user interface (GUI).  If any of
the part of the combination is different, it becomes a different platform.  For
example, each combination listed below would be considered a different platform:

<TABLE>
<CAPTION>
        Hardware                   Operating System                GUI
       ----------                  ----------------                ---
       <S>                         <C>                             <C>
       PC (Intel)                  DOS                             Windows 3.1
       PC (Intel)                  Windows NT                      Windows NT
       Macintosh                   Mac OS                          Mac OS
       Digital Alpha (AXP)         OpenVMS                         DECwindows
       Digital Alpha (AXP)         OSF/1                           DECwindows
</TABLE>

Client Environment -- All the Forte development tools and runtime system
libraries for a designated client platform.  For environments with a
heterogeneous (mixed) set of clients, the

                                       2.
<PAGE>

customer is required to purchase a different Client Environment for each
platform. The one time charge per environment for these environments (and the
server environments below) is the only place where Forte covers its expense of
building, testing and maintaining a complex, heterogeneous environment.

Forte Developer License -- This is distinct from the environment above.  This is
limited to the Forte Application Environment (Web Enterprise, Express and
Conductor require additional purchases).  The development environment provides
the software and each developer requires an individual license to use the
software in the environment.  Note: these licenses are per designated developer
and not per machine.  For example, if a developer has both Windows and Macintosh
machines, they are still only one developer.  The company would, however, be
required to have license rights for both Client Environments.

"New" vs.  "Additional" -- The term "new" (as in New Client Environment)
indicates the addition of a new environment of a different platform (see above).
For example, if a customer has been doing development exclusively on Windows and
now wants Macintosh support, they will need a new Client Environment for the
Macintosh.  The term "additional" applies to the acquisition of subsequent
copies of an already existing product.  For example, if a customer wants to
spread the development load over more than one Sun server, the second and
subsequent Suns will be considered "additional" licenses.

Runtime Server License -- Gives the customer the rights to run the server
runtime libraries on a single server.  It includes a license for all network
protocols supported on that server.

Runtime User License -- Forte charges for concurrently active users that are
"logged into Forte".  Any platform that has one or more active windows running a
Forte application is considered to be a concurrent user and needs a separate
license.  The customer must license the peak number of concurrent users that
will be running a Forte application.  For example, if only 75 of 200 users will
be using Forte at the same time, the customer must acquire 75 Runtime User
Licenses.

Server Environment -- The Forte development system for a designated server
platform.  A customer is required to have a separate Server Environment for each
different platform used as a server in development or deployment.  This Server
Environment does not contain support for a database interface; the interface is
purchased separately.

Server Development License -- Gives the customer the right to use Forte products
for development on the designated server machine.  This is distinct from the
Server Environment (above).  A Server Environment must be purchased for each
type of environment used for server development and is a one-time charge.  A
Server Development License must be purchased for the machine where server
development will occur.

RDBMS Interface -- Support for a designated RDBMS interface.  Support for an
additional RDBMS interfaces can be purchased separately.  This includes
scenarios where more than one database type is running on a single server (e.g.
a VAX that runs both Sybase and Rdb).

                                       3.
<PAGE>

Forte WebEnterprise

Web Enterprise Server -- A standard Forte deployment server that incorporates
all or part of Forte WebEnterprise in order to provide access to the server from
the Web, or from or to IIOP. Examples include:

- -    a Forte Server that is connected to a Web Server via the WebEnterprise CGI,
     NSAPI or ISAPI
- -    a Forte Server that connects to an IIOP environment
- -    any Forte Server that exposes itself as an IIOP service
- -    any Forte Server that has the WebEnterprise libraries included in
At least ONE Web Enterprise Server must be purchased before a customer can
                                                     ---------------------
develop for the Web.  There is no additional charge per developer.
- -------------------

Web Enterprise Developer License -- There is no additional charge per developer,
the customer must have purchased at least one WebEnterprise Server.  Each
WebEnterprise Developer must have a Forte Developer License.

Forte Express

Express Developer License -- Each Express developer requires an individual
license to use the Express software in the environment.  Note: these licenses
are per designated developer and not per machine.  Each Express Developer must
have an Express Developer License and a Forte Developer License.

Forte Conductor

Conductor Core System -- The starting point for any Conductor development.  The
Conductor Core system can only be purchased once the Forte Core System has been
purchased.  The RDBMS Development interfaces and repository that is used by
Conductor must have already been purchased with the Forte Core System.  If
Conductor is to use a separate repository from the Forte development repository,
an additional repository must be purchased.  Similarly, any additional RDBMS
interfaces needed for Conductor must be purchased (and may also be used with
other Forte products).

Conductor Developer License -- Each Conductor developer requires an individual
license to use the Conductor software in the environment.  Note: these licenses
are per designated developer and not per machine.  There is no correlation
between Conductor developer licenses and Forte developer licenses.  For example
it is possible to have more or less Conductor developer licenses than Forte
Developer Licenses.

Additional Conductor Development Engines -- Each Conductor Core system comes
with one Conductor Development Engine.  A Conductor Development Engine is the
software that runs on a server that stores process definitions and runs business
processes for development.  Additional engines might be required where customers
have multiple project teams that desire autonomy over their development work, or
developers that work in a disconnected distributed environment.  The license for
these engines ONLY covers development work, NO deployment is allowed on this
engine.

                                       4.
<PAGE>

Conductor Deployment Engines -- A single Conductor Deployment Engine consists of
multiple components:
- -    Two engine units: These units can be deployed across multiple machines for
     failover purposes.
- -    One governer: An integral part of the Conductor environment.
- -    Multiple database services: The customer can configure as many database
     services they desire. Note: Each RDBMS Interface must be purchased with the
     Forte Application Environment.

Additional engines are required to support large numbers of concurrent sessions
and distributed environments.  Note: It is possible to run multiple Conductor
Deployment Engines on one machine.  Each engine, not each machine, needs a
separate license.

Conductor Runtime Sessions -- Any application that connects to the Conductor
engine to start, get, or perform work is considered a session.  These Runtime
Sessions could be traditional GUI clients, web browsers, or server applications
like the email-server, credit-check servers, fax servers, etc.  These clients
could make use of any of the Conductor APIs.  There is no difference to the
pricing if these Runtime Sessions are from a Forte client or server, a C++
client or server, an ActiveX client, an IIOP application, etc.

<TABLE>
<CAPTION>
              Qty Description                Unit Price   Extended Price    Discount      Total
- -----------------------------------------  ------------ ---------------- -----------  ---------
Development
Forte Application Environment Core System
 (Core System)
<S>                                          <C>         <C>              <C>        <C>
  1 Client Environment                          $15,000         $15,000
  5 Forte Developer Licenses                    $ 6,000         $30,000
  10 Runtime User Licenses                      $   750         $ 7,500
  1 Server Environment                          $15,000         $15,000
  I Server Development License                  $ 7,500         $ 7,500
  I RDBMS Development Interface                 $ 7,500         $ 7,500
  I Repository                                  $ 7,500         $ 7,500
  I Documentation Set                           $   250         $   250
  5 Student-days of Training                    $   350          $1.750
  1 Media Set on CD-ROM                         $   250         $   250
     Subtotal                                                   $92,250         19%     $75,000
Additional Environments
     New Client Environment                                                             $15,000
     New Server Environment                                                             $15,000
     Additional Server Development License                                              $ 7,500
Additional Developer Licenses (per
 Developer)
     I to 9 Developers                          $ 6,000                          0%     $ 6,000
     10 to 24 Developers                        $ 6,000                         10%     $ 5,400
     25 to 49 Developers                        $ 6,000                         20%     $ 4,800
     50 or more Developers                      $ 6,000                         35%     $ 3,900
Optional Products & Interfaces
 Additional RDBMS Interface                                                             $ 7,500
 Additional Repository License                                                          $ 7,500
 Express License with Core System
     1 to 10 Developers                         $20,000                          0%     $20,000
     11 to 24 Developers (each)                 $ 2,000                         10%     $ 1,800
     25 to 49 Developers (each)                 $ 2,000                         20%     $ 1,600
     50 or more Developers (each)               $ 2,000                         35%     $ 1,300
 Conductor Licenses with Core System
  Conductor Core System
</TABLE>

                                       5.
<PAGE>

<TABLE>
<CAPTION>
              Qty Description                Unit Price   Extended Price    Discount      Total
- -----------------------------------------  ------------ ---------------- -----------  ---------
<S>                                         <C>          <C>             <C>          <C>
     5 Conductor Developers
     1 Conductor Development Engine             $50,000                                 $50,000
      (RDBMS Interface and Repository
      purchased with Forte Core)
 Additional Conductor Developers
     1 to 19 Developers                         $ 4,000              10%    $3,600
     20 to 49 Developers (each)                 $ 4,000              20%    $3,200
     50 or more Developers (each)               $ 4,000              35%    $2,600

 Additional Conductor Development Engines       $20,000                                 $20,000
 WebEnterprise Developers
  Providing at least one WebEnterprise          $     0                                 $     0
   Server license purchased
Deployment (Runtime)
Runtime User Packs
 1 to 10 Runtime User Licenses                  $   750                          0%     $   750
 11 to 25 Runtime User Licenses                 $   750                         10%     $   675
 26 to 50 Runtime User Licenses                 $   750                         20%     $   600
 51 to 100 Runtime User Licenses                $   750                         30%     $   525
 101 to 250 Runtime User Licenses               $   750                         40%     $   450
 251 to 1000 Runtime User Licenses              $   750                         50%     $   375
 1001 to 2000 Runtime User Licenses             $   750                         60%     $   300
 2000 or more Runtime User Licenses             $   750                         70%     $   225
Runtime Servers (see next page)                                                      Per Matrix
WebEnterprise Servers - additional fee per
 server
 1 to 9 WebEnterprise Servers                   $15,000                          0%     $15,000
 10 to 24 WebEnterprise Servers                 $15,000                         17%     $12,500
 25 to 49 WebEnterprise Servers                 $15,000                         33%     $10,000
 50 or more WebEnterprise Servers               $15,000                         45%     $ 8,000
Conductor Concurrent Deployment Sessions
 1 to 10 Deployment Session Licenses            $   250                          0%     $   250
 11 to 25 Deployment Session Licenses           $   250                         10%     $   225
 26 to 50 Deployment Session Licenses           $   250                         20%     $   200
 51 to 100 Deployment Session Licenses          $   250                         30%     $   175
 101 to 250 Deployment Session Licenses         $   250                         40%     $   150
 251 to 1000 Deployment Session Licenses        $   250                         50%     $   125
 1001 to 2000 Deployment Session Licenses       $   250                         60%     $   100
 2000 or more Deployment Session Licenses       $   250                         70%     $    75
Conductor Deployment Engines
 Per Engine                                     $20,000                          0%     $20,000
     Engine includes 2 engine units, a
      governor And multiple database
      services.
Additional Services and Products
 Training @ Forte facilities -- per                                                     $   380
  student-day
 Training @ Customer Site -- per                                                        $ 3,200
  lecturer-day + expenses; 12 person limit
 Consulting -- On-site, per day, plus                                                   $ 2,000
  travel and expenses
 Additional Documentation Set- Hardcopy                                                 $   250
</TABLE>

                                       6.
<PAGE>

<TABLE>
<CAPTION>

              Qty Description                Unit Price   Extended Price    Discount      Total
- -----------------------------------------  ------------ ---------------- -----------  ---------
<S>                                         <C>         <C>               <C>          <C>
 Additional Documentation Set - CD-
  ROM                                                                                   $   250

Maintenance
 18% of Current List Price per Year
International Uplift (outside U.S. and
 Canada)
 30% of List Price
</TABLE>

                                       7.
<PAGE>

                                 ADDENDUM A to
              VALUE-ADDED RESELLER LICENSE AND SERVICES AGREEMENT
                                    BETWEEN
                           CHORDIANT SOFTWARE, INC.
                                      AND
                             Forte Software, Inc.

This Addendum A shall amend the Value-Added Reseller License and Services
Agreement dated October 30, 1998 ("Agreement") between Chordiant Software, Inc.
("VAR") and Forte Software, Inc. ("Forte") as of the Effective Date indicated
below. Other than the amendments listed below, the terms and conditions of the
Agreement remain unchanged and in full force and effect.  In the event of any
conflict between the Agreement and this Addendum A, the latter shall govern.
Capitalized terms herein shall have the same meaning as in the Agreement, unless
otherwise indicated.

1.  Forte hereby grants VAR the one time right to Sublicense, under the terms
herein and under the Agreement, up to 20 Full Use Designated Developer Licenses
of the Core System Products  to Electronic Data Systems ("EDS" including EDS'
subsidiary, Centrobe) for General Motors internal use.  VAR shall pay Forte a
Sublicense fee equal to Forte's then-current list price, [*], plus initial year
Support Fees for such Sublicense.

2.  VAR shall also have the ongoing right during the term of the Agreement to
grant Sublicenses for additional Full Use Designated Developers Licenses of the
Core System Products.  For each such Sublicense, VAR shall pay Forte a
Sublicense fee equal to Forte's then-current list price, plus initial year
Support Fees.

The parties have executed this Addendum A as of  February 22, 1999 (the
"Effective Date").

Executed by VAR                            Executed by Forte Software, Inc.

Signature: /s/ Steven R. Springsteel       Signature: /s/ Sayed Darwish

Name: Steven R. Springsteel                Name: Sayed Darwish
      (Please Print)                             (Please Print)

Title: EVA/CFO                             Title: VP, General Counsel

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                 ADDENDUM B to
              VALUE-ADDED RESELLER LICENSE AND SERVICES AGREEMENT
                                    BETWEEN
                           CHORDIANT SOFTWARE, INC.
                                      AND
                             Forte Software, Inc.

This Addendum B shall amend the Value-Added Reseller License and Services
Agreement dated October 30, 1998 ("Agreement") between Chordiant Software, Inc.
("VAR") and Forte Software, Inc. ("Forte") as of the Effective Date indicated
below. Other than the amendments listed below, the terms and conditions of the
Agreement remain unchanged and in full force and effect. In the event of any
conflict between the Agreement and this Addendum B, the latter shall govern.
Capitalized terms herein shall have the same meaning as in the Agreement, unless
otherwise indicated.

1.  VAR shall pay a nonrefundable license fee of [*], payable ninety (90) days
from the Effective Date of this Addendum B. Upon execution of this Addendum,
such payment obligation is noncancelable. In consideration for such payment, the
Sublicense fee rates and royalties specified in Exhibit A under the Agreement
shall be adjusted as follows:

A. In Section 4(a)(i), [*] is reduced to [*].

B. In Section 4(a)(ii), [*] is reduced to [*].

C. In Section 4(b)(i), [*] is reduced to [*].

D. In Section 4 (c), [*] is reduced to [*].

E. In Section 4 (d), [*] is reduced to [*].

2.  VAR shall pay a nonrefundable pre-paid license fee of [*], payable thirty
(30) days from the Effective Date of this Addendum B. Upon execution of this
Addendum, such payment obligation is noncancelable. In consideration for such
pre-paid license fee, Forte shall waive the next [*] of Sublicense fees
(i.e. credit VAR for any type of license fees otherwise due to Forte under the
initial 3 year term of the Agreement for Products that VAR is currently
permitted to Sublicense, but not Support Fees or fees for services) that would
otherwise be due under the Agreement and Sublicense fee schedule, as amended in
Section 1 above.

The Effective Date of this Addendum B is March 1, 1999 (the "Effective Date").

Executed by VAR                         Executed by Forte Software, Inc.

Signature: /s/ Steven R. Springsteel    Signature: /s/ Marty Sprinzen

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

Name: Steven R. Springsteel              Name: Marty Sprinzen
      (Please Print)                           (Please Print)

Title: EVP/CFO                           Title: President and CEO

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.


<PAGE>

                                                                    EXHIBIT 10.7

                          SOFTWARE LICENSE AGREEMENT

                                    BETWEEN

                      ELECTRONIC DATA SYSTEMS CORPORATION

                                      AND

                           CHORDIANT SOFTWARE, INC.


<PAGE>

                               TABLE OF CONTENTS

                                      FOR

                          SOFTWARE LICENSE AGREEMENT

<TABLE>
<CAPTION>
<S>                                                                                        <C>
ARTICLE I.    AGREEMENT, TERM, AND DEFINITIONS
         1.1  Agreement and Term........................................................   1
         1.2  Certain Definitions.......................................................   1
ARTICLE II.   PURCHASE ORDERS
         2.1  Preparation of Purchase Orders............................................   2
         2.2  Issuance and Acceptance of Purchase Orders................................   2
         2.3  Purchase Order Alterations................................................   3
         2.4  Evaluation Purchase Orders................................................   3
         2.5  Cancellation of Purchase Orders...........................................   4
ARTICLE III.  PROVISION OF LICENSED SOFTWARE AND SERVICES
         3.1  General...................................................................   4
         3.2  Transportation of Licensed Software.......................................   5
         3.3  Risk of Loss..............................................................   5
         3.4  Installation of Licensed Software.........................................   5
         3.5  Right to Cancel for Delays................................................   5
         3.6  Resale of Products by EDS.................................................   5
         3.7  Time and Materials Services...............................................   6
         3.8  Services in General.......................................................   7
         3.9  Ownership of Intellectual Property Rights.................................   8
         3.10 Use of Existing Materials.................................................   9
         3.11 Further Acts..............................................................  10
         3.12 Time of Performance.......................................................  10
         3.13 EDS Business Practices....................................................  10
         3.14 Education Services........................................................  10
         3.15 Development Services......................................................  10
ARTICLE IV.   PROVISION OF LICENSED SOFTWARE
         4.1  Acceptance of Licensed Software...........................................  10
         4.2  Grant of License..........................................................  11
         4.3  Transfer of Licensed Software.............................................  13
         4.4  Ownership of Licensed Software and Modifications..........................  13
         4.5  Proprietary Markings......................................................  14
         4.6  Duplication of Documentation..............................................  14
         4.7  Non-Disclosure............................................................  14
         4.8  Licensed Software Support Services........................................  14
         4.9  Licensed Software Support Services Options................................  17
         4.10 Provision of Source Code..................................................  18
         4.11 Acquisition of Third Party Software.......................................  18
         4.12 Software from an Authorized Third Party...................................  19
         4.13 Software Audit............................................................  19
ARTICLE V.    WARRANTIES, INDEMNITIES, AND LIABILITIES
         5.1  Warranty..................................................................  19
         5.2  Proprietary Rights Indemnification........................................  20
         5.3  Cross Indemnification.....................................................  21
</TABLE>

i
<PAGE>

<TABLE>
<S>                                                                                       <C>
         5.4  Limitation of Liability...................................................  22
         5.5  Insurance.................................................................  22
         5.6  Survival of Article V.....................................................  22
ARTICLE VI.   PAYMENTS TO SUPPLIER
         6.1  Charges, Prices, and Fees for Licensed Software and Services..............  23
         6.2  Modifications to Charges..................................................  23
         6.3  Auto Payment..............................................................  23
         6.4  Payment Through Invoicing.................................................  24
         6.5  Taxes.....................................................................  24

ARTICLE VII.  TERMINATION
         7.1  Termination for Cause.....................................................  25
         7.2  Termination for Insolvency or Bankruptcy..................................  26
         7.3  Termination for Non-Payment...............................................  26
         7.4  Termination of Software License...........................................  26
         7.5  Rights Upon Termination...................................................  26
ARTICLE VIII. MISCELLANEOUS
         8.1  Binding Nature, Assignment, and Subcontracting............................  26
         8.2  Counterparts..............................................................  27
         8.3  Headings..................................................................  27
         8.4  Authorized Agency.........................................................  27
         8.5  Relationship of Parties...................................................  28
         8.6  Confidentiality...........................................................  28
         8.7  Media Releases............................................................  28
         8.8  Dispute Resolution........................................................  28
         8.9  Electronic Communications.................................................  29
         8.10 Proposals and Special Projects............................................  29
         8.11 Governmental Customers....................................................  29
         8.12 International Business....................................................  29
         8.13 Compliance with Laws......................................................  29
         8.14 Labor.....................................................................  30
         8.15 Export....................................................................  30
         8.16 Notices...................................................................  30
         8.17 Force Majeure.............................................................  30
         8.18 Severability..............................................................  31
         8.19 Waiver....................................................................  31
         8.20 Remedies..................................................................  31
         8.21 Survival of Terms.........................................................  31
         8.22 Nonexclusive Market and Purchase Rights...................................  31
         8.23 GOVERNING LAW.............................................................  31
         8.24 Entire Agreement..........................................................  32
</TABLE>

ii
<PAGE>

                               LIST OF EXHIBITS

EXHIBIT A
EDS BUSINESS PRACTICES
- ----------------------
EXHIBIT B
CHARGES, PRICES, AND FEES
- -------------------------
EXHIBIT C
THIRD PARTY SYSTEM ACCESS AGREEMENT
- -----------------------------------
EXHIBIT D
EDUCATION SERVICES
- ------------------
EXHIBIT E
DEVELOPMENT SERVICES
- --------------------
EXHIBIT F
RESELLER ACCESS AUTHORIZATION
- -----------------------------
EXHIBIT G
THIRD PARTY LETTER AGREEMENT
- ----------------------------
EXHIBIT H
END USER SOFTWARE LICENSE AGREEMENT
- -----------------------------------

iii
<PAGE>
                                                                  EXHIBIT 10.7

                          SOFTWARE LICENSE AGREEMENT
                          --------------------------

     THIS SOFTWARE LICENSE AGREEMENT (the "Agreement"), dated July 11, 1998 (the
"Effective Date"), is between CHORDIANT SOFTWARE, INC., a Delaware corporation
("Chordiant"), and ELECTRONIC DATA SYSTEMS CORPORATION, a Delaware corporation
("EDS").

                              W I T N E S S E T H:

     WHEREAS, EDS desires to have the right to license computer software
programs and to obtain services from Chordiant for EDS' Centrobe business or
successor organizations as designated by EDS from time to time; and

     WHEREAS, Chordiant is willing to provide computer software programs and
services to EDS in accordance with the terms and conditions set forth in this
Agreement;

     NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration received and to be received, Chordiant and EDS agree as
follows:


                 ARTICLE I.  AGREEMENT, TERM, AND DEFINITIONS
                 --------------------------------------------

1.1  Agreement and Term.  The parties agree that the terms and conditions of
     ------------------
     this Agreement apply to Chordiant's provision of computer software programs
     and services to EDS for EDS' Centrobe customers.  The term of this
     Agreement commences on the Effective Date and the Agreement shall continue
     to be in effect until terminated by either party as set forth in this
     Agreement.

1.2  Certain Definitions.  The following definitions apply to this Agreement:
     -------------------

     (a)  "Affiliate" means any entity controlling, controlled by or under
          common control with either party.  For purposes of this Agreement,
          control means operational control in which the controlling entity has
          either (i) fifty one percent (51%) or more of the equity interest, or
          (ii) the maximum percentage of the equity interest allowed by local
          law, based on the entity's location or state of incorporation, as
          applicable, whichever is less.

     (b)  "Applicable Specifications" means the functional, performance,
          operational, compatibility, and other specifications or
          characteristics of a Product described in applicable Documentation and
          such other specifications or characteristics of a Product agreed upon
          in writing by the parties.

     (c)  "Documentation" means user guides, operating manuals, education
          materials, product descriptions and specifications, technical manuals,
          supporting materials, and other information provided, or to be
          provided, by Chordiant to EDS relating to the Products or used in
          conjunction with the Services, whether distributed in print, magnetic,
          electronic, or video format, in effect as of the date (i) a Product is
          shipped to or is accepted by EDS, as applicable, or (ii) the Service
          is provided to EDS.


1
<PAGE>

     (d)  "Employee" means those employees, agents, subcontractors, consultants,
          and representatives of Chordiant provided or to be provided by
          Chordiant to perform Services pursuant to this Agreement.

     (e)  "Licensed Software" means computer programs in object code (including
          micro code) provided or to be provided by Chordiant pursuant to this
          Agreement. The definition of Licensed Software also includes any
          enhancements, translations, modifications, updates, releases, or other
          changes to Licensed Software which are provided or to be provided as
          part of Chordiant's performance of warranty Service obligations or
          pre-paid support Services pursuant to this Agreement.

     (f)  "Products" means, individually or collectively as appropriate,
          Licensed Software, Documentation, and Work Products (as later defined
          in this Agreement), provided or to be provided by Chordiant pursuant
          to this Agreement.

     (g)  "Services" includes, but is not limited to, installation, education,
          acceptance testing, support, development, warranty, and time and
          materials services, provided or to be provided by Chordiant pursuant
          to this Agreement.

     (h)  "Site" means geographically contiguous buildings, each of which, in
          whole or in part, is occupied or accessed by EDS or a customer of EDS.
          "Geographically contiguous" means adjacent tracts or parcels of real
          property separated, if at all, only by publicly dedicated rights of
          way or private easements.

     (i)  "Source Code" means the instructions regarding the Licensed Software
          expressed in the high-level technical and specialized programming
          language in which the programmer wrote the software program.

     (j)  "Warranty Period" means the period specified in Section 5.1(e) of this
          Agreement during which Chordiant is obligated to perform its warranty
          obligations.


                         ARTICLE II.  PURCHASE ORDERS
                         ----------------------------

2.1  Preparation of Purchase Orders.  Chordiant agrees that computer software
     ------------------------------
     programs and services which Chordiant generally makes available to other
     customers shall be made available to EDS under the terms and conditions of
     this Agreement.  EDS may reasonably request non-confidential information
     about computer software programs and services in order to prepare purchase
     orders and Chordiant shall promptly provide to EDS, at no charge,
     sufficiently detailed non-confidential information which is responsive to
     EDS' request.  From time to time and/or at EDS' request, Chordiant shall
     provide written information to EDS about computer software programs and
     services, and new releases, versions or options related thereto, available
     or to be available from Chordiant.

2.2  Issuance and Acceptance of Purchase Orders.  References in this Section
     ------------------------------------------
     to purchase orders also apply to alterations to Purchase Orders (as later
     defined in this Section).  The following governs the issuance and
     acceptance of purchase orders under this Agreement:

     (a)  EDS may issue to Chordiant written purchase orders identifying the
          Licensed Software and Services EDS desires to obtain from Chordiant.
          Each purchase order may include

2
<PAGE>

          other terms and conditions applicable to the Licensed Software and
          Services ordered; such other terms shall be consistent with the terms
          and conditions of this Agreement, or shall be necessary to place a
          purchase order, such as billing and shipping information, required
          delivery dates, installation locations, and Charges (as later defined
          in this Agreement).

     (b)  Chordiant shall promptly accept purchase orders by providing to EDS a
          written or an oral acceptance of such purchase order, or by commencing
          performance pursuant to such purchase order. Chordiant shall accept
          purchase orders which do not establish new or conflicting terms and
          conditions from those set forth in this Agreement. Chordiant shall
          also accept purchase orders incorporating terms and conditions which
          have been separately agreed upon in writing by the parties.
          Notwithstanding the forgoing, Chordiant shall have the right to reject
          purchase orders for Services due to an inability to meet the delivery
          or commencement dates set forth in such purchase orders by promptly
          providing written notice to EDS of such inability and alternative
          dates that can be met by Chordiant.

     (c)  Chordiant may reject a purchase order which does not meet the
          conditions described in subsection (b) above by promptly providing to
          EDS a written explanation of the reasons for such rejection. Chordiant
          shall accept an alteration to the originally issued purchase order if
          such alteration remedies the items set forth in Chordiant's written
          rejection.

     Purchase orders accepted in accordance with this Section are referred to as
     "Purchase Orders." EDS shall have no responsibility or liability for
     Licensed Software or Services provided without a Purchase Order so long as
     EDS returns such Licensed Software to Chordiant, at Chordiant's expense.

2.3  Purchase Order Alterations.  EDS may issue an alteration to a Purchase
     --------------------------
     Order in order to, without limitation, (i) change a location for delivery,
     (ii) reasonably modify the quantity or type of Licensed Software and
     Services to be delivered or performed, (iii) implement any reasonable
     change or modification as required by or permitted in this Agreement, (iv)
     correct typographical or clerical errors, or (v) order Licensed Software or
     Services which are of superior quality, or are enhancements to or are new
     releases or new options of the Licensed Software or Services set forth in
     the Purchase Order. Notwithstanding the forgoing, Chordiant shall have the
     right to reject purchase order alterations for Services due to an inability
     to meet the delivery or commencement dates if such inability is caused by
     such alteration, by promptly providing written notice to EDS of such
     inability and alternative dates that can be met by Chordiant

2.4  Evaluation Purchase Orders. EDS may issue a purchase order to Chordiant for
     --------------------------
     Product evaluation by EDS in accordance with the following:

     (a)  The evaluation period shall not exceed thirty (30) days (the
          "Evaluation Period") unless otherwise agreed upon by the parties in
          writing.

     (b)  During the Evaluation Period, the Products shall be used by EDS in a
          non-production environment.

     (c)  Chordiant shall provide the Products listed in the evaluation Purchase
          Order to EDS and shall pay all related transportation costs.

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     (d)  Licensed Software provided pursuant to an evaluation Purchase Order
          shall be protected by EDS in accordance with the non-disclosure
          requirements specified in this Agreement which are applicable to
          Licensed Software.

     (e)  EDS and Chordiant must mutually agree to Services required during the
          Evaluation Period, EDS shall pay Chordiant for such Services as per
          the Charges listed in Exhibit B of this Agreement, or as mutually
          agreed by the parties.  If no agreement is reached as to the amount of
          Services required then Chordiant may reject such Evaluation Purchase
          Order.

     (f)  At the conclusion of the Evaluation Period, EDS shall have the option
          of: (i) acquiring such Products pursuant to this Agreement, (ii)
          returning such Products to Chordiant at EDS' expense without
          obligation to Chordiant, and (iii) destroying all copies of such
          Products.

     (h)  Products which Chordiant and EDS agree to be the subject of beta
          testing by EDS shall be subject to a separate agreement between the
          parties containing applicable beta test terms and conditions.

2.5  Cancellation of Purchase Orders. Except as otherwise agreed upon by the
     -------------------------------
     parties, EDS may cancel all or a portion of a Purchase Order relating to
     Product(s), without charge or penalty up to ten (10) calendar days prior to
     the scheduled delivery date of the affected Product(s).  In the event EDS
     cancels a Purchase Order or any portion thereof within ten (10) calendar
     days of the scheduled delivery date, as Chordiant's sole and exclusive
     remedy and EDS' sole liability, EDS shall reimburse Chordiant the direct,
     verifiable, non-recoverable expenses incurred by Chordiant as a result of
     such cancellation.  Purchase Orders, or portions thereof, for Services may
     be canceled as specified in the applicable sections of this Agreement.


          ARTICLE III.  PROVISION OF LICENSED SOFTWARE AND SERVICES
          ---------------------------------------------------------

3.1  General. EDS is entitled to obtain Licensed Software and Services for
     -------
     the benefit of and use by Affiliates of EDS if such use is on behalf of
     EDS' Centrobe business.  Such Affiliates and their respective employees are
     entitled to use the Licensed Software and Services in accordance with this
     Agreement and have and are entitled to all rights, benefits, and
     protections granted to EDS pursuant to this Agreement with respect to such
     Licensed Software and Services.  However, an Affiliate of EDS shall only be
     entitled to obtain Licensed Software and Services directly from Chordiant
     pursuant to this Agreement if EDS so provides written notice to Chordiant.
     EDS is responsible for compliance by its Affiliates with the terms and
     conditions set forth in this Agreement.  EDS and its Affiliates have the
     right to transfer (pursuant to Section 4.3 "Transfer of Licensed
     Software"), or remarket the Licensed Software and Services to third
     parties.

3.2  Transportation of Licensed Software. Chordiant shall deliver Licensed
     -----------------------------------
     Software to EDS on the delivery date set forth in the applicable Purchase
     Order or as otherwise agreed upon by the parties.  Charges for
     transportation of Licensed Software shall be paid by Chordiant.  The method
     and mode of all transportation shall be those selected by Chordiant.

3.3  Risk of Loss. All risk of loss of, or damage to, Licensed Software
     ------------
     shall be borne by Chordiant until receipt of delivery of such Licensed
     Software by EDS.  Chordiant agrees to insure Licensed Software until
     receipt of delivery of such Licensed Software by EDS.  If loss to or damage
     of

4
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     Licensed Software occurs prior to receipt of delivery by EDS, Chordiant
     shall immediately provide a replacement item or, if Licensed Software is
     not immediately replaceable, Chordiant shall give EDS highest priority for
     the provision of replacement Licensed Software.

3.4  Installation of Licensed Software. If installation is set forth in
     ---------------------------------
     the governing Purchase Order or is included in the Charge for Licensed
     Software, Chordiant shall install Licensed Software in good working order
     at the designated location on or before the installation date set forth in
     the applicable Purchase Order or as otherwise agreed upon by the parties.
     Installation Services shall include performance of  Chordiant's usual and
     customary diagnostic tests to determine the operational status of the
     Licensed Software. Chordiant shall inform EDS of any education Services
     which are included with installation, and such education may be performed
     at a time mutually agreed upon by Chordiant and EDS.

3.5  Right to Cancel for Delays. In the event of a delay in delivery of
     --------------------------
     all or any portion of Licensed Software listed on a Purchase Order or
     Licensed Software listed on a series of Purchase Orders which relate to a
     specific project or request for proposal (the Licensed Software listed on
     such series of Purchase Orders referred to as "Related Licensed Software"),
     or in the event of a delay in the performance of Services which is not
     excused in this Agreement, EDS may cancel without charge all or any portion
     of the Licensed Software, Related Licensed Software or Services for which
     delivery or performance has been so delayed.  If, in EDS' opinion, the
     delivered Licensed Software or Related Licensed Software are not operable
     without the remaining undelivered Licensed Software or Related Licensed
     Software, EDS may, at Chordiant's expense, return any delivered Licensed
     Software or Related Licensed Software to Chordiant.  EDS shall not be
     liable for any expenses incurred by Chordiant for canceled, undelivered, or
     returned Licensed Software or Related Licensed Software.  EDS shall receive
     a refund of all amounts paid to Chordiant with respect to the canceled
     and/or returned Licensed Software, Related Licensed Software and Services.

3.6  Resale of Products by EDS. During the term of this Agreement, EDS may
     -------------------------
     promote and resell Product licenses, in conjunction with EDS providing
     systems integration, outsourcing or facilities management services to a
     customer of EDS ("ITS Customer"), in accordance with the following terms
     and conditions:

     (a)  Charges for Purchase Orders identified for resale of Product licenses
          shall be as set forth in Exhibit B.

     (b)  For a Purchase Order not identified as subject to Auto Payment as
          defined in Section 6.3, Chordiant may invoice EDS for resale products
          upon delivery and payment will be made in accordance with the
          provisions of Section 6.4, Payment Through Invoicing.

     (c)  Chordiant shall extend the same warranties and indemnifications, with
          respect to Products resold by EDS hereunder, as Chordiant extends to
          other end user customers.

     (d)  The term of agreements, warranties and indemnities extended by
          Chordiant to an ITS Customer shall commence upon delivery of a Product
          to an ITS Customer and the ITS Customer shall be governed by
          Chordiant's then current End User Software License Agreement, which
          may be changed by Chordiant from time to time but is substantially
          similar to Exhibit H, from the delivery date to such ITS Customer. EDS
          shall not resell Product without first obtaining an End User Software
          License Agreement signed by Chordiant and ITS Customer.

5
<PAGE>

     (e)  Chordiant shall make available to ITS Customers all training,
          technical support and other services related to the Products that are
          currently generally available or that may be generally available by
          Chordiant to other end user customers.

     (f)  During the term that EDS is providing services to an ITS Customer, EDS
          shall have authorized access to Licensed Software acquired under this
          Section 3.6, in accordance with the provisions of Exhibit F, titled
          "Reseller Access Authorization".


3.7  Time and Materials Services. If available from Chordiant, EDS may
     ---------------------------
     obtain on a time and materials basis from Chordiant consulting, development
     and other Services (excluding support Services which are provided pursuant
     to other sections of this Agreement) agreed upon by the parties in
     accordance with the terms and conditions set forth below.

     (a)  EDS may reasonably request on a purchase order the number and skill
          levels of Employees to perform Services.

     (b)  During the course of performance of Services, EDS may request
          replacement of an Employee or a proposed Employee. In such event,
          Chordiant shall use best efforts to provide, within five (5) working
          days of receipt of such request from EDS, a substitute Employee of
          sufficient skill, knowledge, and training to perform the applicable
          Services. If, after use of best efforts, Chordiant is unable to
          provide such substitute Employee, EDS may, at its sole option, retain
          the Services of said unacceptable Employee until such time as
          Chordiant provides an acceptable substitute Employee. If, within the
          first thirty (30) days after an Employee's commencement of Services,
          EDS notifies Chordiant (i) such Employee's level of performance is
          unacceptable, (ii) such Employee has failed to perform as required, or
          (iii) such Employee, in EDS' sole opinion, lacks the skill, knowledge
          or training to perform at the required level, then EDS shall not be
          required to pay for Services provided by such Employee during such
          period and Chordiant shall refund to EDS all amounts paid for such
          Employee's Services; however, EDS shall pay for any Work Product
          created by said Employee which EDS continues to use after the
          replacement of said Employee and if EDS decides to retain the services
          of said Employee because no acceptable substitute has been made
          available, then EDS shall pay for any services performed after the
          date of notice to Chordiant at a discounted rate mutually agreed to by
          the parties. If EDS requests replacement of an Employee for the above-
          referenced reasons after such thirty (30) day time period, or at any
          time for a reason other than the reasons indicated above, EDS shall
          not be required to pay for, and shall be entitled to a refund of, any
          sums paid to Chordiant for such Employee's Services after the date of
          EDS' requested replacement of such Employee.

     (c)  Chordiant shall not replace, without EDS' consent (which shall not be
          unreasonably withheld or delayed), an Employee then currently
          performing Services, for which the Employee is uniquely qualified,
          this includes but is not limited to: (i) EDS has provided training to
          said Employee to enable them to perform the Service, or (ii) EDS
          specifically requested and Chordiant agreed to provide said Employee
          to perform the Service; until the governing Purchase Order expires or
          is terminated; however, Chordiant may replace, without EDS' consent,
          an Employee for reasons relating to the Employee's termination with
          Chordiant, promotion, demotion, illness, death, or causes beyond
          Chordiant's control.

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<PAGE>

     (d)  EDS shall reimburse Chordiant for reasonable expenses incurred by
          Employees in the performance of Services (if requested by EDS or
          requested by Chordiant in advance and approved by EDS) which are
          related to travel, lodging, and meals; such expenses  shall be
          reimbursed in accordance with EDS' guidelines for its own employees.

     (e)  Chordiant shall establish and shall retain, for a period of three (3)
          years following the performance of time and materials Services,
          records which adequately substantiate the applicability and accuracy
          of Charges for such Services and related expenses to EDS.  Upon
          receipt of thirty (30) days advance notice from EDS, Chordiant shall
          produce such records for audit by EDS subject to the confidentiality
          provisions of this Agreement.

     (f)  Purchase Orders for Services provided or to be provided under this
          Section may be canceled at any time without charge or penalty, upon
          five (5) business days advance written notice to Chordiant, provided
          that EDS shall pay for Services already performed prior to the
          effective date of such notice.

3.8  Services in General. In connection with the performance of any
     -------------------
     Services pursuant to this Agreement:

     (a)  Unless a specific number of Employees is set forth in the governing
          Purchase Order, Chordiant warrants it will provide sufficient
          Employees to complete the Services ordered within the applicable time
          frames established pursuant to this Agreement or as set forth in such
          Purchase Order; however, it shall be considered an excused delay if
          EDS changes the technical specifications associated with such
          Services, then EDS and Chordiant shall set  new time frames based upon
          such changed technical specifications.

     (b)  Chordiant warrants that Employees shall have sufficient skill,
          knowledge, and training to perform Services and that the Services
          shall be performed in a professional and workmanlike manner.

     (c)  Employees performing Services in the United States must be United
          States citizens or lawfully admitted in the United States for
          permanent residence or lawfully admitted in the United States holding
          a visa authorizing the performance of Services on behalf of Chordiant.

     (d)  Chordiant warrants that all Employees utilized by Chordiant in
          performing Services are under a written obligation to Chordiant
          requiring Employee: (i) to maintain the confidentiality of information
          of Chordiant's customers, and (ii) if such Employee is not a full-time
          employee whose work is considered a "work for hire" under Section 101
          of the United States Copyright Code, to assign all of Employee's
          right, title, and interest to Chordiant in and to any Work Product
          which is developed, prepared, conceived, made, or suggested by such
          Employee while providing Services on behalf of Chordiant.

     (e)  Chordiant shall require Employees providing Services at an EDS
          location to comply with applicable EDS security and safety regulations
          and policies.

     (f)  Chordiant shall provide for and pay the compensation of Employees and
          shall pay all taxes, contributions, and benefits (such as, but not
          limited to, workers' compensation benefits) which an employer is
          required to pay relating to the employment of employees. EDS shall not
          be liable to Chordiant or to any Employee for Chordiant's failure to

7
<PAGE>

            perform its compensation, benefit, or tax obligations. Chordiant
            shall indemnify, defend and hold EDS harmless from and against all
            such taxes, contributions and benefits and will comply with all
            associated governmental regulations, including the filing of all
            necessary reports and returns.

     (g)    Chordiant shall allow EDS or its designated third party to conduct a
            background investigation and drug screening ("Investigation"), in
            accordance with applicable law, of any Employee performing Services
            in the United States, Canada and Mexico if EDS intends to provide
            the Employee with unescorted access to an EDS location. If an
            Employee declines such Investigation, the parties agree such
            Employee will not be allowed unescorted access to an EDS location;
            furthermore, Chordiant will contact other Employees with suitable
            training to see if they will agree to such Investigation. It will
            not be a breach of this Agreement if Chordiant has used reasonable
            efforts to request such Investigation of all suitable Employees and
            Chordiant is unable to supply a suitable Employee willing to undergo
            such Investigation. In connection with such Investigation EDS shall
            provide to Chordiant a standard form authorizing the Investigation
            and Chordiant shall promptly secure the completion of such form by
            the Employee. Any and all information obtained in connection with an
            Investigation of any Employee or acquired or made known during such
            Investigation shall be deemed confidential and shall not be revealed
            to persons without a bona fide need to know. If, after reviewing the
            results of an Investigation, EDS elects not to accept an Employee
            for performance of Services under this Agreement, Chordiant agrees
            to not utilize such Employee in the performance of Services. EDS
            shall waive the Investigation for an Employee if Chordiant provides
            EDS with written confirmation that: (i) Chordiant has conducted a
            background and drug screening investigation of such Employee with
            satisfactory results, or (ii) the Employee has been employed with
            Chordiant for at least five (5) years in good standing.

3.9  Ownership of Intellectual Property Rights. (a) For purposes of this
     -----------------------------------------
     Agreement, the following definitions apply:

     (i)    "Work Product(s)" means (in any form including Source Code) any and
            all processes, methods, formulas, manufacturing techniques, mask
            works, reports, programs, manuals, software, flowcharts and systems
            and any improvements, enhancements, or modifications to any of the
            foregoing, which are developed, prepared, conceived, or made by any
            Employee or by Chordiant as part of, in connection with, or in
            relationship to the performance of Services (except in connection
            with Chordiant's performance of warranty Service obligations or
            pre-paid support Services) pursuant to this Agreement. Work Products
            also means all such developments as are originated or conceived
            during the term of this Agreement but are completed or reduced to
            practice thereafter.

     (ii)   "Existing Materials" means any confidential or proprietary materials
            which belong to third parties or in which Chordiant has a
            pre-existing intellectual property interest.

     (iii)  "Ownership Rights" includes: (A) all rights, title and interests,
            and all United States and foreign intellectual property rights such
            as, but not limited to, patent, trade secret, and copyright; (B) the
            right to use, duplicate, and disclose Work Products and Work Product
            data, in whole or in part, in any manner and for any purpose and to
            authorize others to do so; (C) the exclusive right to prepare
            derivative works of Work Products and of any portion thereof, with
            full rights to authorize others to do the same; (D) the right to
            exploit Work Product, whether or not for profit; (E) the right to
            use, market or take any other

8
<PAGE>

          measures without attribution to another party; (F) the right to
          register ownership interest in a Work Product without contest or
          assertion of a competing ownership interest in such Work Product by
          another party; and, (G) all "moral rights" in and to Work Products.

     (b)  Chordiant shall disclose promptly and cause Employees to disclose
          promptly in writing to EDS all Work Products; as to each such
          disclosure, such Employee and/or Chordiant shall specifically describe
          to EDS the features or concepts considered new or different.

     (c)  It is the intent of the parties that EDS shall have all Ownership
          Rights in and to Work Products; however, if Chordiant desires
          ownership in Work Product, it must be mutually agreed upon in writing
          by the parties. In order to accomplish such intent, Chordiant (i)
          shall make and shall ensure that each Employee makes, without
          reservation, a non-terminable, irrevocable assignment to EDS of any
          and all Ownership Rights that Employees and/or Chordiant may have in
          or to such Work Product or any tangible media embodying such Work
          Product, and (ii) shall provide to EDS and shall ensure that each
          Employee provides such assignment prior to or concurrently with the
          provision of the affected Work Product to EDS. If Chordiant and/or
          Employees have any termination rights under law, then upon exercise of
          such termination rights, Chordiant shall automatically grant and
          Chordiant shall ensure that Employee grants, and EDS shall have an
          irrevocable, royalty-free, paid-up, worldwide, perpetual license to
          use the Work Product in the same manner, and for the same purposes as
          EDS did and was entitled to do prior to such termination. Except as
          necessary to perform Services or as agreed upon by the parties in a
          supplemental agreement entered into in accordance with this Agreement,
          Chordiant and Employees shall not exercise any Ownership Rights in and
          to the Work Product, and hereby waive and agree not to assert any or
          all "moral rights" in and to the Work Product, even after the
          termination or expiration of this Agreement.

          Unless otherwise agreed by the parties, EDS shall have no Ownership
          Rights with respect to any underlying ideas or concepts provided by
          Chordiant during the performance of Services.

3.10 Use of Existing Materials. To the extent that Work Product(s) under
     -------------------------
     development may incorporate or require the use of Existing Materials, or to
     the extent Chordiant intends, in its performance of Services, to utilize
     any such Existing Materials (except as such are utilized by Chordiant in
     the performance of warranty Service obligations or pre-paid support
     Services), Chordiant shall: (i) notify EDS of such intent prior to
     commencement of performance of Services; (ii) identify to EDS the ownership
     of such Existing Materials; (iii) describe the use to which Chordiant
     intends to put such Existing Materials; and (iv) explain Chordiant's
     ability to proceed with performance of the Services without the use of such
     Existing Materials. EDS may require that Chordiant perform Services without
     the use of such Existing Materials. If any such Existing Material is owned
     by a third party and/or is used in the performance of Services, Chordiant
     warrants that it has acquired all licenses and authorizations necessary to
     utilize the Existing Material in the manner and for the purpose intended by
     Chordiant in its actual use of such Existing Material in the performance of
     Services. To the extent that Existing Materials are incorporated in Work
     Products, Chordiant grants to EDS and its Affiliates a royalty-free,
     irrevocable, worldwide, non-exclusive, perpetual right to use, modify and
     prepare derivative

9
<PAGE>

     works of such Existing Materials and to use and display such Existing
     Materials, with full rights to authorize others to do the same but only to
     the extent required to utilize the Work Product in accordance with the
     Ownership Rights granted in this Agreement, unless otherwise agreed to in
     writing by the parties for specific Work Product(s).

3.11 Further Acts. During and subsequent to the term of this Agreement,
     ------------
     Chordiant shall do, or cause to be done, all such further acts and shall
     execute, acknowledge, and deliver, or cause to be executed, acknowledged,
     and delivered, any and all further documentation or assignments as EDS may
     reasonably require to evidence or perfect EDS' right to use, or Ownership
     Rights in, as the case may be, Licensed Software or Work Products.

3.12 Time of Performance. Time is expressly made of the essence with respect to
     -------------------
     each and every term and provision of this Article.

3.13 EDS Business Practices. Chordiant shall comply with the EDS Business
     ----------------------
     Practices set forth in Exhibit A.

3.14 Education Services. Education Services (as later defined) provided or to be
     ------------------
     provided by Chordiant pursuant to this Agreement shall also be subject to
     the terms and conditions set forth in Exhibit E.

3.15 Development Services. Development Services provided or to be provided by
     --------------------
     Chordiant pursuant to this Agreement shall also be subject to the terms and
     conditions set forth in Exhibit F unless otherwise agreed to in writing by
     the parties.


                 ARTICLE IV.  PROVISION OF LICENSED SOFTWARE
                 -------------------------------------------

4.1  Acceptance of Licensed Software. EDS shall accept delivered copy(ies) of
     -------------------------------
     the Licensed Software on the date (the "Acceptance Date") when necessary
     Documentation has been received and (i) the Licensed Software performs in
     accordance with and/or conforms to its Applicable Specifications, (ii) the
     Licensed Software is used in a production environment, or (iii) on the
     ninetieth (90th) day after receipt of the Licensed Software by EDS,
     whichever occurs first. If, within such ninety (90) day period, EDS
     determines that the Licensed Software does not so perform and/or conform,
     EDS shall so notify Chordiant in writing and Chordiant shall have thirty
     (30) days from receipt of such notice to correct any non-conforming and/or
     non-performing features. If, after such thirty (30) day cure period, EDS
     determines that such Licensed Software still fails to perform in accordance
     with and/or conform to its Applicable Specifications, EDS may return the
     Licensed Software and related Documentation to Chordiant, at Chordiant's
     expense and without liability to Chordiant, and any amounts paid by EDS for
     the Licensed Software and Documentation shall be refunded by Chordiant to
     EDS. Acceptance of Licensed Software does not waive any warranty rights
     provided in this Agreement for the Licensed Software.

4.2  Grant of License. For each item of Licensed Software received by EDS,
     ----------------
     Chordiant grants EDS and EDS has a worldwide, nonexclusive, irrevocable
     (except as provided in this Agreement), perpetual license to use, execute,
     store, and display the object code version of the Licensed Software, on
     behalf of EDS' Centrobe business and customers of EDS' Centrobe business (a
     "License") in accordance with the terms and conditions of this Agreement.
     All Licenses shall be deemed to be a Site Software License.

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<PAGE>

     (a)  A "Site Software License" permits EDS to use the Licensed Software at
          the Site designated in the Purchase Order and to copy the Licensed
          Software as necessary for dissemination at the Site and for archival,
          maintenance, disaster recovery testing, or back-up purposes.

          Notwithstanding the foregoing, the Licensed Software may be used at
          other than the designated Site, if (i) the designated Site cannot be
          used, (ii) the designated Site is replaced or changed by EDS, or (iii)
          EDS provides Chordiant with prior written notice. If EDS desires to
          run parallel operations in the process of conducting a disaster
          recovery test or transferring operations from one Site to another
          Site, EDS may operate the Licensed Software at two (2) Sites for the
          period of time reasonably necessary to complete the disaster recovery
          test or transfer.

     (b)  "Runtime Client Licenses" (seats) are not restricted to the Site,
          i.e., can be located anywhere in the World interfacing with a Site
          Software License, but distribution is limited to the number of Runtime
          Client Licenses actually ordered on the applicable Purchase Order.

     (c)  Any License granted under this Agreement permits EDS to (i) use
          Licensed Software for its corporate purposes including, but not
          limited to, providing services to or processing data of customers of
          EDS' Centrobe business, providing remote access to the Licensed
          Software, and performing disaster recovery, disaster testing, and
          backup as EDS deems necessary, and (ii) use, copy and modify Licensed
          Software and Documentation for the purpose of creating and using
          training materials relating to the Licensed Software, which training
          materials may include flow diagrams, system operation schematics, or
          screen prints from operation of the Licensed Software. Access to and
          use of the Licensed Software by customers of EDS shall be considered
          authorized use under this Section so long as such use is in
          conjunction with EDS' provision of services to, or EDS' processing the
          data of, such customers, and so long as any such customers are bound
          by obligations of confidentiality.

     (d)  Unless the Third Party Letter Agreement, attached as Exhibit G has
          been executed, any License granted under this Agreement which includes
          the right to use the Forte Software, Inc. ("Forte") software embedded
          therein pursuant to the agreement between Chordiant and Forte shall be
          deemed to include the following provisions:

       (i)   A provision which restricts use of the Licensed software to a
             maximum number of users and/or nodes and/or servers, specified
             geographic location, designated call center and computer/operating
             system configuration for EDS' own internal business purposes only.

       (ii)  A provision which prohibits transfer or duplication of the Software
             except for temporary transfer in the event of a computer
             malfunction and a reasonable number of backup or archival copies.
             All titles, trademarks and copyright and restricted rights notices
             shall be reproduced in such copies.

       (iii) A provision which prohibits assignment, timesharing or rental of
             the Licensed Software.

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<PAGE>

       (iv)    A provision which prohibits any use of the software outside the
               scope of the Licensed Software.

       (v)     A provision which prohibits causing or permitting the reverse
               engineering, disassembly, decompilation or any other attempt to
               derive Source Code of the Licensed Software, except as and to the
               extent permitted under applicable law.

       (vi)    A provision which prohibits title to the Software from passing to
               EDS.

       (vii)   A provision disclaiming Chordiant's suppliers' liability for any
               damages, whether direct, indirect, incidental or consequential.

       (viii)  A provision which requires EDS, at termination of the Sublicense,
               to discontinue use and return or destroy all copies of the
               Software and Documentation.

       (ix)    A provision which restricts publication of any results of
               benchmark tests run on the Licensed Software.

       (x)     A provision which requires EDS to comply fully with all relevant
               export laws and regulations of the United States, to ensure that
               neither the Licensed Software, nor any direct product thereof, is
               exported, directly or indirectly, in violation of United States
               or other applicable law.

       (xi)    A provision which allows Chordiant, at Chordiant's expense, to
               audit EDS' use of the Licensed Software. If the audit reveals
               that EDS has underpaid fees to Chordiant, EDS shall be invoiced
               directly for such underpaid fees based on the Chordiant Price
               List in effect at the time the audit is completed. If the
               underpaid fees are in excess of five percent (5%), then EDS shall
               pay Chordiant's reasonable costs of conducting the audit.

       (xii)   A provision which states that the Licensed Software is not
               specially developed, or licensed for use in any nuclear,
               aviation, mass transit or medical application or in any other
               inherently dangerous application; that EDS agrees that Chordiant
               and its suppliers shall not be liable for any claims or damages
               arising from EDS' use of the Licensed Software for such
               applications; and that EDS agrees to indemnify and hold Chordiant
               and its suppliers harmless from any claims for losses, costs,
               damages or liability arising out of or in connection with the use
               of the Licensed Software in such applications.

       (xiii)  A provision that Forte is a third party beneficiary of the
               portions of this Agreement relating to any Forte software.

            In the event of any conflict between the terms of this Section
            4.2(d) and any other section of this Agreement, this Section 4.2(d)
            shall control.

    (e)     Restrictions on Use. EDS agrees not to translate the Licensed
            Software into another computer language, in whole or in part. Except
            as provided in this Agreement, EDS shall not make copies or make
            media translations of the Products, in whole or in part, without
            Chordiant's prior written approval. EDS agrees that if, for any
            reason, it comes into possession of any Source Code outside the
            terms of this Agreement, or portion thereof,

12
<PAGE>

            for any Chordiant product, it will immediately deliver all copies of
            such Source Code to Chordiant. EDS shall not rent, electronically
            distribute or timeshare the Licensed Software or distribute the
            Licensed Software by interactive cable or remote processing services
            or otherwise distribute the Licensed Software other than as
            specified in this Agreement. EDS acknowledges Chordiant's claim that
            the Licensed Software contains trade secrets that belong to
            Chordiant and its suppliers. Except as permitted under the Section
            of the Agreement titled "Provision of Source Code", EDS shall not
            disassemble, de-compile, or reverse engineer the Licensed Software.
            Nothing contained in this Agreement shall be interpreted so as to
            exclude or prejudice the rights (if any) of EDS or any End User
            under the European Directive 91/250 on the Legal Protection of
            Computer Programs (14 May 1991, OJ 1991 (122/42) as implemented in
            the relevant jurisdiction) with respect to the Licensed Software.

     The governing License also includes the right to use the Source Code
     version of Licensed Software in accordance with the terms and conditions of
     the Section of this Agreement titled "Provision of Source Code."

4.3  Transfer of Licensed Software.  During the performance or upon termination
     -----------------------------
     of a contract with an EDS customer or upon any transfer of equipment
     incorporating Licensed Software to a third party (such customers and third
     parties referred to as "Transferee"), (i) EDS may sublicense the applicable
     Licensed Software to such Transferee pursuant to terms and conditions
     similar to those contained in this Article (excluding the right to
     sublicense or assign), (ii) the applicable License (excluding the right to
     sublicense or assign) may be assigned to such Transferee, or (iii) upon
     request by EDS, the Licensed Software will be licensed directly by
     Chordiant to such Transferee in accordance with the terms and conditions of
     Chordiant's standard software license agreement or as agreed upon by
     Chordiant and Transferee. Any assignment or sublicensing of Licensed
     Software in accordance with this Section shall be at no additional charge
     to EDS or Transferee, and EDS shall have no further liability or
     responsibility with respect to Licensed Software under (ii) or (iii) above.

4.4  Ownership of Licensed Software and Modifications. The Licensed Software
     ------------------------------------------------
     shall be and remain the property of Chordiant or third parties which have
     granted Chordiant the right to license the Licensed Software and EDS shall
     have no rights or interests therein except as set forth in this Agreement.
     EDS shall be entitled to modify the Licensed Software and to develop
     software interfacing with the Licensed Software. All modifications of and
     interfaces to the Licensed Software developed by EDS shall be and remain
     the property of EDS, and Chordiant and its Employees shall have no rights
     or interests therein. Except in connection with Chordiant's performance of
     warranty Service obligations or pre-paid support Services, all
     modifications of and interfaces to the Licensed Software developed at EDS'
     expense by Chordiant and its Employees shall be considered Work Product and
     EDS shall have rights in such Work Product as established in the Section
     titled "Ownership of Intellectual Property Rights" elsewhere in this
     Agreement.

     Upon payment of the development software license fees set forth in the
     then-current price list (reduced by any applicable discounts), EDS shall
     have a non-exclusive license to use the development software at one (1)
     development center per development license for the sole purpose of
     providing development, customization and integration services for EDS
     Customers who have already entered into a Chordiant End User Software
     License Agreement or an EDS customer agreement. All such modifications of
     the Licensed Software developed by EDS shall be and remain the property of
     EDS.

13
<PAGE>

     Chordiant will provide support Services for modifications owned by EDS on a
     case-by-case basis under terms mutually agreed to in writing by the
     parties.

4.5  Proprietary Markings. EDS shall not remove or destroy any proprietary
     --------------------
     markings or proprietary legends placed upon or contained within the
     Licensed Software.

4.6  Duplication of Documentation. EDS may duplicate Licensed Software
     ----------------------------
     Documentation, at no additional charge, for EDS' use or for use by a
     customer of EDS in connection with the provision of Licensed Software so
     long as all required proprietary markings are retained on all duplicated
     copies.

4.7  Non-Disclosure. For the longer of, (i) the term of a License, or (ii) for
     --------------
     as long a EDS retains backup copies of the Licensed Software associated
     with said License, and for two (2) years after, EDS will treat the Licensed
     Software with the same degree of care and confidentiality which EDS
     provides for similar information belonging to EDS which EDS does not wish
     disclosed to the public, but not less than reasonable care. This provision
     shall not apply to Licensed Software, or any portion thereof, which is (i)
     already known by EDS without an obligation of confidentiality, (ii)
     publicly known or becomes publicly known through no unauthorized act of
     EDS, (iii) rightfully received from a third party without obligation of
     confidentiality, (iv) disclosed without similar restrictions by Chordiant
     to a third party, (v) approved by Chordiant for disclosure, or (vi)
     required to be disclosed pursuant to a requirement of a governmental agency
     or law so long as EDS provides Chordiant with timely prior written notice
     of such requirement. It will not be a violation of this Section if (A) EDS
     provides access to and the use of the Licensed Software to third parties
     providing services to EDS so long as EDS secures execution by such third
     parties of a confidentiality agreement as would normally be required by
     EDS, or (B) EDS independently develops software which is similar to
     Licensed Software, so long as such independent development is substantiated
     by written documentation.

4.8  Licensed Software Support Services. The support Services set forth below
     ----------------------------------
     for the Licensed Software shall be provided by Chordiant to EDS during the
     Warranty Period at no charge to EDS. Thereafter, such support Services
     shall be provided by Chordiant, upon EDS' request, for either a fixed or
     open-ended term, at the applicable Charges set forth in Exhibit B, upon the
     terms contained in the next Section. EDS may discontinue such support
     Services at any time by providing thirty (30) days' advance written notice
     to Chordiant. If such support Services were provided by Chordiant for an
     open-ended term, EDS shall promptly receive a refund of pre-paid support
     Charges which reflects the amount for discontinued support Services after
     the effective date of the notice.

     (a)  Chordiant shall promptly notify EDS of any defects, errors or
          malfunctions ("Defects") in the Licensed Software or Documentation of
          which Chordiant becomes aware from any source and shall promptly
          provide to EDS modified versions of Licensed Software or Documentation
          which incorporate corrections of any Defects ("Corrections").
          Chordiant shall also provide to EDS all operational and support
          assistance necessary to cause Licensed Software to perform in
          accordance with its Applicable Specifications and remedial support
          designed to provide a by-pass or temporary fix to a Defect until the
          Defect can be permanently corrected. Chordiant shall use its best
          efforts to respond to requests from EDS for Licensed Software support
          in a manner and time frame which are reasonably responsive considering
          the nature and severity of the Defect which gave rise to such request.

14
<PAGE>

     (b)  Chordiant shall provide to EDS all changes to Licensed Software
          developed by Chordiant which are generally made available to other
          customers of Chordiant. Such changes could be designated as an Update
          or Enhancement as follows:

          (i)  Chordiant shall provide to EDS any improvement or update to the
               Licensed Software which is denoted by Chordiant by a change to
               the tenths digit to the right of the decimal point in the then-
               current version number of the Licensed Software [x.(x)] (an
               "Update"). EDS shall have the option to implement any Update and
               any failure by EDS to so implement shall not affect EDS' right to
               continue to receive support and maintenance Services; provided
               that all applicable support Service fees have been paid.

          (ii) Chordiant shall provide to EDS any improvement or update to the
               Licensed Software which is denoted by Chordiant by a change to
               the digit to the left of the decimal point in the then-current
               version number of the Licensed Software [(x).x] (an
               "Enhancement"). EDS shall have the option to implement any
               Enhancement; however, EDS' only has the right to continue to
               receive support Services if it is on the most current Enhancement
               or the one just prior to such most current Enhancement; provided
               that all applicable support Service fees have been paid. If EDS
               stops support Services and is not operating on the most current
               Enhancement or the one just prior to such most current
               Enhancement, and wishes to resume support Services, EDS must
               bring its support Service payments current and install the most
               current Enhancement; i.e., EDS did not pay support Services for
               three (3) years and the Licensed Software EDS is running is
               version 2.0, but the current version is 7.0, EDS would have to
               pay for those prior three (3) years plus the current year and
               implement Enhancements required to be bring such Licensed
               Software to version 7.0. The ability to bring support Services
               current is contingent on Chordiant still offering support
               Services for such Licensed Software.

               If EDS is no longer receiving support Services for a specific
               Product(s), and Chordiant is considering whether to stop offering
               support Services for said Product(s), Chordiant shall notify EDS
               they are considering such decision and provide EDS with one (1)
               month to become current on support Service payments for such
               Product(s). This will allow EDS to either (i) be eligible for
               receipt of Source Code through escrow if Chordiant's decision is
               in fact to stop providing support Services for said specific
               Product(s), or (ii) begin receiving support Services for said
               Product(s) at whatever level of support Services Chordiant is
               offering at the time.

     (c)  Chordiant offers two levels of support Services, (i) Standard, which
          provides telephone hot-line support twenty-four (24) hours per day,
          five (5) days per week; and (ii) Premium, which provides telephone
          hot-line support twenty-four (24) hours per day, seven (7) days per
          week. The applicable Charges for such support Services are set forth
          in Exhibit B.

          The severity assigned to a problem will be designated by EDS and will
          determine the response time and associated time to fix the problem or
          provide a work-around by Chordiant.  The priority assigned will be
          reviewed by Chordiant for potential re-classification.  However, any
          such re-classification shall be upon mutual agreement by the parties.
          The problem severity levels and associated times follows:

15
<PAGE>

          (i)   Severity 1 - Critical. A problem that affects the behavior of
                the Licensed Software, software system, or application such
                that: 1) an essential marketed product, component, concept, and
                or function is missing or cannot be completed, or 2) a user
                cannot complete essential operations, or 3) the work in progress
                terminates/crashes causing loss of data, with no known work-
                around.

                Response time - within one (1) hour
                Time to fix or provide a work-around - within twenty four (24)
                    hours of the problem being reported.

          (ii)  Severity 2 - Serious. A problem that affects the behavior of the
                Licensed Software, software system, or application such that: 1)
                essential performance and/or functionality may be missing, or
                may be degraded, or 2) degradation of system performance and/or
                functionality imposes unreasonable constraints on users. These
                problems normally prevent the continuation of work in progress.

                Response time - within eight (8) hours
                Time to fix or provide a work-around - within two (2) working
                    days of the problem being reported.

          (iii) Severity 3 - Problem. A Licensed Software problem that is a user
                inconvenience or annoyance and which may represent a loss of
                non-essential capability or is not required for essential
                operations or functional capability. The problem may adversely
                affect the user's accomplishment of an essential operation or
                functional capability. Examples of problems in this
                classification include, but are not limited to: functions that
                do not operate as documented/expected, unanticipated results
                from an operation, or functional documentation errors.

                Response time - within five (5) working days
                Time to fix or provide a work-around - within fifteen (15)
                    working days of the problem being reported.

          (iv)  Severity 4 - Minor. A Licensed Software problem that is a user
                inconvenience or annoyance and which does not affect an
                operational or essential functional capability. This
                classification is for problems that generally are annoyances,
                non-functional documentation or non-user friendly applications
                and/or documentation.

                Response time - within fifteen (15) working days
                Time to fix or provide a work-around - next product or
                    documentation release.

          (v)   Severity 5 - Other.  All other problems, errors, defects and
                change requests not covered severity categories 1 through 4.

                Response time - within thirty (30) working days
                Time to fix or provide a work-around - no commitment, to be
                    determined on a case-by-case basis.


16
<PAGE>

     (d)  Chordiant shall provide to EDS any revisions to the existing
          Documentation developed for the Licensed Software or necessary to
          reflect all Corrections, Improvements, or Updates.

     (e)  Chordiant shall make Licensed Software training available to persons
          designated by EDS to the extent agreed upon by the parties.

     (f)  If the applicable Charge for Licensed Software is payable on a
          periodic basis, and such Charge includes provision of support
          Services, then if an Event of Default as described in the Section of
          this Agreement titled "Provision of Source Code" occurs or an event
          described in the Section of this Agreement titled "Termination for
          Insolvency or Bankruptcy" occurs and if Chordiant fails to provide the
          support Services described above, then EDS' Charge for the affected
          Licensed Software shall be immediately reduced to reflect such failure
          by subtracting that portion of the Charge allocable to the provision
          of support Services.

4.9  Licensed Software Support Services Options. EDS may obtain the support
     ------------------------------------------
     Services described in the previous Section for Licensed Software on a
     central site support basis and/or on an individual site support basis. In
     the absence of a designation of central or individual site support in a
     Purchase Order, such support shall be deemed to be individual site support.
     The Charges for each option shall be as set forth in Exhibit B or as
     otherwise agreed upon by the parties. Where "central site support" is
     requested, support Services shall be provided by Chordiant to and shall be
     requested by EDS through a single point of contact identified by EDS on a
     Purchase Order. To the extent necessitated by geographic diversity or where
     required in order to support multiple time zones, EDS may designate
     multiple central site support locations. With respect to central site
     support, Chordiant shall provide to EDS one master disk and one copy of all
     Documentation relating to each Correction, Improvement, or Update. EDS
     shall be entitled to copy the disk and Documentation and distribute the
     copies or electronically transmit the copied information to each location
     supported by the central site. A designation of central site support shall
     not prevent an individual user of Licensed Software from contacting
     Chordiant in the event of a Severity 1 call. Where "individual site
     support" is requested, support Services shall be provided by Chordiant to
     the applicable licensed CPU, Site, or Network, or, in the case of a
     Corporate Software License, to a licensed user.

4.10 Provision of Source Code. EDS' ability to utilize adequately Licensed
     ------------------------
     Software will be seriously jeopardized if Chordiant fails to maintain or
     support such Licensed Software unless complete Source Code and related
     Documentation is made available to EDS for EDS' use in satisfying EDS'
     maintenance and support requirements. Therefore, Chordiant agrees that if
     an "Event of Default" occurs, then Chordiant will provide to EDS one copy
     of the most current version of the Source Code for the affected Licensed
     Software and associated Documentation in accordance with the following:

     (a)  An Event of Default shall be deemed to have occurred if Chordiant: (i)
          ceases to market or make available maintenance or support Services for
          the Licensed Software during a period in which EDS has a License or
          Licenses and is receiving, or is entitled to receive as per Section
          4.8 of this Agreement, such maintenance and support for such
          License(s) and Chordiant has not promptly cured such failure despite
          EDS' demand that Chordiant make available or perform such maintenance
          and support, (ii) ceases business operations generally or (iii) has
          transferred all or substantially all of its assets or obligations set
          forth


17
<PAGE>

          in this Agreement to a third party which has not assumed all of the
          obligations of Chordiant set forth in this Agreement.

     (b)  Chordiant will promptly and continuously update and supplement the
          Source Code as necessary with all revisions, Corrections,
          enhancements, and other changes developed for the Licensed Software
          and Documentation. Such Source Code shall be in a form suitable for
          reproduction and use by computer and photocopy equipment, and shall
          consist of a full source language statement of the program or programs
          comprising the Licensed Software and complete program maintenance
          Documentation which comprise the pre-coding detail design
          specifications, and all other material necessary to allow a reasonably
          skilled programmer or analyst to maintain and enhance the Licensed
          Software without the assistance of Chordiant or reference to any other
          materials.

     (c)  Source Code received under this Section becomes a part of Licensed
          Software. The governing License for the Licensed Software includes the
          right to use Source Code received under this Section as necessary to
          modify, maintain, and update the Licensed Software.

     (d)  Upon request by EDS, Chordiant will deposit in escrow with an escrow
          agent acceptable to EDS and pursuant to a mutually acceptable escrow
          agreement supplemental to this Agreement, a copy of the Source Code
          which corresponds to the most current version of the Licensed Software
          in use by EDS. EDS shall pay all fees of the escrow agent for services
          provided. Chordiant's entry into, or failure to enter into, an
          agreement with an escrow agent or to deposit the described materials
          in escrow shall not relieve Chordiant of its obligations to EDS
          described in this Section.

     (e)  If, as a result of an Event of Default, Chordiant fails to provide
          required support Services, then any periodic license fee which EDS is
          required to pay under this Agreement for Licensed Software shall be
          reduced to reflect such lack of support Services. At such time as
          Chordiant commences offering the support Services described in this
          Agreement for Licensed Software, EDS may obtain such support Services
          as provided for elsewhere in this Agreement.

4.11 Acquisition of Third Party Software. If EDS has acquired software products
     -----------------------------------
     from a third party and rights to such software products are subsequently
     acquired by Chordiant (whether through purchase of the third party in whole
     or in part, through purchase of the software products, through acquisition
     of the rights to market the software, or through any other means), then EDS
     shall have the option of (i) continuing to use the software products under
     the original license agreement with such third party at no additional
     charge to EDS other than applicable fees identified in such license
     agreement, or (ii) using the software products under the terms and
     conditions of this Agreement.

4.12 Software from an Authorized Third Party. If EDS acquires Chordiant's
     ---------------------------------------
     software products from a value added reseller, dealer, distributor, or
     other Chordiant authorized third party provider or if the Licensed Software
     is embedded in software products acquired from a third party, Chordiant
     agrees that, at EDS' option, such software products shall be deemed to have
     been acquired under this Agreement.

4.13 Software Audit.
     --------------


18
<PAGE>

     Upon sixty (60) days advance notice from Chordiant, and no more often than
     once in any twelve (12) month period, Chordiant may audit EDS' use of the
     Chordiant Licensed Software solely to verify EDS has not exceeded the
     number of Licenses EDS has purchased. Said audit will be conducted by a
     third party audit professional selected by Chordiant with the prior written
     consent of EDS, during normal business hours, and not disrupt EDS'
     business. Chordiant shall be responsible for the fees and costs of such
     audit. If EDS has exceeded the number of Licenses it has purchased,
     Chordiant's sole and exclusive remedy will be to have EDS purchase the
     additional Licenses required to equal actual usage.


             ARTICLE V.  WARRANTIES, INDEMNITIES, AND LIABILITIES
             ----------------------------------------------------

5.1  Warranty. Chordiant represents and warrants that:
     --------

     (a)  Chordiant has not and will not enter into agreements or commitments
          which are inconsistent with or conflict with the rights granted to EDS
          in this Agreement;

     (b)  No portion of the Products contain, at the time of delivery, any "back
          door," "time bomb," "Trojan horse," "worm," "drop dead device,"
          "virus," or other computer software routines or hardware components
          designed to (i) permit access or use of either the Products or EDS'
          computer systems by Chordiant or a third party not authorized by this
          Agreement, (ii) disable, damage or erase the Products or data, or
          (iii) perform any other such actions;

     (c)  The Products and the design thereof shall not contain preprogrammed
          preventative routines or similar devices which prevent EDS from
          exercising the rights set forth in Article IV of this Agreement or
          from utilizing the Products for the purpose for which they were
          designed;

     (d)  The media containing each Product shall be new and free from defects
          in manufacture, materials, and design. Each Product and its media
          shall function properly under ordinary use and operate in conformance
          with its Applicable Specifications and Documentation from the date of
          receipt until the date thirty (30) days from the applicable Acceptance
          Date of such Product;

     (e)  The Products are, and shall continue to be as long as EDS is receiving
          support Services, data, program, and upward compatible with any other
          Products available or to be available from Chordiant so that data
          files created for a Product can be utilized without adaptation with
          other Products and Products will operate with other Products and will
          not result in the need for alteration, emulation, or other loss of
          efficiency. Chordiant shall provide to EDS at least ninety (90) days
          prior written notice to discontinue any Product; and

     (f)  Neither the performance nor the functionality of the Products will be
          affected by any changes to the date format or date calculations within
          any part of the Product either before, during or after the year 2000.

     During the Warranty Period, Chordiant will provide warranty Service to EDS
     at no additional cost and will include all Services or replacement Products
     or Product media necessary to enable Chordiant to comply with the
     warranties set forth in this Agreement. Chordiant shall pass


19
<PAGE>

     through to EDS any manufacturers' warranties which Chordiant receives on
     the Products and, at EDS' request, Chordiant shall enforce such warranties
     on EDS' behalf. Chordiant agrees that EDS shall be entitled to pass through
     to Product end users any warranties received from Chordiant for such
     Products pursuant to this Agreement.

     EXCEPT AS SET FORTH IN THIS AGREEMENT, CHORDIANT EXPRESSLY DISCLAIMS ALL
     WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY IN ANY TERRITORY OR
     JURISDICTION, RELATING TO THE PRODUCTS, AND FURTHER EXPRESSLY EXCLUDES ANY
     WARRANTY FOR NON-INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE OR
     MERCHANTABILITY.

5.2  Proprietary Rights Indemnification.
     ----------------------------------

     Chordiant represents and warrants that as of the Effective Date: no Product
     provided under this Agreement is the subject of any litigation
     ("Litigation"), furthermore, if a Product becomes the subject of Litigation
     after the Effective Date Chordiant will immediately notify EDS of such
     Litigation. EDS may terminate any License, and receive a full refund of any
     amounts paid for such Product after the date legal process regarding such
     Litigation has been served on Chordiant. Further; Chordiant represents and
     warrants that to Chordiant's knowledge, (i) Chordiant has all right, title,
     ownership interest, and/or marketing rights necessary to provide the
     Products to EDS, and (ii) as of the Effective Date each License, the
     Products and their sale, license, and use hereunder do not and shall not
     directly or indirectly violate or infringe upon any copyright, patent,
     trade secret, or other proprietary or intellectual property right of any
     third party or contribute to such violation or infringement.

     (a)  Chordiant shall indemnify and hold EDS and Product end users and their
          respective successors, officers, directors, employees, and agents
          harmless from and against any and all actions, claims, losses,
          damages, liabilities, awards, costs, and expenses (including legal
          fees) resulting from or arising out of any Litigation, any breach or
          claimed breach of the foregoing warranties, or which is based on a
          claim that each License, the Products and their sale, license, and use
          hereunder do not, and shall not directly or indirectly violate or
          infringe upon any copyright, patent, trade secrete, or other
          proprietary or intellectual property right of any third party, or
          contribute to such violation or infringement ("Infringement"), and
          Chordiant shall defend and settle, at its expense, all suits or
          proceedings arising therefrom. EDS shall inform Chordiant of any such
          suit or proceeding against EDS, shall provide all reasonable
          assistance and cooperation, at Chordiant's expense, and shall have the
          right to participate in the defense of any such suit or proceeding at
          its expense and through counsel of its choosing. Chordiant shall
          notify EDS of any actions, claims or suits against Chordiant based on
          an alleged Infringement of any party's intellectual property rights in
          and to the Products. In the event an injunction is sought or obtained
          against use of the Products or in EDS' opinion is likely to be sought
          or obtained, Chordiant shall promptly, at its option and expense,
          either (A) procure for EDS and Product end users the right to continue
          to use the infringing Product as set forth in this Agreement, (B)
          replace or modify the infringing Products to make its use non-
          infringing while being capable of performing the same function without
          degradation of performance. If, after the use of reasonable best
          efforts, neither option (A) or (B) is accomplished by Chordiant within
          thirty (30) days of the effective date of an injunction then Chordiant
          will refund the unamortized portion of the Charges paid to Chordiant
          for such Product amortized on a five (5) year straight line basis from
          the


20
<PAGE>

          Acceptance Date of such Product, and any prepaid amounts associated
          with the affected Product.

     (b)  The provisions of the foregoing indemnity shall not apply with respect
          to any instances of alleged Infringement based upon or arising out of:
          (i) alterations to Products where such alleged Infringement would not
          have occurred but for such alteration (except for those alterations
          made by Chordiant, third parties retained by Chordiant, or otherwise
          made prior to EDS' receipt of said Product); (ii) failure of EDS to
          use updated Products that are provided by Chordiant (at no cost to
          EDS) and were provided to avoid Infringement; provided such update is
          identified in writing as being provided for such purpose; (iii) use of
          any Products in connection with or in combination with any equipment,
          devices or software which have not been supplied or recommended by
          Chordiant, where such alleged Infringement would not have occurred but
          for the use of such Products in connection with or in combination with
          such equipment, devices or software; or (iv) use of Products in a
          manner for which same were neither designed nor contemplated as
          reflected in the Documentation. Notwithstanding any other provisions
          hereof, the forgoing indemnity shall not apply with respect to any
          Infringement based upon EDS activities associated with such infringing
          Product after Chordiant has completed performance of its replace,
          repair or refund obligations in (a) above.

     (c)  THE FOREGOING SECTIONS 5.2(a) AND 5.2(b) STATE THE SOLE AND EXCLUSIVE
          REMEDY OF EDS AND THE ENTIRE LIABILITY AND OBLIGATION OF CHORDIANT
          WITH RESPECT TO INFRINGEMENT OR CLAIMS OF INFRINGEMENT OF ANY
          INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY BY THE PRODUCTS OR ANY
          PART THEREOF.

5.3  Cross Indemnification. In the event any act or omission of a party or
     ---------------------
     its employees, servants, agents, or representatives causes or results in
     (i) damage to or destruction of property of the other party or third
     parties, and/or (ii) death or injury to persons including, but not limited
     to, employees or invitees of either party, then such party shall indemnify,
     defend, and hold the other party harmless from and against any and all
     claims, actions, damages, demands, liabilities, costs, and expenses,
     including reasonable attorneys' fees and expenses, resulting therefrom.
     The indemnifying party shall pay or reimburse the other party promptly for
     all such damage, destruction, death, or injury.

5.4  Limitation of Liability. Neither party shall be liable to the other
     -----------------------
     pursuant to this Agreement for any amounts representing loss of profits,
     loss of business or indirect, consequential, exemplary, or punitive damages
     of the other party.  The foregoing shall not limit the indemnification,
     defense and hold harmless  obligations set forth in this Agreement, and
     shall not apply to any unauthorized use or disclosure of Chordiant's Source
     Code by EDS.

5.5  Insurance. Chordiant shall, at Chordiant's sole expense, maintain the
     ---------
     following insurance:

     (a)  Commercial General Liability Insurance including contractual
          coverage:  The limits of this insurance for bodily injury and property
          damage combined shall be at least:

          Each Occurrence Limit                    $1,000,000
          General Aggregate Limit                  $2,000,000
          Products-Completed Operations Limit      $1,000,000
          Personal and Advertising injury Limit    $1,000,000


21
<PAGE>

     (b)  Business Automobile Liability Insurance:  Should the performance of
          this Agreement involve the use of automobiles, Chordiant shall provide
          comprehensive automobile insurance covering the ownership, operation
          and maintenance of all owned, non-owned and hired motor vehicles.
          Chordiant shall maintain limits of at least $1,000,000 per occurrence
          for bodily injury and property damage combined.

     (c)  Workers' Compensation Insurance:  Such insurance shall provide
          coverage in amounts not less than the statutory requirements in the
          state where the work is performed, even if such coverage is elective
          in that state.

     (d)  Employers Liability Insurance:  Such insurance shall provide limits
          of not less than $1,000,000 per occurrence.

     The insurance specified in (a) and (b) above shall: (i) name EDS, its
     directors, officers, employees and agents as additional insureds, and, (ii)
     provide that such insurance is primary coverage with respect to all
     insureds and additional insureds.

     The above insurance coverages may be obtained through any combination of
     primary and excess or umbrella liability insurance. EDS may require higher
     limits or other types of insurance coverage(s) as necessary and appropriate
     under the applicable purchase order.

     Chordiant shall provide at EDS' request certificates evidencing the
     coverages, limits and provisions specified above on or before the execution
     of the Agreement and thereafter upon the renewal of any of the policies.
     Chordiant shall require all insurers to provide EDS with a thirty (30) day
     advanced written notice of any cancellation, nonrenewal or material change
     in any of the policies maintained in accordance with this Agreement.

5.6  Survival of Article V. The provisions of Sections 5.2, 5.3, 5.4 and 5.6
     ---------------------
     shall survive the term or termination of this Agreement for any reason.

                       ARTICLE VI.  PAYMENTS TO SUPPLIER
                       ---------------------------------

6.1  Charges, Prices, and Fees for Licensed Software and Services. Charges,
     ------------------------------------------------------------
     prices, and fees ("Charges") and discounts, if any, for Licensed Software
     and Services shall be determined as set forth in Exhibit B, in a Purchase
     Order, or as otherwise agreed upon by the parties, unless modified as set
     forth in this Agreement. Upon EDS' reasonable request, Chordiant shall: (i)
     provide to EDS current copies of Chordiant's standard published prices, and
     (ii) records which substantiate that EDS has received the Charges and
     discounts to which EDS is entitled to under this Agreement. In no event
     shall Charges exceed Chordiant's then current established charges, prices
     and fees. If promotional discounts or programs are extended to other
     customers, dealers, or distributors of Chordiant, EDS shall be entitled to
     participate in such promotional discounts or programs. All purchases which
     utilize any such discounts shall be deemed for all purposes including,
     without limitation, for purposes of calculating accumulated purchases and
     any discounts hereunder, to have been purchased or licensed under this
     Agreement.

6.2  Modifications to Charges. Where a change in an established Charge for
     ------------------------
     Licensed Software or Services is provided for in this Agreement, Chordiant
     shall give to EDS at least ninety (90) days' prior written notice of such
     change.


22
<PAGE>

     (a)  Any increase in a Charge shall not occur during the first twelve (12)
          months of this Agreement, during the term of the applicable Purchase
          Order or during the specified period for performance of Services,
          whichever period is longer.  Thereafter, any increase in a Charge
          shall (i) not occur unless a minimum of twelve (12) months has elapsed
          since the effective date of the previously established Charge, and
          (ii) not exceed five percent 5% of such Charge.

     (b)  All purchase orders issued by EDS prior to the end of the required
          notice period will be honored at the then current Charges so long as
          the scheduled delivery date of the applicable Licensed Software or
          Services is within ninety (90) days after the effective date of the
          increase.

     (c)  If Chordiant's established Charge, less any applicable discount or
          promotion, on the scheduled delivery date is lower than the
          established Charge for such Licensed Software or Service stated in the
          applicable Purchase Order, then EDS shall be entitled to obtain such
          Licensed Software or Service at such lower Charge, less any applicable
          discount or promotion.

6.3  Auto Payment. This Section shall apply to Purchase Orders identified as
     ------------
     being subject to automatic payment by EDS.

     (a)  Single Payment for Recurring Charges. All Charges which are due and
          ------------------------------------
          payable on a monthly, annual or other periodic basis for Licensed
          Software and Services ("Recurring Charges") shall be paid by EDS on
          the same date of the month for each month that such Charges are due
          (the "Remit Date"). The initial payment for a Recurring Charge shall
          be made on the first Remit Date after the Applicable Event provided
          that such Applicable Event occurs at least five (5) days prior to the
          first Remit Date. An "Applicable Event" is the event set forth in a
          Purchase Order that initiates payment of Charges (such as the
          installation, receipt, or acceptance of the Licensed Software; or the
          commencement or completion of Services). If the Applicable Event
          occurs less than five (5) days prior to the first Remit Date, the
          initial payment for such Recurring Charge shall be made on the
          following Remit Date, and EDS shall not be subject to interest or
          penalties as a result of such late payment.

     (b)  Payment for Other Charges. Except for Recurring Charges, or unless
          -------------------------
          otherwise agreed to by the parties in writing, all payments due
          Chordiant for Licensed Software and Services shall be paid within
          thirty (30) days after the date of the Applicable Event.

     (c)  Invoices Required Under Auto Payment. Chordiant must send EDS an
          ------------------------------------
          invoice to receive payment for any amounts due for any Charges which
          are payable and have not been identified on the applicable Purchase
          Order which is subject to automatic payment.

     (d)  Reconciliation. From time to time, at either party's request, the
          --------------
          other party shall assist with the reconciliation of the payments made
          by EDS to Chordiant.

     (e)  Taxing Jurisdictions. Chordiant shall provide EDS with the list of
          --------------------
          states and taxing jurisdictions, and their respective registration
          numbers where Chordiant is qualified and registered to collect
          sales/use taxes in all of the taxing jurisdictions within that state.
          If such written notification is not received by EDS from Chordiant,
          then EDS shall remit


23
<PAGE>

          the appropriate tax directly to the taxing authority. Chordiant shall
          promptly notify EDS of any additional jurisdictions to which Chordiant
          may qualify and register to collect sales/use taxes.

6.4  Payment Through Invoicing. This Section applies to Purchase Orders
     -------------------------
     issued by EDS which are not identified as being subject to automatic
     payment or to any invoice received by EDS from Chordiant as permitted by
     this Agreement.

     (a)  Except as otherwise set forth in this Agreement, any undisputed sum
          due to Chordiant pursuant to this Agreement shall be payable within
          thirty (30) days after receipt by EDS of a correct invoice therefor
          from Chordiant. Chordiant shall invoice EDS on or after the
          applicable Acceptance Date for the Licensed Software covered by such
          invoice. Periodic payments, if any, due to Chordiant pursuant to this
          Agreement shall be invoiced at the beginning of the period to which
          they apply. Payment for any other Services shall be invoiced as
          agreed upon by the parties or, in the absence of an agreement, upon
          completion of such Services.

     (b)  A "correct" invoice shall contain (i) Chordiant's name and invoice
          date, (ii) the specific Purchase Order number if applicable, (iii)
          description including serial number as applicable, price, and quantity
          of the Licensed Software or Services actually delivered or rendered,
          (iv) credits (if applicable), (v) name (where applicable), title,
          phone number, and complete mailing address of responsible official to
          whom payment is to be sent, and (vi) other substantiating
          documentation or information as may reasonably be required by EDS from
          time to time. A correct invoice must be submitted to the appropriate
          invoice address listed on the applicable Purchase Order.

6.5  Taxes.
     -----

     (a)  Unless EDS provides evidence of exemption, EDS shall pay or reimburse
          Chordiant, where EDS is liable under applicable tax statute, amounts
          equal to taxes which are imposed upon EDS' acquisition of Products or
          Services including federal excise taxes, or sales or use taxes;
          provided, however, EDS shall not be obligated to pay or reimburse
          Chordiant for any taxes attributable to the sale of any Products or
          Services which are imposed on or measured by net or gross income,
          capital, net worth, franchise, privilege, any other taxes, or
          assessments, nor any of the foregoing imposed on or payable by
          Chordiant.

     (b)  Chordiant agrees to reasonably cooperate with EDS in the audit or
          minimization of any applicable tax and shall make available to EDS,
          and any taxing authority, all information, records, or documents
          relating to any audits or assessments attributable to or resulting
          from the payment process under this Agreement, and the filing of any
          tax returns or the contesting of any tax. In the event Chordiant is in
          dispute with such taxing authority, Chordiant reserves the right to
          reasonably withhold any such information records or documents during
          such dispute period.

          EDS shall not be obligated to pay or reimburse Chordiant for additions
          to taxes, penalties, interest, fees, or other expenses or costs, if
          any, incurred by EDS as a result of, or attributable to, (i)
          Chordiant's failure to verify taxability of a purchase, (ii)
          Chordiant's failure to correctly calculate or remit taxes in a timely
          manner, or (iii) Chordiant's


24
<PAGE>

          negligence, misconduct or failure to file properly any required
          returns or reports, or other required documents.

     (c)  Upon written notification by EDS and subsequent verification by
          Chordiant, Chordiant shall reimburse or credit, as applicable, EDS in
          a timely manner, for any and all taxes erroneously paid by EDS.

     (d)  EDS shall provide Chordiant with, and Chordiant shall accept in good
          faith, resale, direct pay, or other exemption certificates, as
          applicable. Chordiant agrees to separately identify on the invoice the
          taxable and non-taxable purchases, the types of tax and the taxing
          authorities.

     (e)  Where Products are destined or Services are performed internationally,
          then at EDS' direction, payment may be made by EDS or its affiliate
          (i) in country to the local affiliate, (ii) in the United States, or
          (iii) in a country mutually agreed upon by the parties.

     (f)  If EDS or an affiliate of EDS is required by law to make any deduction
          or to withhold from any sum payable hereunder, then the sum payable by
          EDS or such affiliate of EDS upon which the deduction is based shall
          be paid to Chordiant net of such deduction or withholding. EDS or such
          affiliate of EDS shall pay the applicable tax authorities any such
          required deduction or withholding.



                           ARTICLE VII.  TERMINATION
                           -------------------------

7.1  Termination for Cause. Except as provided below by the Section of this
     ---------------------
     Agreement titled "Termination for Non-Payment," in the event that either
     party materially or repeatedly defaults in the performance of any of its
     duties or obligations set forth in this Agreement, and such default is not
     substantially cured within thirty (30) days after written notice is given
     to the defaulting party specifying the default, then the party not in
     default may, by giving written notice thereof to the defaulting party,
     terminate the applicable License or Purchase Order relating to such default
     as of a date specified in such notice of termination. Chordiant shall also
     have the right to reject any unfilled or future Purchase Orders from the
     business unit responsible for such default.

7.2  Termination for Insolvency or Bankruptcy. Either party may terminate this
     ----------------------------------------
     Agreement and any Purchase Order by giving written notice to the other
     party in the event any of the following occur and are not resolved in such
     party's favor within forty five (45) days of such occurrence date: (i) the
     liquidation or insolvency of the other party, (ii) the appointment of a
     receiver or similar officer for the other party, (iii) an assignment by the
     other party for the benefit of all or substantially all of its creditors,
     (iv) entry by the other party into an agreement for the composition,
     extension, or readjustment of all or substantially all of its obligations,
     or (v) the filing of a meritorious petition in bankruptcy by or against the
     other party under any bankruptcy or debtors' law for its relief or
     reorganization.

7.3  Termination for Non-Payment. Chordiant may terminate a Purchase Order, or
     ---------------------------
     any portion thereof, or any License granted in connection with such
     Purchase Order, if EDS fails to pay when due any undisputed amounts due
     pursuant to such Purchase Order and such failure continues for a period of
     sixty (60) days after the last day payment is due, so long as Chordiant


25
<PAGE>

     gives EDS written notice of the expiration date of the aforementioned sixty
     (60) day period at least thirty (30) days prior to the expiration date.

7.4  Termination of Software License. EDS may terminate any License for any
     -------------------------------
     reason by providing written notice to Chordiant. If EDS elects to so
     terminate a License, or if a License is terminated pursuant to 7.1 or 7.3
     above, EDS shall return to Chordiant or, at EDS' option, destroy, all
     copies of the Licensed Software and Documentation in EDS' possession which
     are the subject of the terminated License, and an authorized representative
     of EDS shall certify such return or destruction. In the event EDS
     terminates a License, Chordiant shall credit to EDS a prorated amount of
     any prepaid charges for support Services for the Licensed Software.

7.5  Rights Upon Termination. Unless specifically terminated as set forth
     -----------------------
     in this Article, all Licenses (and EDS' right to use the Licensed Software
     in accordance with such Licenses) and Purchase Orders which require
     performance or extend beyond the term of this Agreement shall, at EDS'
     option, be so performed and extended and shall continue to be subject to
     the terms and conditions of this Agreement.


                         ARTICLE VIII.  MISCELLANEOUS
                         ----------------------------

8.1  Binding Nature, Assignment, and Subcontracting. This Agreement shall
     ----------------------------------------------
     be binding on the parties and their respective successors in interest and
     assigns. Either party shall have the right to assign this Agreement to its
     parent corporation, if applicable; or to any entity into (i) which the
     party may be merged or reorganized or (ii) which a controlling interest in
     the associated party's capital stock or assets may be sold or assigned
     provided, however, that such assignees assume in writing the liabilities,
     obligations and responsibilities of the associated party under this
     Agreement. If a party hereto assigns the Agreement as set forth above, such
     party shall notify the other in writing of the assignment. Except as
     provided herein, neither party have the power to assign this Agreement
     without the prior written consent of the other party, which consent shall
     not be unreasonably withheld or delayed. If either party subcontracts or
     delegates any of its duties or obligations of performance in this Agreement
     or in a Purchase Order to any third party, such party shall remain fully
     responsible for complete performance of all of its obligations set forth in
     this Agreement or in such Purchase Order and for any such third party's
     compliance with the non-disclosure and confidentiality provisions set forth
     in this Agreement.

8.2  Counterparts. This Agreement may be executed in several counterparts,
     ------------
     all of which taken together shall constitute one single agreement between
     the parties.

8.3  Headings. The Article and Section headings used in this Agreement are
     --------
     for reference and convenience only and shall not enter into the
     interpretation hereof.

8.4  Authorized Agency. From time to time and at any time, EDS may assume
     -----------------
     operational responsibility for computer software programs acquired directly
     or indirectly from Chordiant by third parties which become customers or
     Affiliates, or which are acquired by EDS, after the Effective Date.

     (a)  With respect to such customers, and immediately upon execution of a
          contract between EDS and a customer, the computer software programs
          acquired from Chordiant by such customer shall be governed by the
          terms and conditions of this Agreement and EDS may use such computer
          software programs in accordance with this Agreement at no additional


26
<PAGE>

          charge to EDS or its customer, provided, however, that such computer
          software programs may only be used by EDS on behalf of that customer.
          With respect to each such customer, Chordiant, EDS and the customer
          shall execute an access agreement authorizing EDS' use of the computer
          software programs. Such access agreement shall be in a form
          substantially similar to the Third Party System Access Agreement
          attached to this Agreement as Exhibit C.

     (b)  With respect to any such affiliate, and upon Chordiant's receipt of
          written notice from EDS and such affiliate, the license or other
          agreement governing the use and support of such computer software
          programs shall automatically be deemed to have been assigned to EDS,
          provided, however, that such assigned license or other agreement shall
          be superseded by, and the use and support of the computer software
          programs shall be governed by, the terms and conditions of this
          Agreement.

     (c)  With respect to any third party with which EDS either (i) buys,
          leases, or otherwise acquires all or a substantial part of the assets
          or business of such third party, or (ii) consolidates with or merges
          with said third party, the license or other agreement governing the
          use and support of such computer software programs shall automatically
          be deemed to have been assigned to EDS. At that time, EDS may
          supersede such assigned license or other agreement with the terms and
          conditions of this Agreement, in which case the use and support of
          such computer software programs shall be governed by the terms and
          conditions of this Agreement, or EDS may elect to have the assigned
          license or other agreement continue to govern the use of such computer
          software programs.

8.5  Relationship of Parties. Both parties are performing pursuant to this
     -----------------------
     Agreement only as an independent contractors. Both parties have the sole
     obligation to supervise, manage, contract, direct, procure, perform or
     cause to be performed its obligations set forth in this Agreement, except
     as otherwise agreed upon by the parties. Nothing set forth in this
     Agreement shall be construed to create the relationship of principal and
     agent between Chordiant and EDS. Chordiant shall not act or attempt to act
     or represent itself, directly or by implication, as an agent of EDS or its
     Affiliates or in any manner assume or create, or attempt to assume or
     create, any obligation on behalf of, or in the name of, EDS or its
     Affiliates.

8.6  Confidentiality. Each party acknowledges that in the course of
     ---------------
     performance of its obligations pursuant to this Agreement, it may obtain
     confidential and/or proprietary information of the other party or its
     affiliates or customers. "Confidential Information" includes: information
     relating to development plans, costs, finances, marketing plans, equipment
     configurations, data, access or security codes or procedures utilized or
     acquired, business opportunities, names of customers, research, and
     development; the terms, conditions and existence of this Agreement; any
     information designated as confidential in writing or identified as
     confidential at the time of disclosure if such disclosure is verbal or
     visual; and any copies of the prior categories or excerpts included in
     other materials created by the recipient party. Each party agrees that, for
     a period of two (2) years following its receipt of Confidential Information
     from the other party or the other party's affiliates or customers, whether
     before or after the Effective Date, such recipient party shall use the same
     means it uses to protect its own confidential and proprietary information,
     but in any event not less than reasonable means to prevent the disclosure
     and to protect the confidentiality of the Confidential Information.
     Further, the recipient party shall only use the Confidential Information
     for purposes of this Agreement, and shall not disclose the Confidential
     Information without the prior written consent of the other party. This
     provision shall not apply to Confidential Information which is (i) already
     known by the recipient party without an


27
<PAGE>

     obligation of confidentiality, (ii) publicly known or becomes publicly
     known through no unauthorized act of the recipient party, (iii) rightfully
     received from a third party (other than an affiliate or customer of the
     party owning the Confidential Information) without an obligation of
     confidentiality, (iv) disclosed without similar restrictions by the owner
     of the Confidential Information to a third party (other than an affiliate
     or customer of the party owning the Confidential Information), (v) approved
     by the party owning the Confidential Information, in writing, for
     disclosure, or (vi) required to be disclosed pursuant to a requirement of a
     governmental agency or law so long as the recipient party provides the
     other party with timely prior written notice of such requirement.

8.7  Media Releases. Except for any announcement intended solely for
     --------------
     internal distribution by Chordiant or any disclosure required by legal,
     accounting, or regulatory requirements beyond the reasonable control of
     Chordiant, all media releases, public announcements, or public disclosures
     (including, but not limited to, promotional or marketing material) by
     Chordiant or its employees or agents relating to this Agreement or its
     subject matter, or including the name, trade name, trade mark, or symbol of
     EDS or any affiliate of EDS, shall be coordinated with and approved in
     writing by EDS prior to the release thereof. Chordiant shall not represent
     directly or indirectly that any Licensed Software or Service provided by
     Chordiant to EDS has been approved or endorsed by EDS or include the name,
     trade name, trade mark, or symbol of EDS or any affiliate of EDS on a list
     of Chordiant's customers without EDS' express written consent.

8.8  Dispute Resolution. In the event of any disagreement regarding
     ------------------
     performance under or interpretation of this Agreement and prior to the
     commencement of any formal proceedings, the parties shall continue
     performance as set forth in this Agreement and shall attempt in good faith
     to reach a negotiated resolution by designating a representative of
     appropriate authority to resolve the dispute.

8.9  Electronic Communications. If Chordiant and EDS mutually agree, business
     -------------------------
     communications between the parties, including, but not limited to, purchase
     orders, invoices, and payment may be submitted electronically.  In such
     case, the parties shall mutually agree in writing upon supplemental terms
     and conditions, including technical standards, for the electronic exchange
     of such items.

8.10 Proposals and Special Projects. EDS may request a written proposal, quote,
     ------------------------------
      or bid from Chordiant for the provision of Licensed Software and/or
     Services for a specific EDS project which may be governed by separately
     negotiated terms and conditions. In such event, any Licensed Software and
     Services obtained for such project shall be deemed for purposes of
     calculating accumulated purchases and any discounts set forth in this
     Agreement, to have been obtained pursuant to this Agreement.

8.11 Governmental Customers. This Agreement shall apply to the acquisition
     ----------------------
     of Licensed Software or Services for use in or in support of the
     performance of, or resale under, a contract with a state, county, or local
     governmental entity (a "Governmental Customer"). Chordiant and EDS may
     negotiate in good faith a supplemental agreement incorporating required
     flow-down provisions or other provisions relating to, applicable to, or
     required by such Governmental Customer or the proposed contract between EDS
     and such Governmental Customer. All Licensed Software and Services obtained
     pursuant to this Section shall be deemed for purposes of calculating
     accumulated purchases and any discounts set forth in this Agreement, to
     have been obtained pursuant to this Agreement, including purchases made by
     EDS in support of the United States


28
<PAGE>

     Federal Government under a separate contract with Chordiant. EDS shall not
     provide Product to the United States Federal Government or any agency
     thereof under this Agreement.

8.12 International Business. This Agreement shall apply to the acquisition
     ----------------------
     of Licensed Software and Services for use in or in support of the
     performance or remarketing of Licensed Software and Services in countries
     outside the United States and its territories. Chordiant and EDS and/or
     their respective agents, distributors, or Affiliates authorized to conduct
     business in such countries may negotiate in good faith supplemental
     agreements incorporating further terms and conditions required by local
     law. All Licensed Software and Services obtained pursuant to this Section
     shall be deemed for purposes of calculating accumulated purchases and any
     discounts set forth in this Agreement, to have been obtained pursuant to
     this Agreement.

8.13 Compliance with Laws. In the performance of Services or the provision
     --------------------
     of Licensed Software pursuant to this Agreement, Both parties shall comply
     with the requirements of all applicable laws, ordinances, and regulations
     of the United States or any state, country, or other governmental entity.
     In particular, the parties agree, as applicable, to comply with the United
     States Export Administration Act, Executive Order No. 11246, as amended by
     Executive Order No. 11375, the Vietnam Era Veterans Readjustment Assistance
     Act of 1974, the Rehabilitation Act of 1973, the Immigration Reform and
     Control Act of 1986, the Foreign Corrupt Practices Act, and the Americans
     With Disabilities Act. This Section incorporates by reference all
     provisions required by such laws, orders, rules, regulations, and
     ordinances.

8.14 Labor. Chordiant shall comply with any labor jurisdictions applicable
     -----
     to Chordiant's performance pursuant to this Agreement and shall cooperate
     with EDS in resolving any disputes resulting from any jurisdictional or
     labor claims or stoppages. Upon request by Chordiant, EDS shall provide to
     Chordiant clarification and guidelines regarding relationships with labor
     and Chordiant's responsibilities with respect thereto.

8.15 Export. Neither party shall export any Licensed Software or  information
     ------
     protected hereunder by an obligation of confidentiality from the United
     States, either directly or indirectly, without first obtaining a license or
     clearance as required from the U.S. Department of Commerce or other agency
     or department of the United States Government.

8.16 Notices. Wherever one party is required or permitted to give notice to
     -------
     the other pursuant to this Agreement, such notice shall be deemed given
     when delivered in hand, when mailed by registered or certified mail, return
     receipt requested, postage prepaid, or when sent by a third party courier
     service where receipt is verified by the receiving party's acknowledgment,
     and addressed as follows:

     In the case of EDS:

     Electronic Data Systems Corporation
     5400 Legacy Drive
     Plano, Texas 75024
     Attn: Manager, Contracts Administration

     In the case of Chordiant:

     CHORDIANT SOFTWARE, INC.
     1810 Embarcadero Rd.


29
<PAGE>

     Palo Alto, CA 94303-3308
     Attn: Contracts Administrator

     Either party may from time to time change its address for notification
     purposes by giving the other party written notice of the new address and
     the date upon which it will become effective; first class, postage prepaid,
     mail shall be acceptable for provision of change of address notices.

8.17 Force Majeure.  The term "Force Majeure" shall be defined to include
     -------------
     fires or other casualties or accidents, acts of God, severe weather
     conditions, strikes or labor disputes, war or other violence, or any law,
     order, proclamation, regulation, ordinance, demand, or requirement of any
     governmental agency.

     (a)  A party whose performance is prevented, restricted, or interfered with
          by reason of a Force Majeure condition shall be excused from such
          performance to the extent of such Force Majeure condition so long as
          such party provides the other party with prompt written notice
          describing the Force Majeure condition and takes all reasonable steps
          to avoid or remove such causes of nonperformance and immediately
          continues performance whenever and to the extent such causes are
          removed.

     (b)  If, due to a Force Majeure condition, the scheduled time of delivery
          or performance is or will be delayed for more than thirty (30) days
          after the scheduled date, the party not relying upon the Force Majeure
          condition may terminate, without liability to the other party, the
          Purchase Order or any portion thereof covering the delayed Products or
          Services.

     (c)  If a Force Majeure condition or other delay by Chordiant causes EDS to
          terminate its business relationship with a third party for whom
          delayed Products were ordered and EDS has no alternative use for the
          Products after using reasonable efforts to relocate or otherwise
          utilize the Products, then EDS may terminate the applicable Purchase
          Order and Chordiant shall refund to EDS all amounts paid thereunder.

8.18 Severability.  If, but only to the extent that, any provision of this
     ------------
     Agreement is declared or found to be illegal, unenforceable, or void, then
     both parties shall be relieved of all obligations arising under such
     provision, it being the intent and agreement of the parties that this
     Agreement shall be deemed amended by modifying such provision to the extent
     necessary to make it legal and enforceable while preserving its intent.  If
     that is not possible, another provision that is legal and enforceable and
     achieves the same objective shall be substituted.  If the remainder of this
     Agreement is not affected by such declaration or finding and is capable of
     substantial performance, then the remainder shall be enforced to the extent
     permitted by law.

8.19 Waiver.  Any waiver of this Agreement or of any covenant, condition, or
     ------
     agreement to be performed by a party under this Agreement shall (i) only be
     valid if the waiver is in writing and signed by an authorized
     representative of the party against which such waiver is sought to be
     enforced, and (ii) apply only to the specific covenant, condition or
     agreement to be performed, the specific instance or specific breach thereof
     and not to any other instance or breach thereof or subsequent instance or
     breach.

8.20 Remedies. Except with respect to remedies that have been identified as
     --------
     sole and exclusive remedies, all remedies set forth in this Agreement, or
     available by law or equity shall be cumulative and not alternative, and may
     be enforced concurrently or from time to time.


30
<PAGE>

8.21 Survival of Terms.  Termination or expiration of this Agreement for any
     -----------------
     reason shall not release either party from any liabilities or
     obligations set forth in this Agreement which (i) the parties have
     expressly agreed shall survive any such termination or expiration, or (ii)
     remain to be performed or by their nature would be intended to be
     applicable following any such termination or expiration.

8.22 Nonexclusive Market and Purchase Rights.  It is expressly understood and
     ---------------------------------------
     agreed that this Agreement does not grant to Chordiant an exclusive right
     to provide to EDS any or all of the Licensed Software and Services and
     shall not prevent EDS from developing or acquiring from other suppliers
     computer software programs or services similar to the Licensed Software and
     Services. Chordiant agrees that acquisitions by EDS pursuant to this
     Agreement shall neither restrict the right of EDS to cease acquiring nor
     require EDS to continue any level of such acquisitions. Estimates or
     forecasts furnished by EDS to Chordiant prior to or during the term of this
     Agreement shall not constitute commitments.

8.23 GOVERNING LAW.  THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
     -------------
     AGREEMENT SHALL NOT BE GOVERNED BY THE PROVISIONS OF THE 1980 UNITED
     NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.
     RATHER THESE RIGHTS AND OBLIGATIONS SHALL BE GOVERNED BY THE LAWS, OTHER
     THAN CHOICE OF LAW RULES, OF THE STATE OF TEXAS.

8.24 Entire Agreement.  This Agreement constitutes the entire and exclusive
     ----------------
     statement of the agreement between the parties with respect to its subject
     matter and there are no oral or written representations, understandings or
     agreements relating to this Agreement which are not fully expressed in the
     Agreement.  This Agreement shall not be amended except by a written
     agreement signed by both parties.  All exhibits, documents, and schedules
     referenced in this Agreement or attached to this Agreement, and each
     Purchase Order are an integral part of this Agreement.  In the event of any
     conflict between the terms and conditions of this Agreement and any such
     exhibits, documents, or schedules, the terms of this Agreement shall be
     controlling unless otherwise stated or agreed.  In the event of a conflict
     between the terms and conditions of this Agreement and a Purchase Order
     issued in accordance with Article II, the Purchase Order shall be
     controlling with respect to those transactions covered by that Purchase
     Order.  Any other terms or conditions included in any shrink-wrap license
     agreements, quotes, invoices, acknowledgments, bills of lading, or other
     forms utilized or exchanged by the parties shall not be incorporated in
     this Agreement or be binding upon the parties unless the parties expressly
     agree in writing or unless otherwise provided for in this Agreement.

     IN WITNESS WHEREOF, Chordiant and EDS acknowledge that each of the
provisions of this Agreement were expressly agreed to and have each caused this
Agreement to be signed and delivered by its duly authorized officer or
representative as of the Effective Date.

ELECTRONIC DATA SYSTEMS CORPORATION      CHORDIANT SOFTWARE, INC.

By: /s/ Joe B. Dorfmeister               By: /s/ Steven R. Springsteel

Printed Name: Joe B. Dorfmeister        Printed Name: Steven R. Springsteel

Title: Contract Manager                  Title: EVP/CFO

Date: 7/23/98                            Date: July 24, 1998

                                         Fed. Tax ID #: 93-1051328

31
<PAGE>

                                   EXHIBIT A
                            EDS BUSINESS PRACTICES
                            ----------------------

     EDS' suppliers have played a key role in our continuous growth and success.
We sincerely appreciate your support.  In order to avoid any conflict of
interest between our suppliers and EDS employees and to keep business
relationships on a professional basis, EDS has established and briefed its
employees on the following business practices.  Please review these business
practices carefully and give a copy of this Exhibit to any of your associates
who have a need to know.

1.   EDS expects its suppliers to provide a quality product or service for which
     they will be fairly paid.

2.   In selecting suppliers, EDS will test the market to assure quality of
     service and fairness of price.

3.   No EDS employee is to ask for  anything of value from a supplier.  Gifts
     from a supplier such as tickets to athletic events, concerts or the
     theater, personal travel, or any type of personal item are discouraged by
     our business practices.

4.   If any EDS employee is offered or accepts an item of value from a supplier,
     the employee is to report it to the appropriate EDS management.

5.   If any EDS employee engages in any type of unethical behavior such as
     requesting anything of value from a supplier, the supplier is requested to
     report the incident to the Director of Purchasing or the General Counsel of
     EDS.

6.   Occasional meals during visits to a supplier's facilities or a customer's
     location during which a supplier incurs normal and reasonable marketing
     expenses are acceptable.  The EDS employee is required to report such meal
     expenses to their management.

     EDS appreciates your cooperation in complying with these business
     practices.

A-1
<PAGE>

                                   EXHIBIT B
                           CHARGES, PRICES, AND FEES
                           -------------------------


LICENSED SOFTWARE and Services:
- ------------------------------

EDS shall be entitled to a forty percent (40%) discount off Chordiant's then
current list price on all products for a period of one year from the Effective
Date, except that such discount will not apply to licenses for Chordiant CCS
Development Systems for Systems Integrators. The parties shall negotiate in good
faith, EDS' discount commencing on the one (1) year anniversary of the Effective
and thereafter, but in no event shall such negotiated discount be less than
thirty percent (30%). During the period after the one (1) year anniversary but
prior to such negotiated discount being agreed upon, EDS shall be entitled to
purchase Products at a thirty five percent (35%) discount.

The Services discount shall be twenty percent (20%) off Chordiant's then
current list price; except EDS shall be entitled to a twenty five percent
(25%) discount on educational Services.

Chordiant's Product offering and North American list price for such Products,
and Services price list, as of the Effective Date is attached. If Products are
being purchased for international use, a fifteen percent (15%) uplift must be
added to the discounted price.

Notes:

1.   An initial purchase to support an EDS customer must include one of the
     following two Product sets at a minimum: 1) Chordiant CCS Foundation with
     Chordiant CCS ChorApps, or 2) Chordiant CCS Development System for system
     integrators with Chordiant CCS Reference Applications. Additional purchases
     of such Products can be made individually. The two Product sets do not have
     to be installed at the same Site, for example, Chordiant CCS Foundation
     with Chordiant CCS ChorApps could be installed at Site A and Chordiant CCS
     Development System for system integrators with Chordiant CCS Reference
     Applications at Site B.

2.   The Chordiant CCS Foundation License includes one copy of the Client
     Platform, Server Platform, Telephony Platform, Database Platform, and
     Electronic Gateways. If additional copies are required they may be
     purchased as per this Exhibit B.

3.   The Chordiant CCS Development System for system integrators License
     includes one copy of the CCS support client, server, telephony, and
     database objects and one electronic services facility. The Forte
     Development System and tools are not included with the CCS Development
     System, they must be purchased from Forte. Notwithstanding any other
     provision of this Agreement to the contrary, a license for the Chordiant
     CCS Development System for Systems Integrators is for the exclusive use of
     EDS, for the sole purpose of performing development work. Any such
     development work  to be provided to an EDS client who has not previously
     licensed Chordiant CCS shall be provided within a period not to exceed
     ninety (90) days without the prior written consent of Chordiant Software.

4.   The training fees apply to CCS training conducted at Chordiant CCS
     University in Palo Alto, California. Students must pay their own travel and
     related expenses. Training at any other location will be upon terms
     mutually agreed to and signed by the parties.

B-1
<PAGE>

5.   If requested by EDS, Chordiant shall provide to EDS one Chordiant CCS
     -------------------
     Center of Excellence Demonstration System license at no charge except for
     an annual maintenance and support fee of $25,000 per Center of Excellence.
     With Chordiant's consent, additional Chordiant CCS Center of Excellence
     Demonstration System licenses will be provided to EDS at no charge except
     for an annual maintenance and support fee of $25,000 per Center of
     Excellence. Notwithstanding any other provision of this Agreement to the
     contrary, a license for a Chordiant CCS Center of Excellence Demonstration
     System is for the exclusive use of EDS, for the sole purpose of
     demonstrating Chordiant CCS.

B-2
<PAGE>

                          Chordiant CCS - Release 1.3
                                  Price List


<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
                              End-User License                                    License Fees
                                                                             -------------------------
                            Product Description                                Required     Optional
- ------------------------------------------------------------------------------------------------------
<S>                                                                           <C>           <C>
Chordiant CCS Foundation/(Note 1)/                                            $ 750,000
             .  Chordiant CCS ChorServices  (System Services)
             .  Chordiant CCS ChorObjects   (Business Services)
     Distributed Service Centers Deployment Option/(Note 2)/
     ---------------------------------------------
             .  First Additional Center                                                     $375,000
             .  Second & Subsequent Additional Centers                                      $187,500
     Additional Components
     ---------------------
             .  Client Platform                                                             $ 25,000
             .  Server Platform                                                             $ 25,000
             .  Telephony Platform                                                          $ 50,000
             .  Database Platform                                                           $ 25,000
             .  Electronic Gateways                                                         $ 50,000
- ------------------------------------------------------------------------------------------------------
Chordiant CCS ChorApps (Applications)                                         $ 600,000
- ------------------------------------------------------------------------------------------------------
Chordiant CCS Runtime Client Licenses
                1 -      50                                                                 $    950
                         51 -    100                                                        $    850
                        101 -    200                                                        $    750
                        201 -    500                                                        $    650
                        501 +                                                            Negotiated
- ------------------------------------------------------------------------------------------------------
</TABLE>

The Chordiant CCS Foundation allows for

B-3
<PAGE>

                          Chordiant CCS - Release 1.3
                                   Price List

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
                  Global System Integrator License  (GSI)                                License Fees
                                                                              ---------------------------------------
                            Product Description                                   Required          Optional
- ---------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>
Chordiant CCS Development System for GSI Centers  (Note  6)                       $400,000
     .  Chordiant CCS ChorServices  (System Services)
     .  Chordiant CCS ChorObjects   (Business Services)
     .  Chordiant CCS Developer Training
          Includes one developer training class for 10 developers

  GSI Distributed Service Centers Deployment Option (Note  7)
  -------------------------------------------------
     .  First Additional GSI Center
     .  Second & Subsequent Additional GSI Centers                                                       $300,000
        Includes one developer training class for each center                                            $150,000

   Additional Components
   ----------------------
     .  Client Platform
     .  Server Platform
     .  Telephony Platform                                                                               $ 25,000
     .  Database Platform                                                                                $ 25,000
     .  Electronic Gateways                                                                              $ 50,000
                                                                                                         $ 25,000
                                                                                                         $ 50,000

- ---------------------------------------------------------------------------------------------------------------------
Chordiant CCS Reference Applications                                              $100,000
- ---------------------------------------------------------------------------------------------------------------------
Chordiant CCS Development System Client Licenses
            1 -  50 (per client license fee)
           51 - 100                                                                                     $   2000
          101 - 200                                                                                     $   1500
          201 - 500                                                                                     $   1250
                                                                                                        $   1000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

B-4
<PAGE>

                          Chordiant CCS - Release 1.3
                                   Price List

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
                        Description  of  Services                                       Service Fees
- -----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>
Chordiant CCS Annual Maintenance and Support
     .  End-User Support for Chordiant CCS Standard                         20%  of  Chordiant CCS
        Product (12 Months)                                                 Product License Fee

     .  Developer Support for Chordiant CCS Development                     $14,000.   Per Client License
        System Support - 12 Months

     .  Developer Support for Chordiant CCS Development                     $ 8,500.   Per Client License
        System Support -  6 Months
- -----------------------------------------------------------------------------------------------------------------

Chordiant Consulting Services
     .  Engineer                                                            $1,640 per day
     .  Project Manager                                                     $2,360 per day
     .  Technical Architect                                                 $2,360 per day
     .  Business Analyst                                                    $2,360 per day
     .  Chief Technologist                                                  $2,800 per day

- -----------------------------------------------------------------------------------------------------------------

Chordiant CCS Services
     .  Systems Integration                                                 Quote
     .  Installation and Deployment                                         Quote
     .  Expert Consulting                                                   Quote

- -----------------------------------------------------------------------------------------------------------------
Chordiant CCS University  (Note 8)
     .  CCS Developer Enablement Training                                   $    500   Per Day, Per Student
     .  CCS User Training                                                   $    325   Per Day, Per Student

- -----------------------------------------------------------------------------------------------------------------
Chordiant CCS Documentation
     .  Additional Documentation Sets                                       $ 1,000 Each

- -----------------------------------------------------------------------------------------------------------------
</TABLE>

B-5
<PAGE>

                                   EXHIBIT C
                      THIRD PARTY SYSTEM ACCESS AGREEMENT
                      -----------------------------------

                                     AMONG

                                  {CUSTOMER},

                           CHORDIANT SOFTWARE, INC.

                                      AND

                      ELECTRONIC DATA SYSTEMS CORPORATION

     THIS Third Party System Access Agreement (the "Access Agreement") effective
as of {Effective Date}, is by and among {CUSTOMER LEGAL NAME} ("Customer"),
CHORDIANT SOFTWARE, INC. ("Chordiant") and ELECTRONIC DATA SYSTEMS CORPORATION
("EDS").


                             W I T N E S S E T H:

     WHEREAS, Chordiant owns certain software products (hereinafter referred to
as "Software") more specifically described in the {Chordiant/Customer Agreement
Name}, dated {Chordiant/Customer Agreement Date}, between Customer and Chordiant
(the "License Agreement"); and

     WHEREAS, Chordiant and EDS have entered into a {EDS/Chordiant Agreement
Name}, dated {EDS/Chordiant Agreement Date}, pursuant to which EDS may obtain
certain software products and services from Chordiant (the "Master Agreement");

     WHEREAS, Customer and EDS have entered into an information technology
services agreement (the "ITS Agreement") pursuant to which EDS will provide data
processing and other services ("Services") requiring that EDS have access to the
Software; and

     WHEREAS, the parties desire that EDS undertake appropriate contractual
commitments to assure that the Software will be used only in accordance with and
subject to the terms and conditions of the Master Agreement and this Access
Agreement;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Customer, Chordiant and EDS hereby
agree as follows:

1.   Chordiant hereby grants EDS the right to use, execute, store and display
     (collectively "Access") the Software set forth in Attachment 1 to this
     Access Agreement for the purpose of performing its obligations pursuant to
     the ITS Agreement.  The parties agree that EDS' Access of such Software,
     and Chordiant's support and maintenance obligations with respect to the
     Software, shall be governed by the terms and conditions of the Master
     Agreement; provided, however, EDS may Access the Software for the sole and
     exclusive purpose of providing Services on behalf of Customer.

C-1
<PAGE>

2.   Customer shall be entitled to all protections under the Master Agreement,
     including, but not limited to, proprietary rights indemnification as
     defined in the Master Agreement.

3.   The parties agree that EDS shall be Customer's agent for payment of any
     fees due to Chordiant under the Master Agreement from the date of this
     Access Agreement until Chordiant is notified otherwise.  In the event of a
     conflict between this Access Agreement and the License Agreement, this
     Access Agreement will prevail.

4.   This Access Agreement shall commence as of the date first set forth above
     and shall continue in effect until the earlier of (i) the termination of
     the ITS Agreement, (ii) Chordiant's receipt of written notice from EDS that
     EDS' need to Access the Software has ceased, or (iii) the termination of
     the License Agreement.  Upon termination of this Access Agreement, EDS
     shall discontinue all use of the Software and; provided that the License
     Agreement has not terminated, Customer's continued use of and Chordiant's
     support and maintenance obligations with respect to the Software shall be
     governed by the terms and conditions of the License Agreement.  At such
     time, EDS shall have no further liability or responsibility with respect to
     such Software.


     IN WITNESS WHEREOF, the parties have caused this Access Agreement to be
executed as of the dates indicated.

CHORDIANT SOFTWARE, INC.                           {CUSTOMER}

By:____________________________       By:_________________________________

Printed Name:________________   Printed Name:________________________

Title:_______________________   Title:_______________________________

Date:__________________________       Date:_______________________________

ELECTRONIC DATA SYSTEMS CORPORATION

By:____________________________

Printed Name:________________

Title:_______________________

Date:__________________________

C-2
<PAGE>

                                  ATTACHMENT 1

                                    SOFTWARE

     This Attachment 1 shall automatically be deemed to include any and all
software products obtained by Customer from Chordiant after the effective date
of the ITS Agreement.


C-3
<PAGE>

                                   EXHIBIT D
                               EDUCATION SERVICES
                               ------------------

1.   Certain Definitions.  The following definitions apply to this Exhibit:
     -------------------

     (a)  "EDS Students" means employees of EDS and employees of EDS' customers
          or suppliers who receive Education Services and participate as
          students.

     (b)  "Education Services" includes, but is not limited to, student and
          instructor training, and time and material services provided or to be
          provided by Chordiant pursuant to the Agreement and this Exhibit.

     (c)  "Location" means the place where Education Services are performed or
          are to be performed and/or where Documentation for Education Services
          is to be delivered.

2.   Supplemental Chordiant Obligations.  Chordiant will provide to EDS the
     ----------------------------------
     Education Services specified in each Purchase Order in accordance with the
     terms and conditions set forth in this Agreement and this Exhibit and will:

     (a)  Designate an individual who will be EDS' contact person at Chordiant
          during the term of this Agreement and who shall have the authority and
          power to make management decisions relating to Education Services on
          behalf of Chordiant.  Such individual shall provide, at the request of
          EDS and within a reasonable period of time, any requested management
          decisions. Chordiant may change the contact person  upon notice to
          EDS.

     (b)  Provide sufficient class documentation for each EDS Student at no
          charge to EDS. EDS Students may retain all such class documentation
          after completion of the Educational Services to which such
          Documentation applies.

     (c)  Provide necessary education aids, such as references, films,
          overheads, or other similar instructional aids for use with Education
          Services.

     (d)  If Education Services are to occur at an EDS Location, request in
          writing in advance, any education or audiovisual materials or
          equipment which should be present at the EDS Location for use in
          teaching. Such materials or equipment may include, but shall not be
          limited to, overhead projectors, film projectors, flip charts, boards
          and markers, personal computers for EDS Students' use, etc. ("Training
          Aids").

     (e)  For Education Services which occur at an EDS Location, allow for the
          substitution or cancellation of EDS Students at no additional charge.

     (f)  Provide to EDS, within thirty (30) days of the end of each calendar
          quarter, a written report for the previous quarter indicating the
          Location, the dates, the aggregated Charges paid by EDS, and the
          number of EDS Students in attendance for all Education Services
          provided by Chordiant during the previous quarter.

     (g)  Provide sufficient Employees for each Education Service offering to
          maintain a maximum student-to-instructor ratio of twelve (12)
          students to one (1) instructor, unless otherwise agreed.  In the
          provision of "train-the-trainer" Services, Chordiant will



D-1
<PAGE>

          provide sufficient Employees to maintain a maximum
          student-to-instructor ratio of six (6) students to one (1) instructor.

3.   Supplemental EDS Obligations.  EDS will, at its own cost and expense,
     ----------------------------
     provide classroom facilities and reasonable and necessary Training Aids,
     based on availability and discretion, for classes at an EDS Location.

4.   Open and Closed Education Services.  A Purchase Order shall indicate if a
     ----------------------------------
     course is "open," which means that EDS Students and other commercial
     students may attend the course, or "closed," which means the course is only
     available to EDS Students. Public classes at Chordiant's Location shall
     always be considered open.

5.   Charges.  Where EDS is paying for Education Services on a flat fee per
     -------
     class basis, EDS shall not be required to pay any additional sums in the
     event of student substitution or the student fails to attend the class
     without notice.  Where EDS is paying for the Education Services on a flat
     fee per student basis, EDS may cancel a Student at no charge to EDS by
     providing Chordiant more than seven (7) days advance notice of such
     cancellation. EDS shall pay fifty percent (50%) of the student's class fees
     if cancellation occurs within seven (7) days of the class date.


D-2
<PAGE>

                                   EXHIBIT E
                              DEVELOPMENT SERVICES
                              --------------------

1.   Developed Software.  "Developed Software" means computer software programs,
     ------------------
     including Development Documents (as later defined in this Agreement),
     developed or to be developed by Chordiant and/or Employees pursuant to this
     Agreement.  The parties agree that the definition of Work Product(s) shall
     be modified to include Developed Software.

2.   Provision of Development Services.  Chordiant shall perform development
     ---------------------------------
     Services to the extent agreed upon by the parties for a particular EDS
     project (the "Project").  With respect to each Project, the parties shall
     agree in writing upon supplemental terms and conditions applicable to the
     performance of the Project including, for example and without limitation,
     (i) a price and milestone payment schedule, (ii) a Project performance
     schedule, including the appropriate work steps and phases, (iii) Applicable
     Specifications, (iv) functional and detailed design specifications, and (v)
     a schedule of those items or tasks to be performed by Chordiant which must
     be approved by EDS or performed to the satisfaction of EDS
     ("Deliverables"). The terms and conditions established for a Project shall
     be incorporated in this Agreement, and may be amended upon the mutual
     written agreement of the Project Managers (as later defined in this
     Agreement).  The Section of this Agreement titled "Time and Materials
     Services" shall also apply to the Project if the development Services are
     performed on a time and materials basis.

3.   Project Management.  For each Project, Chordiant and EDS shall each
     ------------------
     designate a project manager (the "Project Managers") who shall have the
     responsibilities set forth in this Exhibit and as otherwise agreed upon by
     the parties.  Each Project Manager shall be responsible for providing
     timely management decisions as required or requested relating to the
     Project.  From time to time at the request of the EDS Project Manager, the
     Chordiant Project Manager shall provide to the EDS Project Manager a
     written report of the status of the Project.

4.   Approval of Deliverables.  The supplemental Project terms and conditions
     ------------------------
     shall establish time frames for the acceptance process of Deliverables; any
     reference to dates or time periods in this Section shall mean the dates
     mutually agreed upon by the parties in, or determined in accordance with,
     such terms and conditions.  The Chordiant Project Manager shall submit each
     Deliverable to the EDS Project Manager on or before the specified delivery
     date.  Within the established time frame, EDS shall approve or disapprove
     the Deliverable by providing written notice to Chordiant.  EDS shall
     describe in any disapproval the ways in which the Deliverable fails to
     conform to the established requirements and/or the Applicable
     Specifications for the Project or portion thereof; EDS may also suggest
     corrections or improvements which may cause the Deliverable to meet such
     standard.  Chordiant shall resubmit the Deliverable to EDS for approval as
     provided in this Section, within the established cure period.  EDS may
     extend the period of time for resubmission of the Deliverable if Chordiant
     submits a written request outlining the specific reasons why Chordiant
     cannot comply with the requirements together with


<PAGE>

     Chordiant's proposed alternative schedule for resubmission of the
     Deliverable. Chordiant may submit draft versions of a Deliverable prior to
     the required date for the informal comment of the EDS Project Manager. EDS'
     approval of a Deliverable only indicates that EDS has reviewed the
     Deliverable and detected no errors or omissions sufficient enough to
     warrant the withholding or denial of payment, if any, for such Deliverable.
     EDS' approval of a Deliverable does not discharge Chordiant's obligation to
     provide a completed Developed Software that as a whole conforms to the
     Applicable Specifications.

5.   Acceptance Testing Procedures.  In connection with each Project, the
     -----------------------------
     parties shall mutually agree upon appropriate acceptance testing criteria
     and procedures for the Developed Software. The applicable acceptance
     testing criteria and procedures must be successfully satisfied and
     performed prior to EDS' acceptance of the Developed Software.  If any
     defects or deficiencies are discovered during acceptance testing, EDS shall
     so notify Chordiant, and Chordiant shall have thirty (30) days from receipt
     of such notice to correct the deficiencies.  If necessary, Chordiant and
     EDS may mutually agree upon an additional time period in order to continue
     acceptance testing of the corrected Developed Software.  For purposes of an
     item of Developed Software, the term "Acceptance Date" shall mean the date
     when the Developed Software successfully satisfies the applicable
     acceptance testing criteria.  Acceptance of an item of Developed Software
     does not waive any warranty rights provided in this Agreement for Developed
     Software.

6.   Change Orders.  By providing written notice to the Chordiant Project
     -------------
     Manager, EDS may request Chordiant to perform additional work or changes
     within the general scope of the Project and Chordiant agrees to perform
     such work or changes.  If a change causes an increase or decrease in the
     price or time required for performance as mutually determined by the
     Project Managers, a negotiated adjustment shall be made in the Project
     price and/or performance schedule.  Changes outside the general scope of
     the Project shall be governed by the following Section.

7.   Additional Work.  By providing written notice to the Chordiant Project
     ---------------
     Manager, EDS may request Chordiant to perform additional Services outside
     the general scope of a Project.  At its option, Chordiant may submit, at no
     charge to EDS, a written proposal for such Services including a price/cost
     proposal, expenses related to travel, lodging and meals, a delivery
     schedule, and any other information reasonably related to such request.
     Within a reasonable time period requested by Chordiant, EDS shall accept or
     reject such proposal. If Chordiant chooses not to provide a proposal in
     response to EDS' request, Chordiant shall promptly notify EDS.

8.   Ownership of Developed Software.  EDS shall have Ownership Rights in and to
     -------------------------------
     all Developed Software, whether completed or partially completed, and all
     documents developed or exchanged during or in support of a Project, whether
     completed or partially completed (the "Development Documents") as set forth
     in the Section titled "Ownership of Intellectual Property Rights" elsewhere
     in this Agreement.  To the extent that Existing Materials are required in
     order to use the Developed Software as contemplated in this


<PAGE>

     Agreement, Chordiant shall grant to EDS, its subsidiaries and affiliates
     rights as set forth in the Section titled "Use of Existing Materials"
     elsewhere in this Agreement.

9.   Remedies for Failure to Perform.  If Chordiant defaults in the performance
     -------------------------------
     of a Project EDS may, in its sole discretion, elect to (i) terminate the
     Project, return to Chordiant all Development Documents and receive a refund
     from Chordiant of all amounts paid to Chordiant with respect to the
     Project, (ii) enter into a joint development effort with Chordiant to
     complete the Project at no additional charge to EDS, (iii) extend the time
     for Chordiant performance at no additional charge to EDS, (iv) continue
     development itself or in connection with a third party, and/or (v)
     terminate the Project.  The foregoing remedies do not constitute exclusive
     remedies.  In the event EDS elects to continue development efforts itself,
     or to continue development efforts with the involvement of a third party,
     Chordiant shall provide to EDS all Chordiant proprietary or other
     information reasonably required to complete such development.  EDS agrees
     that any third parties pursuing such development with EDS shall agree to
     comply with non-disclosure and confidentiality provisions to protect
     Chordiant's information.  EDS may use the information as necessary in order
     to complete the Project.

10.  Rights Upon Project Completion.  Upon completion or termination of a
     ------------------------------
     Project for any reason, Chordiant shall provide to EDS all copies of all
     Developed Software and Development Documents, whether completed or
     partially completed, (except if EDS elects (i) in the previous Section) and
     shall return to EDS any and all copies of all information provided by EDS
     to Chordiant in connection with the Project.  EDS shall be entitled to
     obtain maintenance and support Services for Developed Software under the
     Sections governing support of Licensed Software.


<PAGE>

                                   EXHIBIT F
                         RESELLER ACCESS AUTHORIZATION
                         -----------------------------


1.   Chordiant hereby grants EDS the right to use, execute, store and display
     (collectively "Access") the Licensed Software purchased for resale under
     Section 3.6 of this Agreement, for the purpose of performing its service
     obligations to the ITS Customer.

2.   The ITS Customer shall be entitled to all protections under this Agreement,
     including, but not limited to, proprietary rights indemnification.

3.   EDS shall Access the Licensed Software in accordance with the terms and
     restrictions of this Agreement.

4.   Chordiant agrees that EDS shall be the ITS Customer's agent for payment of
     any fees due to Chordiant for the Licensed Software from the date the ITS
     Customer signs Chordiant End User License Agreement ("Resale Date"), until
     Chordiant is notified otherwise.

5.   This Reseller Access Authorization shall commence as of the Resale Date and
     shall continue in effect until the earlier of (i) Chordiant's receipt of
     written notice from EDS that EDS' need to Access the Licensed Software has
     ceased, or (ii) the termination of the Chordiant End User License
     Agreement.  Upon termination of Access, EDS shall discontinue all use of
     the Licensed Software.  Provided that the End User License Agreement has
     not terminated, the ITS Customer's continued use of and Chordiant's support
     and maintenance obligations with respect to the Licensed Software shall be
     governed by the terms and conditions of the Chordiant End User License
     Agreement.  At such time, EDS shall have no further liability or
     responsibility with respect to such Licensed Software.

6.   During the period of EDS' Access, in the event of any conflict between this
     Agreement and the Chordiant End User License Agreement with the ITS
     Customer, this Agreement will prevail.


<PAGE>

                                   EXHIBIT G
                          THIRD PARTY LETTER AGREEMENT
                          ----------------------------

This letter agreement (the "Agreement") dated ____ is by and between
______("Third Party Provider"), Electronic Data Systems Corporation and its
Affiliates ("EDS"), and Chordiant Software, Inc. and its Affiliates
("Chordiant").

     For purposes of this Agreement, "Affiliates" of a party shall mean any
corporation or other legal entity owning, directly or indirectly, ten percent
(10%) or more of the voting capital shares of such party;  any corporation or
other legal entity ten percent (10%) or more of the voting capital shares (or
equivalent control) of which is owned, directly or indirectly, by such party, as
applicable;  or any corporation or other legal entity ten percent (10%) or more
of the voting capital shares (or equivalent control) of which is owned, directly
or indirectly, by a corporation or other legal entity owning, directly or
indirectly, ten percent (10%) or more of the voting capital shares (or
equivalent control) of such party.

Chordiant and Third Party Provider have entered into an agreement dated ___
("Chordiant Agreement") pursuant to which Chordiant has obtained the right to
use and distribute (description or name of software to be provided) ("Third
Party Software") to licensees of Chordiant's products, provided that Chordiant
includes in all license agreements with such licensees certain terms and
conditions regarding the use of such Third Party Software ("Pass Thru Terms").

EDS and Third Party Provider have entered into an agreement dated  ____ (the
"EDS Agreement"), pursuant to which EDS has obtained the rights to use the Third
Party Software.

Third Party Provider hereby authorizes Chordiant to distribute to EDS the Third
Party Software for use with Chordiant's products without a license agreement
containing the Pass Thru Terms, and agrees that Chordiant shall remain obligated
to pay to Third Party Provider any amounts that may be due to Third Party
Provider as a result of such distribution pursuant to the Chordiant Agreement.

EDS and Third Party Provider agree that EDS' use of the Third Party Software
shall be pursuant to the EDS Agreement.

Third Party Provider hereby forever generally and completely  releases and
discharges Chordiant, its servants, agents, directors, officers and employees,
and all others, of and from any and all claims and demands of every kind and
nature, in law, equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, and in particular of and from all claims
and demands of every kind and nature, known and unknown, suspected and
unsuspected, disclosed and undisclosed, for damages actual and consequential,
past, present and future, arising out of or in any way related to the
Chordiant's distribution of the Third Party Software to EDS.  This release,
notwithstanding Section 1542 of the California Civil Code which provides that "a
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release which if
known by him must have materially affected his settlement with the debtor,"
shall be a full and final release.

The parties by their duly authorized representatives have executed this
Agreement as of the date above.

Chordiant Software, Inc.               Electronic Data Systems Corporation

By: _____________________________      By:_____________________________

Name:____________________________      Name: __________________________

Title: __________________________      Title:____________________________

[Third Party Provider]
By: _____________________________

Name:____________________________

Title: __________________________

<PAGE>

                                   EXHIBIT H
                      END USER SOFTWARE LICENSE AGREEMENT
                      -----------------------------------

Chordiant will provide EDS with a copy of the End User Software License
Agreement whenever it is revised by Chordiant. EDS will have thirty (30) days to
begin using such revised new End User Software License Agreement from receipt.


<PAGE>

                    SOFTWARE LICENSE AND SERVICES AGREEMENT

THIS SOFTWARE LICENSE AND SERVICES AGREEMENT ("Agreement") is between
______________________ having a place of business at_________________________
("Customer") and CHORDIANT SOFTWARE, Inc., a Delaware corporation, having a
place of business at 20400 Stevens Creek Blvd. Suite 400, Cupertino, CA 95014
("Chordiant"). The terms of this Agreement shall apply to each Software license
granted by Chordiant under this Agreement, which will be identified on a
Purchase Order or Order Form. The Effective Date of this Agreement shall be
___________________________.

1. Definitions.

  (a) "Commencement Date" means the date on which Chordiant delivers the
Software to Customer, or if no delivery is necessary, the Effective Date set
forth on the relevant Purchase Order or Order Form.

  (b) "Designated Center" means the computer hardware, operating system,
customer-specific application and Customer Geographic Location designated on the
relevant Purchase Order or Order Form.

 (c)  "Designated Contact" shall mean the contact person or group designated by
Customer and agreed to by Chordiant who will coordinate all Support requests to
Chordiant.

  (d) "Documentation" means the user guides and manuals for installation and use
of the Software. Documentation is provided in CD-ROM or bound form, whichever is
generally available.

  (e) "Error" shall mean a reproducible defect in the Supported Program or
Documentation when operated on a Supported Environment which causes the
Supported Program not to operate substantially in accordance with the
Documentation.

  (f) "Resolution" shall mean a modification or workaround to the Supported
Program and/or Documentation and/or other information provided by Chordiant to
Customer intended to resolve an Error.

   (g) "Order Form" means the document in hard copy form by which Customer
orders Software licenses and services, and which is agreed to by the parties.
The Order Form shall reference the Effective Date and be governed by the terms
of this Agreement.

  (h) "Purchase Order" means the document in hard copy or electronic form by
which Customer orders additional Software licenses and services, and which is
agreed to by the parties. The Purchase Order shall reference the Effective Date
and be governed by the terms of this Agreement.

  (i) "Software" means the software in object or source code form distributed by
Chordiant for which Customer is granted a license pursuant to this Agreement,
and the media, Documentation and any Updates thereto.

  (j) "Support" shall mean ongoing support provided by Chordiant pursuant to the
terms of this Agreement and Chordiant's current support policies. "Supported
Program" or "Supported Software" shall mean the then current version of the
Software in use at the Designated Center for which the Customer has paid the
then-current support fee ("Support Fee").

  (k) "Support Hours" shall mean twenty-four (24) hours a day, Monday through
Friday, for Standard Support; twenty-four (24) hours a day, seven (7) days a
week, for Premier Support.

  (l) "Support Period" shall mean the period during which Customer is entitled
to receive Support on a particular Supported Program, which shall be a period of
twelve (12) months beginning from the Commencement Date, or if applicable,
twelve (12) months from the expiration of the preceding Support Period.

  (m) "Supported Environment" shall mean any hardware and operating system
platform which Chordiant provides Support for use with the Supported Program.

  (n) "Update" means a subsequent release of the Software that Chordiant
generally makes available for Supported Software licensees at no additional
license fee other than shipping and handling charges. Update shall not include
any release, option or future product that Chordiant licenses separately.
Chordiant will provide Updates for the Supported Programs as and when developed
for general release in Chordiant's sole discretion. Chordiant will support the
most current Update and the immediately preceding release for a period of twelve
(12) months.

                                      1.
<PAGE>

2. Software License.

   (a)  Rights Granted.

        (i)   Chordiant grants to Customer a non-exclusive license to use the
Software as specified on a Purchase Order/Order Form under this Agreement, as
follows:

            (1) to use the Software solely for Customer's operations at the
Designated Center consistent with the use limitations specified or referenced in
this Agreement, the Documentation for such Software or any Order Form or
Purchase Order accepted by Chordiant pursuant to this Agreement. Customer may
not relicense, rent or lease the Software or use the Software for third party
training, commercial timesharing or service bureau use;

            (2) to use the Documentation provided with the Software in support
of Customer's authorized use of the Software;

            (3) to make a single copy for back-up or archival purposes and/or
temporarily transfer the Software in the event of a computer malfunction. All
titles, trademarks and copyright or other restricted rights notices shall be
reproduced in any such copies;

            (4) to allow third parties to use the Software for Customer's
operations, so long as Customer ensures that use of the Software is in
accordance with the terms of this Agreement.

        (ii)  Customer shall not copy or use the Software (including the
Documentation) except as specified in this Agreement and applicable Purchase
Order/Order Form. Customer shall have no right to use any Forte Software, Inc.
software or other third party software that is included within the Software
except in connection and within the scope of Customer's use of the Software.

        (iii) Customer agrees not to cause or permit the reverse engineering,
disassembly, decompilation, or any other attempt to derive source code from the
Software, except to the extent required to obtain interoperability with either
independently created software or as specified by law.

        (iv)  Chordiant and its suppliers shall retain all title, copyright and
other proprietary rights in the Software. Customer does not acquire any rights,
express or implied, in the Software, other than those specified in this
Agreement.

        (v)   Customer agrees that it will not publish any results of benchmark
tests run on the Software.

   (b)  Transfer.  Customer may transfer a Software license within its
organization upon notice to Chordiant; transfers are subject to the terms and
fees specified in Chordiant's transfer policy in effect at the time of the
transfer.

   (c)  Verification.  At Chordiant's written request, not more frequently than
annually, Customer shall furnish Chordiant with a signed certification verifying
that the Software is being used pursuant to the provisions of this Agreement and
applicable Purchase Order/Order Form. Chordiant (or Chordiant's designee) may
audit Customer's use of the Software. Any such audit shall be conducted during
regular business hours at Customer's facilities and shall not unreasonably
interfere with Customer's business activities. If an audit reveals that Customer
has underpaid fees to Chordiant, Customer shall be invoiced directly for such
underpaid fees based on the Chordiant Price List in effect at the time the audit
is completed. If the underpaid fees are in excess of five percent (5%) of the
aggregate license fees paid to Chordiant pursuant to this Agreement, the
Customer shall pay Chordiant's reasonable costs of conducting the audit. Audits
shall be conducted no more than once annually.

   (d)  Customer Specific Objects.

        (i) The parties agree and acknowledge, subject to Chordiant's underlying
proprietary rights, that Customer may create certain software objects applicable
to Customer's internal business ("Customer Specific Objects"). Any Customer
Specific Object developed solely by Customer shall be the property of Customer.
To the extent that Customer desires to have Chordiant incorporate such Customer
Specific Objects into Chordiant's Software (and Chordiant agrees, in its sole
discretion, to incorporate such Customer Specific Objects), Customer will
promptly deliver to Chordiant the source and object code versions (including
documentation) of such Customer Specific Objects, and any updates or
modifications thereto, and hereby grants Chordiant a perpetual, irrevocable,
worldwide, fully-paid, royalty-free, exclusive, transferable license to
reproduce, modify, use, perform, display, distribute and sublicense, directly
and indirectly, through one or more tiers of sublicensees, such Customer
Specific Objects.

                                      2.
<PAGE>

        (ii)  Any objects, including without limitation Customer Specific
Objects, developed solely by Chordiant shall be the property of Chordiant.

   (e)  Additional Restrictions on Use of Source Code.

        Customer acknowledges that the Software, its structure, organization and
Source Code constitute valuable trade secrets that belong to Chordiant and its
suppliers.  Customer agrees not to translate the Software into another computer
language, in whole or in part.

        (i)   Customer agrees that it will not disclose all or any portion of
the Software's Source Code to any third parties, with the exception of
authorized employees ("Authorized Employees") and authorized contractors
("Authorized Contractors") of Customer who (i) require access thereto for a
purpose authorized by this Agreement, and (ii) have signed an employee or
contractor agreement in which such employee or contractor agrees to protect
third party confidential information. Customer agrees that any breach by any
Authorized Employees or Authorized Contractors of their obligations under such
confidentiality agreements shall also constitute a breach by Customer hereunder.

        (ii)  Customer shall ensure that the same degree of care is used to
prevent the unauthorized use, dissemination, or publication of the Software's
Source Code as Customer uses to protect its own confidential information of a
like nature, but in no event shall the safeguards for protecting such Source
Code be less than a reasonably prudent business would exercise under similar
circumstances. Customer shall take prompt and appropriate action to prevent
unauthorized use or disclosure of such Source Code, including, without
limitation, storing such Source Code only on secure central processing units or
networks and requiring passwords and other reasonable physical controls on
access to such Source Code.

        (iii) Customer shall instruct Authorized Employees and Authorized
Contractors not to copy the Software's Source Code on their own, and not to
disclose such Source Code to anyone not authorized to receive it.

        (iv)  Customer shall handle, use and store the Software's Source Code
solely at the Customer Designated Center.


3. Technical Services.

   (a)  Maintenance and Support Services. Maintenance and Support services will
be provided under the terms of this Agreement and Chordiant's support policies
in effect on the date Support is ordered by Customer. Chordiant's support terms
as of the Effective Date are attached as Exhibit A. Support services shall be
provided from Chordiant's principal place of business or at the Designated
Center, as determined in Chordiant's sole discretion. If Chordiant sends
personnel to the Designated Center to resolve any Error in the Supported
Program, Customer shall pay Chordiant's reasonable travel, meals and lodging
expenses.

   (b)  Consulting and Training Services. Chordiant will provide consulting and
training services agreed to by the parties pursuant to the terms of this
Agreement or Chordiant's standard consulting agreement. All consulting services
shall be billed on a time and materials basis unless the parties expressly agree
otherwise in writing.

   (c)  Incidental Expenses.   For any on-site services requested by Customer,
Customer shall reimburse Chordiant for actual, reasonable travel and out-of-
pocket expenses incurred (separate from then current Support Fees).

   (d)  Reinstatement. Once Support has been terminated by Customer or Chordiant
for a particular Supported Program, it can be reinstated only if Chordiant is
still offering Support for such Supported Program and Customer pays a fee equal
to the Support Fees that would have been payable for the period of time during
which Support was terminated for such Supported Program.

   (e)  Supervision and Management. Customer is responsible for undertaking the
proper supervision, control and management of its use of the Supported Programs,
including, but not limited to: (i) assuring proper Supported Environment
configuration, Supported Programs installation and operating methods; and (ii)
following industry standard procedures for the security of data, accuracy of
input and output, and back-up plans, including restart and recovery in the event
of hardware or software error or malfunction. Chordiant does not warrant (i) the
performance of, or combination of, Software with any third party software, (ii)
any implementation of the Software that does not follow Chordiant's delivery

                                      3.
<PAGE>

methodology, or (iii) any components not supplied by Chordiant.

   (f)  Training. Customer is responsible for proper training of all appropriate
personnel in the operation and use of the Supported Programs and associated
equipment.

   (g)  Access to Personnel and Equipment. Customer shall provide Chordiant with
access to Customer's personnel and its equipment during Support Hours. This
access must include the ability to dial-in from Chordiant facilities to the
equipment on which the Supported Programs are operating and to obtain the same
access to the equipment as those of Customer's employees having the highest
privilege or clearance level. Chordiant will inform Customer of the
specifications of the modem equipment and associated software needed, and
Customer will be responsible for the costs and use of said equipment.

   (h)  Support Term.   Upon expiration of an existing Support Period for a
particular Supported Program, a new Support Period shall automatically begin for
a consecutive twelve (12) month term ("Renewal Period") so long as (i) Customer
pays the Support Fee within thirty (30) days of invoice by Chordiant; and (ii)
Chordiant is still offering Support on such Supported Program.

   (i)  Annual Support Fees.  Annual Support Fees shall be at Chordiant's then-
current rates.

4. Term and Termination.

   (a)  Term.  This Agreement and each Software license granted under this
Agreement shall continue perpetually unless terminated under this Section 4
("Term and Termination").

   (b)  Termination by Customer.  Customer may terminate any Software license at
any time; however, termination shall not relieve Customer's obligations
specified in Section 4(d) ("Effect of Termination").

   (c)  Termination by Chordiant. Chordiant may terminate this Agreement or any
license upon written notice if Customer materially breaches this Agreement and
fails to correct the breach within thirty (30) days following written notice
specifying the breach.

   (d)  Effect of Termination. Termination of this Agreement or any license
shall not limit either party from pursuing other remedies available to it,
including injunctive relief, nor shall such termination relieve Customer's
obligation to pay all fees that have accrued or are otherwise owed by Customer
under any Purchase Order/Order Form. The parties' rights and obligations under
Sections 2 (a)(iii), 2(a)(iv) ("Rights Granted"), 2(d) ("Customer Specific
Objects"), 4 ("Term and Termination"), 5 ("Indemnity, Warranties, Remedies"), 6
("Limitation of Liability"), 7 ("Payment Provisions"), 8 ("Confidentiality") and
9 ("Miscellaneous") shall survive termination. Upon termination, Customer shall
cease using, and shall return or destroy, all copies of the applicable Software
and Documentation.

5. Indemnity, Warranties, Remedies.

   (a) Infringement Indemnity.  Chordiant will defend and indemnify Customer
against a claim that the Software infringes a U.S. copyright or patent  provided
that: (i) Customer notifies Chordiant in writing within ten (10) days of the
claim; (ii) Chordiant has sole control of the defense and all related settlement
negotiations; and (iii) Customer provides Chordiant with the assistance,
information and authority necessary to perform Chordiant's obligations under
this Section 5 ("Indemnities, Warranties, Remedies"). Chordiant shall have no
liability for any claim of infringement based on use of a superseded or altered
release of Software if the infringement would have been avoided by the use of a
current unaltered release of the Software which Chordiant provides to Customer.

If the Software is held or claimed to infringe, Chordiant shall have the option,
at its expense, to (i) modify the Software to be noninfringing or (ii) obtain
for Customer a license to continue using the Software. If it is not commercially
reasonable to perform either of the above options, then Chordiant may terminate
the license for the infringing Software and refund the license fees paid for the
applicable Software license. This Section 5(a) ("Infringement Indemnity") states
Chordiant's entire liability and Customer's exclusive remedy for infringement.

   (b)  Warranties and Disclaimers.

        (i)   Software Warranty. For each Supported Software license which
Customer acquires hereunder, Chordiant warrants for a period of thirty (30) days
from the Commencement Date that the Software, as delivered by Chordiant to
Customer, will substantially perform the functions described in the associated
Documentation in all material respects when operated on a system which meets the

                                      4.
<PAGE>

requirements specified by Chordiant in the Documentation. Chordiant will
undertake to correct any Error condition which is reported to it by Customer
during the above warranty period in accordance with Chordiant's technical
support policies. Provided that Customer gives Chordiant written notice of a
breach of the foregoing warranty during the warranty period, Chordiant shall, as
Customer's sole and exclusive remedy, correct any reproducible Errors that cause
the breach of the warranty in accordance with its technical support policies, or
if Chordiant is unable to make the Software operate as warranted, Customer shall
be entitled to terminate the Software license and recover the fees paid to
Chordiant for the Software license. If Customer does not obtain a Supported
Software license, the Software is provided "AS IS."

        (ii)  Media Warranty.  Chordiant warrants the tapes, diskettes or other
media to be free of defects in materials and workmanship under normal use for
thirty (30) days from the Commencement Date. Customer's sole and exclusive
remedy for breach of the media warranty shall be to require Chordiant to replace
defective media returned within thirty (30) days of the Commencement Date.

        (iii) Services Warranty.  Chordiant warrants any services provided
hereunder shall be performed in a professional and workmanlike manner in
accordance with generally accepted industry practices. This warranty shall be
valid for a period of ninety (90) days from performance. Chordiant's sole and
exclusive obligation pursuant to this warranty and Customer's sole and exclusive
remedy for services shall be re-performance of any work not in compliance with
this warranty which is brought to Chordiant's attention by written notice within
thirty (30) days after such services are performed.

        (iv)  Disclaimer of Warranties. EXCEPT AS SPECIFICALLY PROVIDED HEREIN,
CHORDIANT DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.

        Chordiant does not warrant that the Software will operate in
combinations other than as specified in the Documentation or that the operation
of the Software will be uninterrupted or error-free. Pre-production releases of
Software are distributed "AS IS."

6. Limitation Of Liability.

CHORDIANT'S AGGREGATE CUMULATIVE LIABILITY ARISING OUT OF OR RELATED TO THIS
AGREEMENT (WHETHER ARISING FROM CONTRACT, TORT OR OTHERWISE) FOR DAMAGES SHALL
IN NO EVENT EXCEED THE AMOUNT OF FEES PAID BY CUSTOMER UNDER THIS AGREEMENT, AND
IF SUCH DAMAGES RESULT FROM CUSTOMER'S USE OF THE SOFTWARE OR SERVICES, SUCH
LIABILITY SHALL BE LIMITED TO FEES PAID FOR THE RELEVANT SOFTWARE OR SERVICES
GIVING RISE TO THE LIABILITY. CHORDIANT AND ITS SUPPLIERS SHALL NOT BE LIABLE
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED
UPON CONTRACT, TORT OR ANY OTHER LEGAL THEORY, ARISING OUT OF OR RELATED TO THIS
AGREEMENT.

The provisions of this Agreement allocate the risks between Chordiant and
Customer. Chordiant's pricing reflects this allocation of risk and the
limitation of liability specified herein.

7. Payment Provisions.

   (a) Invoicing.  All fees shall be due and payable thirty (30) days from
receipt of an invoice and shall be made without deductions based on any taxes or
withholdings. Any amounts not paid within thirty (30) days will be subject to
interest of the lower of the legal interest rate or one percent (1%) per month,
which interest will be immediately due and payable.

   (b) Payments.  All payments made by Customer shall be in United States
Dollars and directed to:

       Chordiant Software, Inc.
       20400 Stevens Creek Blvd.
       Suite 400, Cupertino, CA 95014
       Attn: Accounts Receivable.

   (c) Taxes.  The fees listed in this Agreement or the applicable Purchase
Order/Order Form do not include Taxes. In addition to any other payments due
under this Agreement, Customer agrees to pay, indemnify and hold Chordiant
harmless from, any sales, use, excise, import or export, value added or similar
tax or duty, and any other tax not based on Chordiant's net income, including
penalties and interest and all government permit fees, license fees, customs
fees and similar fees levied upon the delivery of the Software or other
deliverables which Chordiant

                                      5.
<PAGE>

may incur in respect of this Agreement, and any costs associated with the
collection or withholding of any of the foregoing items (the "Taxes").

8. Confidentiality.

  During the term of this Agreement, Customer may be exposed to certain
information, including know-how and trade secrets, relating to or contained or
embodied in Chordiant's Software (including object and source code), Chordiant
Software services, proposed new products and services, the terms of this
Agreement and/or information identified as confidential or proprietary
information of Chordiant and not generally known to the public (herein
"Confidential Information"). Customer agrees that during and after the term of
this Agreement, it will not use or disclose any Confidential Information of
Chordiant to any third party without the prior written consent of Chordiant.
Chordiant hereby consents to the disclosure of its Confidential Information to
the employees, contractors or consultants of Customer as is reasonably necessary
in order to allow Customer to perform its obligations under this Agreement and
to obtain the benefits hereof; provided that each such employee, contractor or
consultant who will have access to any Confidential Information has executed a
nondisclosure agreement which prohibits the unauthorized use or disclosure of
any such Confidential Information. This section shall not apply, or shall cease
to apply, to data and information supplied by Chordiant if Customer can
establish that such data or information: (a) were already known Customer, (b)
have come into the public domain without a breach of confidence by Customer, (c)
were received by Customer from a third party without restrictions on their use
in favor of Chordiant, or (d) is independently developed. Notwithstanding the
foregoing, Customer shall have the right to disclose Chordiant's Confidential
Information to the extent that it is required to be disclosed pursuant to any
statutory or regulatory provision or court order, provided that Customer
provides notice thereof to Chordiant, together with the statutory or regulatory
provision, or court order, on which such disclosure is based, as soon as
practicable prior to such disclosure so that Chordiant has the opportunity to
obtain a protective order or take other protective measures as it may deem
necessary with respect to such information.

9. Miscellaneous.

   (a) Export Administration. Customer agrees to comply fully with all relevant
export laws and regulations of the United States ("Export Laws") to assure that
neither the Software nor any direct product thereof are (i) exported, directly
or indirectly, in violation of Export Laws; or (ii) are intended to be used for
any purposes prohibited by the Export Laws, including, without limitation,
nuclear, chemical, or biological weapons proliferation.

   (b) U.S. Government Customers.  The Software is "commercial items," as that
term is defined at 48 C.F.R. 2.101 (OCT 1995), consisting of "commercial
computer software" and "commercial computer software documentation" as such
terms are used in 48 C.F.R. 12.212 (SEPT 1995). Consistent with 48 C.F.R. 12.212
and 48 C.F.R. 227.7202-1 through 227.7202-4 (JUNE 1995), all U.S. Government
Customers acquire the Software with only those rights set forth herein.

   (c) Notices.  All notices under this Agreement shall be in writing and shall
be deemed to have been given when mailed by first class mail five (5) days after
deposit in the mail. Notices shall be sent to the addresses set forth at the
beginning of this Agreement or such other address as either party may specify in
writing. If notice is sent to Chordiant, it shall be sent to the person bearing
the title set forth below Chordiant's signature to this Agreement, with a copy
also sent to Chordiant's Chief Financial Officer.

   (d) Force Majeure.  Neither party shall be liable hereunder by reason of any
failure or delay in the performance of its obligations hereunder (except for the
payment of money) on account of strikes, shortages, riots, insurrection, fires,
flood, storm, explosions, acts of God, war, governmental action, labor
conditions, earthquakes, material shortages or any other cause which is beyond
the reasonable control of such party.

   (e) Assignment.  Neither this Agreement nor any rights or obligations of
Customer hereunder may be assigned by Customer in whole or in part without the
prior written approval of Chordiant. Chordiant's rights and obligations, in
whole or in part, under this Agreement may be assigned by Chordiant.

   (f) Waiver.  The failure of either party to require performance by the other
party of any provision hereof shall not affect the right to require such
performance at any time thereafter; nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.

   (g) Severability.  In the event that any provision of this Agreement shall be
unenforceable or invalid

                                      6.
<PAGE>

under any applicable law or court decision, such unenforceability or invalidity
shall not render this Agreement unenforceable or invalid as a whole and, in such
event, any such provision shall be changed and interpreted so as to best
accomplish the objectives of such unenforceable or intended provision within the
limits of applicable law or applicable court decisions.

   (h) Injunctive Relief.  Notwithstanding any other provisions of this
Agreement, a breach by Customer of the provisions of this Agreement regarding
proprietary rights will cause Chordiant irreparable damage for which recovery of
money damages would be inadequate, and that, in addition to any and all remedies
available at law, Chordiant shall be entitled to seek timely injunctive relief
to protect Chordiant's rights under this Agreement.

   (i) Controlling Law and Jurisdiction. This Agreement shall be governed in all
respects by the laws of the United States of America and the State of California
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. The parties agree that the
United Nations Convention on Contracts for the International Sale of Goods is
specifically excluded from application to this Agreement.

  All disputes arising under this Agreement may be brought in Superior Court of
the State of California in Santa Clara County or the United States District
Court for the Northern District of California as permitted by law. The Superior
Court of Santa Clara County and the United States District Court for the
Northern District of California shall together have non-exclusive jurisdiction
over disputes under this Agreement. Customer consents to personal jurisdiction
of the above courts.

   (j) No Agency.  Nothing contained herein shall be construed as creating any
agency, partnership or other form of joint enterprise between the parties.

   (k) Headings.  The section headings appearing in this Agreement are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or extent of such section or in any way affect such section.

   (l) Counterparts.  This Agreement may be executed simultaneously in two or
more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.

   (m) Disclaimer.  The Software is not specifically developed or licensed for
use in any nuclear, aviation, mass transit or medical application or in any
other inherently dangerous applications. Customer agrees that Chordiant and its
suppliers shall not be liable for any claims or damages arising from Customer's
use of the Software for such applications. Customer agrees to indemnify and hold
Chordiant harmless from any claims for losses, costs, damages or liability
arising out of or in connection with the use of the Software in such
applications.

   (n) Customer Reference.  Chordiant may refer to Customer as a customer in
sales presentations, marketing vehicles and activities.  Such activities may
include, but are not limited to; a press release issued within sixty (60) days
of the Effective Date of the Agreement, a Customer user story completed by
Chordiant upon implementation of the Software, and a reasonable number of
technical or executive level Customer reference calls for Chordiant.

   (o) Entire Agreement. This Agreement, Purchase Order/Order Form together with
any exhibits, completely and exclusively states the agreement of the parties. In
the event of any conflict between the terms of this Agreement and any exhibit
hereto, the terms of this Agreement shall control. In the event of any conflict
between the terms of this Agreement and any Purchase Order or Order Form, the
individualized terms of such Purchase Order or Order Form will control, but any
pre-printed terms on Customer's Purchase Order will be of no effect. This
Agreement supersedes, and its terms govern, all prior proposals, agreements or
other communications between the parties, oral or written, regarding the subject
matter of this Agreement. This Agreement shall not be modified except by a
subsequently dated written amendment signed by the parties, and any "pre-
printed" terms on a Customer Purchase Order or other document purporting to
supplement the provisions hereof shall be void.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

CHORDIANT SOFTWARE, INC.:             CUSTOMER:

                                      7.
<PAGE>

- ----------------------------------           ---------------------------------
Signature                                    Signature

- ----------------------------------           ---------------------------------
Print Name                                   Print Name

- ----------------------------------           ---------------------------------
Title                                        Title

- ----------------------------------           ---------------------------------
Date                                         Date


                                      8.
<PAGE>

                                   Order Form

                         Chordiant Contract Information

     Customer Name:                   Purchase Order Number:

     Customer Location:               Customer Telephone Number:

     Designated Contact:              Contact's E-Mail Address:

- --------------------------------------------------------------------------------
     Agreement Name and Date:  Software License and Services Agreement
dated __________________

     This Order Form ("Order Form") is placed in accordance with and shall be
governed by the terms of the Agreement ("Agreement") specified above.  Customer
hereby orders the Software licenses for use as follows:
- --------------------------------------------------------------------------------


A:  SOFTWARE LICENSE

Designated Center:

     Hardware:
     Operating System:
     Customer Application:
     Geographic Location:



<TABLE>
<CAPTION>
                                         Quantity         List Price         Discount     Net License
                                                                                          Fee
<S>                                    <C>            <C>                 <C>             <C>
Chordiant CCS Foundation
 {fill in applicable programs}

Chordiant Named User
Licenses
Java Client Application

Total License Fees:                                                             $
- ---------------------------------------------------------------------------------

B:  ANNUAL SUPPORT FEE(S)

Support Fees are based on the then current License Fee of the Supported Program.

    1.    Extended Support:                      20% of the License Fee
    2.    Premier Support:                       25% of the License Fee

Total initial Annual Support Fee:                                              $
- --------------------------------------------------------------------------------
</TABLE>
Miscellaneous.  As specified on this Order Form, Chordiant shall deliver to the
- --------------
customer location, the number of copies specified above of the Software media
and Documentation (CD-ROM or bound, whichever is generally available) ("Master
Copy") for each Software license for use at the Designated Center.  Customer
shall have the right to make up to one copy of the Software, including
Documentation, for each Named User license of the Software and Customer shall be
responsible for installation of the Software.  All fees due under this Order
Form shall be due and

                                      9.
<PAGE>

payable net 30 days from receipt of invoice, and shall be noncancelable and the
sum paid nonrefundable. Customer agrees to pay applicable sales/use tax, media
and shipping charges.

CHORDIANT SOFTWARE, INC.:                 CUSTOMER:


- ----------------------------------        ----------------------------------
Signature                                 Signature

- ----------------------------------        ----------------------------------
Print Name                                Print Name

- ----------------------------------        ----------------------------------
Title                                     Title

- ----------------------------------        ----------------------------------
Date                                      Date

                                      10.
<PAGE>

                               Subject to Change
                       EXHIBIT A - GENERAL SUPPORT TERMS:

1.  Definitions:
    ------------

"Named User" or "Client" means an individual who is authorized by Customer to
use the Software, regardless of whether the individual is actively using
Software at any given time.

2.  Technical Support.  Annual Support services ordered by Customer will be
    ------------------
provided under Chordiant's Support policies and pricing in effect on the date
Support is ordered and shall be effective upon shipment (or upon Order Form
Effective Date for products not requiring shipment); first year Support is
quoted above.  Fees for Support are due and payable annually in advance.

(a)  Telephone Support. Chordiant will provide telephone support to the
Designated Contact during the Support Hours. Telephone support will include the
following: (i) Clarification of functions and features of the Supported Program;
(ii) Clarification of the Documentation; (iii) Guidance in operation of the
Supported Program; (iv) Assistance in identifying and verifying the causes of
suspected Errors in the Supported Program; and (v) Advice on bypassing
identified Errors in the Supported Program, if reasonably possible.

(b)  Resolution of Errors. Chordiant will provide an initial response
acknowledging Errors reported by Customer in accordance with the severity levels
and response times identified below ("Error Correction Severity Levels and
Response Times"). Thereafter, Chordiant shall use commercially reasonable
efforts to provide a Resolution to the Supported Program. Chordiant will
acknowledge each Customer report of an Error by written acknowledgment setting
forth a Software Problem Report number (SPR#) for use by Customer and Chordiant
in all correspondence relating to such Error.

(c)  Exceptions. Chordiant shall have no responsibility to fix any Errors
arising out of or related to the following causes: (a) Customer's modification
or combination of the Supported Program (in whole or in part), including without
limitation any Customer Specific Objects (as defined in the Agreement) for which
Chordiant has not received the source code, (b) use of the Supported Program in
an environment other than a Supported Environment; or (c) accident; electrical
or electromagnetic stress; neglect; misuse; failure or fluctuation of electric
power, failure of media not furnished by Chordiant; operation of the Supported
Program with other media and hardware, software or telecommunication interfaces
not meeting or not maintained in accordance with the manufacturer's
specifications; or causes other than ordinary use. Any corrections performed by
Chordiant for such Errors shall be made, in Chordiant's reasonable discretion,
at Chordiant's then current time and material charges.

3.  Error Correction Severity Levels And Response Times
    ---------------------------------------------------

(a)  Level 1 Severity. Level 1 is the classification used when there is an Error
that causes the Software to fail to function and/or crash the system on which
the Software is installed. Chordiant shall respond within two (2) hours and
shall use commercially reasonable efforts to provide a Resolution within one (1)
business day.

(b)  Level 2 Severity. Level 2 is the classification used when there is an Error
that causes the Software to fail to operate in a material manner but does not
render the system on which the Software is installed inoperable. Chordiant shall
respond within eight (8) hours and shall use commercially reasonable efforts to
provide a Resolution within two (2) business days.

(c)  Level 3 Severity. Level 3 is the classification used when there is an Error
that produces an inconvenient situation in which the Software operates
substantially in accordance with the Specifications but nevertheless causes or
results in substandard or erratic performance. Chordiant shall respond within
five (5) business days and shall use commercially reasonable efforts to provide
a Resolution within fifteen (15) business days.

(d)  Level 4 Severity. Level 4 is the classification used when there is an Error
that is minor or that is cosmetic in nature and does not result in reduced
performance. Level 4 Errors shall be corrected at the next Update, if not
otherwise previously corrected.

                                      11.

<PAGE>

                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

    We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated January 18, 2000, except for Note 14 which is as of February
10, 2000, relating to the consolidated financial statements of Chordiant
Software, Inc., which appears in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.

PricewaterhouseCoopers LLP
San Jose, California

February 11, 2000


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