10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-28030

i2 Technologies, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-2294945
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
One i2 Place
11701 Luna Road
Dallas, Texas	75234
(Address of principal executive offices)	(Zip code)

(469) 357-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer  ¨	Accelerated filer  x
Non-accelerated filer (Do not check if a smaller reporting company)  ¨	Smaller reporting company  ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨    No  x

As of August 1, 2008, the Registrant had 21,567,303 shares of $0.00025 par value Common Stock outstanding.

i2 TECHNOLOGIES, INC.

QUARTERLY REPORT ON FORM 10-Q

June 30, 2008

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Submission of Matters to a Vote of Security Holders	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
SIGNATURES		36

2

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(unaudited)

	June 30, 2008			December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	143,061		$	120,978
Restricted cash		6,668			8,456
Accounts receivable, net		29,020			25,108
Other current assets		91,868			7,746
Total current assets		270,617			162,288
Premises and equipment, net		6,081			7,559
Goodwill		16,684			16,684
Non-current deferred tax asset		7,192			8,454
Other non-current assets		6,945			7,168
Total assets	$	307,519		$	202,153
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,958		$	4,741
Accrued liabilities		15,696			14,631
Accrued compensation and related expenses		17,354			17,636
Deferred revenue		72,408			61,715
Total current liabilities		111,416			98,723
Total long-term debt, net		84,768			84,453
Taxes payable		6,278			4,484
Total liabilities		202,462			187,660
Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $0.001 par value, 5,000 shares authorized, none issued and outstanding		—			—
Series A junior participating preferred stock, $0.001 par value, 2,000 shares authorized, none issued and outstanding		—			—
Series B 2.5% convertible preferred stock, $1,000 par value, 150 shares authorized, 108 issued and outstanding at June 30, 2008 and 107 issued and outstanding December 31, 2007		105,003			103,450
Common stock, $0.00025 par value, 2,000,000 shares authorized, 21,560 and 21,448 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		5			5
Additional paid-in capital		10,464,084			10,458,101
Accumulated other comprehensive income		9,649			9,963
Accumulated deficit		(10,473,684	)		(10,557,026	)
Net stockholders’ equity		105,057			14,493
Total liabilities and stockholders’ equity	$	307,519		$	202,153

See accompanying notes to consolidated financial statements.

3

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Revenues:
Software solutions	$	12,569		$	11,412		$	24,241		$	24,845
Services		30,508			31,553			59,350			60,248
Maintenance		21,651			22,018			43,713			43,027
Contract		—			—			—			2,450
Total revenues		64,728			64,983			127,304			130,570
Costs and expenses:
Cost of revenues:
Software solutions		2,874			2,175			5,488			4,649
Services		23,624			24,467			46,095			48,310
Maintenance		2,655			2,800			5,498			5,737
Amortization of acquired technology		—			6			4			12
Sales and marketing		13,072			12,957			25,022			24,654
Research and development		7,541			8,750			15,174			17,555
General and administrative		10,919			10,549			20,428			20,928
Amortization of intangibles		25			25			50			28
Restructuring charges and adjustments		—			(49	)		—			(75	)
Costs and expenses, subtotal		60,710			61,680			117,759			121,798
Intellectual property settlement, net		(81,315	)		—			(79,860	)		—
Total (benefit) costs and expenses		(20,605	)		61,680			37,899			121,798
Operating income		85,333			3,303			89,405			8,772
Non-operating expense, net:
Interest income		932			1,302			2,127			2,648
Interest expense		(1,236	)		(1,236	)		(2,475	)		(2,476	)
Foreign currency hedge and transaction losses, net		(464	)		(74	)		(605	)		(191	)
Other (expense) income, net		(335	)		(231	)		284			(553	)
Total non-operating expense, net		(1,103	)		(239	)		(669	)		(572	)
Income before income taxes		84,230			3,064			88,736			8,200
Income tax expense		2,714			740			3,842			1,598
Net income	$	81,516		$	2,324		$	84,894		$	6,602
Preferred stock dividend and accretion of discount		776			765			1,552			1,524
Net income applicable to common stockholders	$	80,740		$	1,559		$	83,342		$	5,078
Net income per common share applicable to common stockholders:
Basic	$	3.09		$	0.06		$	3.20		$	0.20
Diluted	$	3.05		$	0.06		$	3.15		$	0.19
Weighted-average common shares outstanding:
Basic		26,105			25,770			26,080			25,690
Diluted		26,475			26,806			26,459			26,870

See accompanying notes to consolidated financial statements.

4

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2008			2007		2008			2007
Comprehensive income:
Net income applicable to common stockholders	$	80,740		$	1,559	$	83,342		$	5,078
Other comprehensive income:
Foreign currency translation adjustments		(2,019	)		2,918		(313	)		3,643
Total other comprehensive income		(2,019	)		2,918		(313	)		3,643
Total comprehensive income	$	78,721		$	4,477	$	83,029		$	8,721

See accompanying notes to consolidated financial statements.

5

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Six Months Ended June 30,
	2008			2007
Cash flows from operating activities:
Net income	$	84,894		$	6,602
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance expense		541			504
Warrant accretion		315			315
Depreciation and amortization		1,850			2,471
Stock based compensation		5,872			7,347
Loss on disposal of premises and equipment		144			222
Expense (credit) for bad debts charged to costs and expenses		173			(116	)
Deferred income taxes		1,398			(92	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable		(4,033	)		(440	)
Other assets		(86,212	)		3,791
Accounts payable		1,769			(854	)
Taxes payable		2,055			(9	)
Accrued liabilities		1,178			(5,442	)
Accrued compensation and related expenses		(119	)		(7,516	)
Deferred revenue		10,575			(1,688	)
Net cash provided by operating activities		20,400			5,095
Cash flows provided by (used in) investing activities:
Restrictions (placed) released on cash		1,788			(1,656	)
Purchases of premises and equipment		(562	)		(1,209	)
Proceeds from sale of premises and equipment		17			12
Business acquisitions		—			(2,125	)
Net cash provided by (used in) investing activities		1,243			(4,978	)
Cash flows provided by financing activities:
Cash dividends paid - preferred stock		—			(1,307	)
Net proceeds from common stock issuance from options and employee stock purchase plans		112			2,960
Net cash provided by financing activities		112			1,653
Effect of exchange rates on cash		328			(200	)
Net change in cash and cash equivalents		22,083			1,570
Cash and cash equivalents at beginning of period		120,978			109,419
Cash and cash equivalents at end of period	$	143,061		$	110,989
Supplemental cash flow information
Interest paid	$	2,156		$	2,156
Income taxes paid (net of refunds received)	$	882		$	1,772
Schedule of non-cash financing activities
Preferred stock dividend and accretion of discount	$	1,552		$	217

See accompanying notes to consolidated financial statements.

6

i2 TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except per share data)

(Unaudited)

1. Summary of Significant Accounting Policies

Nature of Operations. We are a provider of supply chain management solutions, consisting of various software and service offerings. In addition to application software, we offer hosted software solutions, such as business optimization and technical consulting, managed services, training, solution maintenance, software upgrades and development. We operate our business in one business segment. Supply chain management is the set of processes, technology and expertise involved in managing supply, demand and fulfillment throughout divisions within a company and with its customers, suppliers and partners. The goals of our solutions include increasing supply chain efficiency and enhancing customer and supplier relationships by managing variability, reducing complexity, improving operational visibility, increasing operating velocity and integrating planning and execution. Our offerings are designed to help customers better achieve the following critical business objectives:

• Visibility – a clear and unobstructed view up and down the supply chain

• Planning – supply chain optimization to match supply and demand considering system-wide constraints

• Collaboration – interoperability with supply chain partners and elimination of functional silos

• Control – management of data and business processes across the extended supply chain

Basis of Presentation. Our unaudited condensed consolidated financial statements have been prepared by management and reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2008. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted under the Securities and Exchange Commission’s (SEC) rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, presented in our Annual Report on Form 10-K for the year ended December 31, 2007 filed on March 17, 2008 with the SEC (2007 Annual Report on Form 10-K).

Recent Accounting Pronouncements. We adopted SFAS No. 157, Fair Value Measurements, on January 1, 2008. The statement creates a single definition of fair value, establishes a framework for measuring fair value, and expands disclosure requirements about items measured at fair value. SFAS No. 157 applies to both items recognized and reported at fair value in the financial statements and items disclosed at fair value in the notes to the financial statements. The statement does not change existing accounting rules governing what can or what must be recognized and reported at fair value in our financial statements, or disclosed at fair value in our notes to the financial statements. Additionally, SFAS No. 157 does not eliminate practicability exceptions that exist in accounting pronouncements amended by this Statement when measuring fair value. As a result, we are not required to recognize any new assets or liabilities at fair value.

Prior to SFAS No. 157, certain measurements of fair value were based on the price that would be paid to acquire an asset, or received to assume a liability (an entry price). The statement clarifies the definition of fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (that is, an exit price). The exit price is based on the amount that the holder of the asset or liability would receive or need to pay in an actual transaction (or in a hypothetical transaction if an actual transaction does not exist) at the measurement date. In some circumstances, the entry and exit price may be the same; however, they are conceptually different.

Fair value is generally determined based on quoted market prices in active markets for identical assets or liabilities. If quoted market prices are not available, the Company uses valuation techniques that place greater reliance on observable inputs and less reliance on unobservable inputs. In measuring fair value, the Company may make adjustments for risks and uncertainties, if a market participant would include such an adjustment in its pricing. Adoption of SFAS No. 157 did not have a material impact on our financial statements.

7

We adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, on January 1, 2008. This statement permits but does not require entities to measure many financial instruments and certain other items at fair value. Once an entity has elected the fair value option for designated financial instruments and other items, changes in fair value must be recognized in the statement of operations. The election is irrevocable once made. Adoption of SFAS No. 159 did not have a material impact on the Company’s financial statements.

In December 2007, the FASB issued Statement No. 141R, Business Combinations (“SFAS No. 141R) which changes how an entity accounts for the acquisition of a business. When effective, SFAS No. 141R will replace existing SFAS No. 141 in its entirety, will amend SFAS No. 109 and Interpretation 48 and also will amend the goodwill impairment test requirements in SFAS No. 142. SFAS No. 141R is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008. Early adoption is prohibited.

We currently record all changes to a valuation allowance for acquired deferred tax assets or the effect of changes in an acquired tax position that occur after the acquisition date by initially reducing the related goodwill to zero, next by reducing other noncurrent intangible assets related to the acquisition to zero and lastly by reducing income tax expense. However, SFAS No. 141R amends SFAS No. 109 and Interpretation 48 to require us to recognize changes to the valuation allowance for an acquired deferred tax asset or the effect of changes to an acquired tax position as adjustments to income tax expense or contributed capital, as appropriate, and not as adjustments to goodwill. This accounting will be required when SFAS No. 141R becomes effective (January 1, 2009) and applies to valuation allowances and tax positions related to acquisitions accounted for originally under SFAS No. 141 as well as those accounted for under SFAS No. 141R.

We intend to adopt SFAS No. 141R effective January 1, 2009 and apply its provisions prospectively. We are evaluating the impact that the adoption of SFAS No. 141R will have on our financial statements.

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (“GAAP”). The pronouncement mandates that the GAAP hierarchy reside in the accounting literature as opposed to audit literature. This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements.

In May 2008, the FASB issued FASB staff position (FSP) APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires that the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) be separately accounted for in a manner that reflects an issuer’s nonconvertible debt borrowing rate. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and shall be applied retrospectively to all periods presented. Early adoption of FSP APB 14-1 is not permitted.

Our 5% Senior Convertible Notes (“Notes”) are within the scope of FSP APB 14-1. During the first quarter of 2009, we will be required to report the debt components of the Notes at fair value as of the date of issuance and amortize the discount as an increase to interest expense over the expected life of the debt. The implementation of this standard will result in a decrease to net income and earnings per share for all periods presented; however, there is no effect on our cash interest payments. We are currently assessing the impact of adopting FSP APB 14-1 on our financial condition and results of operations.

From time to time, new accounting pronouncements applicable to the Company are issued by the FASB or other standards setting bodies, which we will adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

8

2. Investment Securities

Short-term time deposits and other liquid investments in debt securities with original maturities of less than three months when acquired are classified as available-for-sale and reported as cash and cash equivalents on our condensed consolidated balance sheet. Based on their maturities, interest rate movements do not affect the balance sheet valuation of these investments. Investment securities reported as cash and cash equivalents as of June 30, 2008 and December 31, 2007 were as follows:

	June 30, 2008		December 31, 2007
Short-term time deposits	$	6,926		5,143
	$	6,926	$	5,143

We typically invest our cash in a variety of interest-earning financial instruments, including bank time deposits, money market funds and taxable and tax-exempt variable-rate and fixed-rate obligations of corporations and federal, state and local governmental entities and agencies. These investments are primarily denominated in U.S. Dollars.

3. Borrowings and Debt Issuance Costs

The following table summarizes the outstanding debt and related capitalized debt issuance costs recorded on our condensed consolidated balance sheet at June 30, 2008 and December 31, 2007.

	June 30, 2008			December 31, 2007
Senior convertible notes, 5% annual rate payable semi-annually, due November 15, 2015.....		86,250			86,250
Unamortized discount on 5% notes		(1,482	)		(1,797	)
Total debt	$	84,768		$	84,453
Capitalized debt issuance costs, net	$	2,620		$	3,161

We recorded capitalized debt issuance costs, net of accumulated amortization, in other non-current assets and are amortizing these costs over a five-year period, beginning in November 2005.

In connection with the issuance of our 5% senior convertible notes, we issued certain warrants to purchase our common stock. We assessed the characteristics of the warrants and determined that they should be included in additional paid in capital in the stockholders’ equity portion of our condensed consolidated balance sheet, valued using a Black-Scholes model. The effect of recording the warrants as equity is that the 5% senior convertible notes are recorded at an original discount to their face value. The discount recorded was originally $3.1 million, and this discount is being accreted through earnings over five years. We determined a five-year life to be appropriate due to the conversion features of the 5% senior convertible notes and our assessment of the probability that the debt would be converted prior to the scheduled maturity.

4. Restructuring Charges and Adjustments

Restructuring Plans. In prior periods, we implemented restructuring plans, which included the elimination of personnel as well as other targeted cost reductions. See Note 11, Restructuring Charges and Adjustments, in our Notes to Consolidated Financial Statements in our 2007 Annual Report on Form 10-K for a description of our previous restructuring plans.

9

The following table summarizes the changes to our restructuring accruals, as well as the components of the remaining restructuring accruals at June 30, 2008 and June 30, 2007.

	Employee Severance and Termination						Office Closure and Consolidation					Total
	2008			2007			2008		2007			2008			2007
January 1,	$	283		$	192			—	$	123		$	283		$	315
Adjustments to restructuring plans		—			(8	)		—		(17	)		—			(25	)
Cash payments		(108	)		—			—		(32	)		(108	)		(32	)
Remaining accrual balance at March 31,	$	175		$	184		$	—	$	74		$	175		$	258
Adjustments to restructuring plans		—			—			—		(49	)		—			(49	)
Cash payments		(46	)		—			—		10			(46	)		10
Remaining accrual balance at June 30,	$	129		$	184		$	—	$	35		$	129		$	219

5. Net Income Per Common Share

Net Income Per Common Share. Basic net income per common share was computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding for the reporting period following the two-class method. Under the two-class method, participating convertible securities are required to be included in the calculation of basic net income per common share when the effect is dilutive. Accordingly, for the periods presented, the effect of the convertible preferred stock is included in the calculation of basic net income per common share.

Diluted net income per common share includes the dilutive effect of stock options, share rights awards, and warrants granted using the treasury stock method, and the effect of contingently issuable shares earned during the period and shares issuable under the conversion feature of our convertible debt and convertible preferred stock using the if-converted method. A loss causes all common stock equivalents to be anti-dilutive due to an increase of the weighted average shares from the potential dilution that could occur if securities or other contracts were exercised or converted into common stock. EITF 04-8 requires the inclusion of the effect of contingently convertible instruments in the calculation of diluted income per share including when the market price of our common stock is below the conversion price of the convertible security and the effect is not anti-dilutive. Accordingly, the effect of our convertible debt is included in the calculation of diluted earnings per share. Convertible instruments are anti-dilutive when conversion would cause diluted earnings per share to be greater than basic earnings per share. The effect of our convertible preferred stock is included in basic earnings per share under the two-class method per EITF 03-6, “Participating Securities and the Two-Class Method” under FASB No. 128 — Earnings per Share; therefore, it is similarly included in diluted income per share when the effect is dilutive.

10

The following is a reconciliation of the number of shares used in the calculation of basic income per share under the two-class method and diluted earnings per share and the number of anti-dilutive shares excluded from such computations for the three and six months ended June 30, 2008 and June 30, 2007.

	Three Months Ended June 30,		Six Months Ended June 30,
	2008	2007	2008	2007
Common and common equivalent shares outstanding using two-class method - basic:
Weighted average common shares outstanding	21,500	21,222	21,475	21,142
Participating convertible preferred stock	4,605	4,548	4,605	4,548
Total common and common equivalent shares outstanding using two-class method - basic	26,105	25,770	26,080	25,690
Effect of dilutive securities:
Outstanding stock option and share right awards	370	916	379	1,031
Warrants associated with 5% debt	—	120	—	149
Weighted average common and common equivalent shares outstanding - diluted	26,475	26,806	26,459	26,870
Anti-dilutive shares excluded from calculation:
Outstanding stock option and share right awards	3,723	1,686	3,612	1,570
Convertible debt	—	949	—	949
Total anti-dilutive shares excluded from calculation	3,723	2,635	3,612	2,519

6. Segment Information, International Operations and Customer Concentrations

We operate our business in one segment, supply chain management solutions designed to help enterprises optimize business processes both internally and among trading partners. SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information,” establishes standards for the reporting of information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, who is our Chief Executive Officer (CEO), in deciding how to allocate resources and in assessing performance.

We market our software and services primarily through our worldwide sales organization augmented by other service providers, including both domestic and international systems consulting and integration firms and other industry-related partners. Our chief executive officer evaluates resource allocation decisions and our performance based on financial information, presented on a consolidated basis, accompanied by disaggregated information by geographic regions. Sales to our customers generally include products from some or all of our product suites. We have not consistently allocated revenues from such sales to individual products for internal or general-purpose financial statements.

Revenues are attributable to regions based on the locations of the customers’ operations. Total revenues by geographic region, as reported to our CEO, were as follows:

	Three Months Ended June 30,						Six Months Ended June 30
	2008			2007			2008			2007
United States	$	36,058		$	37,005		$	74,425		$	75,046
International revenue:
Non-US Americas		1,297			1,959			2,276			3,307
Europe, Middle East and Africa		15,294			13,205			27,867			29,391
Greater Asia Pacific		12,079			12,814			22,736			22,826
Total international revenue		28,670			27,978			52,879			55,524
Total Revenue	$	64,728		$	64,983		$	127,304		$	130,570
International revenue as a percent of total revenue		44	%		43	%		42	%		43	%

11

No individual customer accounted for more than 10% of our total revenues during the periods presented.

Long-lived assets by geographic region excluding deferred taxes, as reported to our CEO, were as follows:

	June 30, 2008		December 31, 2007
United States	$	27,692	$	29,251
Europe, Middle East, Africa		94		113
Greater Asia Pacific		1,924		2,047
Total Long Lived Assets	$	29,710	$	31,411

7. Commitments and Contingencies

Derivative Action

On March 7, 2007, a purported shareholder derivative lawsuit was filed in the Delaware Chancery Court against certain of our current and former officers and directors, naming the company as a nominal defendant. The complaint, entitled George Keritsis and Mark Kert v. Michael E. McGrath, Michael J. Berry, Pallab K. Chatterjee, Robert C. Donohoo, Hiten D. Varia, M. Miriam Wardak, Sanjiv S. Sidhu, Stephen P. Bradley, Harvey B. Cash, Richard L. Clemmer, Lloyd G. Waterhouse, Jackson L. Wilson Jr., Robert L. Crandall and i2 Technologies, Inc., alleges breach of fiduciary duty and unjust enrichment in connection with stock option grants to certain of the defendant officers and directors on three dates in 2004 and 2005. The complaint states that those stock option grants were manipulated so as to work to the recipients’ favor when material non-public information about the company was later disclosed to positive or negative effect. The complaint is derivative in nature and does not seek relief from the company, but does seek damages and other relief from the defendant officers and directors. We have entered into indemnification agreements in the ordinary course of business with certain of the defendant officers and directors and may be obligated throughout the pendency of this action to advance payment of legal fees and costs incurred by the defendants pursuant to our obligations under the indemnification agreements and/or applicable Delaware law. Based on the stage of the litigation, it is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of this matter.

On October 23, 2007, a purported shareholder derivative lawsuit was filed in the Delaware Chancery Court against certain of our current and former officers and directors, naming the company as a nominal defendant. The complaint, entitled John McPadden, Sr. v. Sanjiv S. Sidhu, Stephen Bradley, Harvey B. Cash, Richard L. Clemmer, Michael E. McGrath, Lloyd G. Waterhouse, Jackson L. Wilson, Jr., Robert L. Crandall and Anthony Dubreville and i2 Technologies, Inc., alleges breach of fiduciary duty and unjust enrichment based upon allegations that the company sold its wholly-owned subsidiary, Trade Services Corporation, for an inadequate price in 2005. The complaint is derivative in nature and does not seek relief from the company, but does seek damages and other relief from the defendant officers and directors.

Indemnification Agreements

We have indemnification agreements with certain of our officers, directors and employees that may require us, among other things, to indemnify such officers, directors and employees against certain liabilities that may arise by reason of their status or service as directors, officers or employees and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. We have also entered into agreements regarding the advancement of costs with certain other officers and employees.

Pursuant to these indemnification and cost-advancement agreements, we have advanced fees and expenses incurred by certain current and former directors, officers and employees in connection with the governmental investigations and actions related to the 2003 restatement of our consolidated financial statements and other matters. We incurred no such expenses during the three months ended June 30, 2008 and June 30, 2007, and incurred no such expense in the six months ended June 30, 2008 and incurred approximately $0.1 million of such expenses during the six months ended June 30, 2007.

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We may continue to advance fees and expenses incurred by certain current and former directors, officers and employees in the future. The maximum potential amount of future payments we could be required to make under these indemnification and cost-advancement agreements is unlimited. Additionally, our corporate by-laws allow us to choose to indemnify any employee for certain events or occurrences while the employee is, or was, serving at our request in such capacity.

Under the terms of our software license agreements with our customers, we agree that in the event the licensed software infringes upon any patent, copyright, trademark, or any other proprietary right of a third-party, we will indemnify our customer licensees against any loss, expense, or liability from any damages that may be awarded against our customer. We include this infringement indemnification in substantially all of our software license agreements and selected managed service arrangements. In the event the customer cannot use the software or service due to infringement and we can not obtain the right to use, replace or modify the software or service in a commercially feasible manner so that it no longer infringes, then we may terminate the license and provide the customer a pro-rata refund of the fees paid by the customer for the infringing software or service. We believe the estimated fair value of these intellectual property indemnification clauses is minimal.

India Tax Examinations and Assessments

We currently are under income tax examinations in India primarily related to our intercompany pricing for services rendered by our Indian subsidiary to other i2 companies, the taxability of certain payments received from our Indian customers, and our statutory qualification for a tax holiday. An aggregate of approximately $7.0 million has been assessed by the tax authorities for the Indian statutory fiscal years ended March 31, 2002, 2003 and 2004. We believe the Indian tax authorities’ positions regarding these matters to be without merit, that all intercompany transactions were conducted at arm’s length pricing levels, all payments received from our Indian customers have been properly treated for tax purposes, and that our operations qualify for the tax holiday claimed. Accordingly, we appealed all of these assessments and sought assistance from the United States competent authority under the mutual agreement procedure of the income tax treaty between the United States and the Republic of India. This provides us with an opportunity to resolve these matters in a forum that includes governmental representatives of both countries.

Pending resolution of these matters, we have paid approximately $3.7 million of the assessed amount and have arranged for $2.9 million in bank guarantees in favor of the Indian government in respect of a portion of the balance as required. The bank guarantees are supported by letters of credit issued in the United States and are reflected on our condensed consolidated balance sheet as restricted cash.

We expect subsequent tax years to be examined and assessments made similar to those discussed above and no assurances can be given that these issues ultimately will be resolved in our favor. We continue to monitor and assess these issues as they progress through the relevant processes and believe that the ultimate resolution of these matters will not exceed the tax contingency reserves we have established for them.

SAP Litigation

On June 23, 2008 we entered into a settlement agreement with SAP America, Inc., a Delaware corporation, and SAP AG, a German corporation and the parent of SAP America, Inc., to settle existing patent litigation between us and the SAP companies.

Under the terms of the settlement agreement, each party licenses to the other party certain patents in exchange for a one-time cash payment to i2 of $83.3 million. In addition, each party has agreed not to pursue legal action against the other party for its actions taken to enforce any of the licensed patents prior to the effective date of the agreement. The agreement also provides for general releases, indemnification for its violation, and dismisses the existing litigations between the parties with prejudice. We have satisfied all our obligations under the agreement and no additional contingencies exist with respect to receipt of the settlement proceeds.

During the second quarter of 2008, we recorded income from an intellectual property lawsuit settlement. The settlement was for $83.3 million and was recorded net of external litigation expenses of $2.0 million and $3.5 million for the three and six month periods ending June 30, 2008, respectively. The patent licenses received in the settlement have no significant value.

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Certain Accruals

We have accrued for estimated losses in the accompanying condensed consolidated financial statements for matters where we believe the likelihood of an adverse outcome is probable and the amount of the loss is reasonably estimable.

We are subject to various claims and legal proceedings that arise in the ordinary course of our business from time to time, including claims and legal proceedings that have been asserted against us by former employees and certain customers, and have been in negotiations to settle certain of those contingencies. The adverse resolution of any one or more of those matters or the matters described above, over and above the amount, if any, that has been estimated and accrued in our condensed consolidated financial statements could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

8. Stock-Based Compensation Plans.

For a description of our stock-based compensation plans, see Note 10, Stock-Based Compensation, in our Notes to Consolidated Financial Statements filed in our 2007 Annual Report on Form 10-K.

Stock-based compensation expense for the three-month and six-month periods ended June 30, 2008 and June 30, 2007 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Services	$	432	$	597	$	1,043	$	1,187
Maintenance		61		57		130	$	130
Sales and marketing		760		676		1,386		1,774
Research and development		627		713		1,382		1,604
General and administrative		1,090		1,125		1,931		2,652
Total	$	2,970	$	3,168	$	5,872	$	7,347

Included in stock-based compensation expense was restricted stock expense of $1.0 million and $0.2 million for the three-month periods ended June 30, 2008 and June 30, 2007, respectively, and $1.9 million and $1.2 million for the six-month periods ended June 30, 2008 and June 30, 2007, respectively.

In February 2007, we granted Restricted Stock Units (“RSUs”) to certain key employees that vest based on specified performance over a two-year performance period. This performance period is from January 1, 2008 to December 31, 2009. We are required to assess whether the performance criteria is probable of being achieved, and only recognize compensation expense if the vesting is considered probable. On a quarterly basis, we assess whether vesting is probable and based on that assessment record the appropriate expense. Based on our second quarter 2008 and prior assessments, no compensation expense associated with these performance-based RSUs is reflected in our results of operations in the three-month periods or six-month periods ended June 30, 2008 and June 30, 2007.

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Fair values of stock options and employee stock purchase plan (ESPP) shares are estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Stock Options Three Months Ended June 30,				ESPP Three Months Ended June 30,			Stock Options Six Months Ended June 30,				ESPP Six Months Ended June 30,
	2008		2007		2008	2007		2008		2007		2008	2007
Expected term (years)	4		4		*	0.5		4		4		*	0.5
Volatility factor	66	%	78	%	*	36	%	67	%	81	%	*	34	%
Risk-free interest rate	2.95	%	4.77	%	*	4.64	%	2.74	%	4.70	%	*	4.66	%
Dividend yield	0	%	0	%	*	0	%	0	%	0	%	*	0	%

* ESPP plan was discontinued during the second quarter of 2007.

9. Income Taxes

Income taxes are provided using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes (“SFAS 109”). In accordance with Accounting Principles Board Opinion No. 28, Interim Financial Reporting (“APB 28”), and FASB Interpretation No. 18, Accounting for Income Taxes in Interim Periods – an interpretation of APB Opinion No. 28 (“FIN 18”), the provision for income taxes reflects the Company’s estimate of the effective rate expected to be applicable for the full fiscal year, adjusted by any discrete events which are reported in the period in which they occur. This estimate is re-evaluated each quarter based on our estimated tax expense for the year.

We recorded income tax expense of approximately $2.7 million for the three months ended June 30, 2008 and $0.7 million for the three months ended June 30, 2007, representing effective income tax rates of 3.2% and 24.1%, respectively. Various factors affect our effective income tax rate including, among others, changes in our valuation allowance, the effect of foreign operations, state income taxes (net of federal income tax benefits), certain non-deductible meals and entertainment expenses, research and development tax credits, and the effect of foreign withholding taxes. Our effective income tax rates during the three months ended June 30, 2008 and June 30, 2007 differ from the U.S. statutory rate primarily due to the effect these items have on our valuation allowance.

Income tax expense included the effect of foreign withholding taxes of $0.6 million for the three months ended June 30, 2008 and $1.0 million for the three months ended June 30, 2007. Foreign withholding taxes are incurred on certain payments from international customers and are recorded upon receipt of such payments that are received net of the withheld taxes. Foreign withholding taxes generally are available to reduce domestic income tax. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these withholding taxes increase our income tax expense.

During the three months ended June 30, 2008 we recorded a benefit to operating expense of approximately $83.3 million related to the settlement of the SAP patent litigation. We utilized net operating loss carryforwards and other tax attributes to reduce taxes on the settlement. We recorded federal and state alternative minimum tax (AMT) of approximately $1.1 million and $0.1 million, respectively, and other state income taxes of approximately $0.2 million in income tax expense during the three months ended June 30, 2008 related to the settlement. Alternative minimum tax generally is available to reduce regular income tax in the future. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these AMT amounts increase our income tax expense.

Income tax expense during the three months ended June 30, 2007 included a benefit of approximately $0.8 million resulting from the favorable resolution of our United Kingdom tax examination related to the 2003 tax year.

Estimated potential interest and penalties related to our unrecognized tax benefits within our global organization are recorded in income tax expense and totaled approximately $0.1 million and $0.3 million for the three and six months ended June 30, 2008, respectively. Accrued interest and penalties were approximately $1.9 million at June 30, 2008. Management believes recording interest and penalties related to income tax uncertainties as income tax expense better reflects income tax expense and provides better information reporting.

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We or one of our subsidiaries file income tax returns in the United States (U.S.) federal jurisdiction and various state and foreign jurisdictions. We have open tax years for the U.S. federal return back to 1992 with respect to our net operating loss (“NOL”) carryforwards, where the IRS may not raise tax for these years, but can reduce NOLs. Otherwise, with few exceptions, we are no longer subject to federal, state, local or foreign income tax examinations for years prior to 2003.

We are subject to potential challenges and assessments by various tax jurisdictions to the inter-company pricing at which we have conducted business within our global related group of companies or our tax treatment of certain types of revenue generated in the conduct of business with our international customers. Additional tax examinations may be opened or existing examinations may be resolved within the next 12 months. We closely monitor developments in these areas and make changes as necessary in the accruals we have recorded for what we believe will be the ultimate outcome of any tax adjustments resulting from such examinations. It is not possible to reasonably estimate a range of potential increases or decreases of such changes.

As part of the process of preparing unaudited condensed consolidated financial statements, we are required to estimate our full-year income and the related income tax expense in each jurisdiction in which we operate. Changes in the geographical mix or estimated level of annual pre-tax income can impact our effective tax rate. This process involves estimating our current tax liabilities in each jurisdiction in which we operate, including the impact, if any, of additional taxes resulting from tax examinations, as well as making judgments regarding the recoverability of deferred tax assets. To the extent recovery of deferred tax assets is not likely based on, among other things, our estimation of future taxable income in each jurisdiction, a valuation allowance is established. Tax controversies often involve complex issues across multiple jurisdictions and may require an extended period to resolve.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical or current facts, including, without limitation, statements about our business strategy, plans, objectives and future prospects, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from these expectations, which could have a material adverse effect on our business, results of operations, cash flow and financial condition. Such risks and uncertainties include, without limitation, the following:

• Certain large stockholders have called for the public sale of the Company, and the Board of Directors of i2 has formed a Strategic Review Committee in connection with an ongoing review of i2’s management, operations and strategy. Continued pressure by activist stockholders for the sale of the Company and/or the Company’s ongoing exploration of strategic options, could create distractions for our management, sales staff and other employees and create uncertainty in existing and potential customers regarding our ability to meet our contractual obligations. Such distractions and uncertainty could harm our business, results of operations, cash flow and financial condition.

• We have recently implemented restructuring and reorganization initiatives. Failure to achieve the desired results of our restructuring and reorganization initiatives could harm our business, results of operations, cash flow and financial condition.

• Our financial results have varied and may continue to vary significantly from quarter-to-quarter. We may fail to meet analysts’ and investors’ expectations.

• We experienced negative cash flows for the quarters ended March 31, 2007, September 30, 2006 and March 31, 2006, and for each of the five years ended December 31, 2005. A failure to maintain profitability and achieve consistent positive cash flows would have a significant adverse effect on our business, impair our ability to support our operations and adversely affect our liquidity.

• Holders of our 5% senior convertible notes may convert the senior convertible notes upon the occurrence of certain events prior to May 15, 2010, and at any time on or after May 15, 2010, and have the right to require us to repurchase all or any portion of the senior convertible notes on November 15, 2010. There is no assurance that at the time of conversion or required repurchase, we will have the ability to satisfy the cash portion of any such conversion obligation or to make any such required repurchase.

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• We may require additional private or public debt or equity financing. Such financing may only be available on disadvantageous terms, or may not be available at all. Any new financing could have a substantial dilutive effect on our existing shareholders.

• The indenture governing our 5% senior convertible notes contains a debt incurrence covenant that places restrictions on the amount and type of additional indebtedness that we can incur. The debt incurrence restrictions imposed by the indenture could restrict or impede our ability to incur additional debt, which in turn could impair our ability to support our operations, adversely affect our liquidity and threaten our ability to repay our debts when they become due.

• If we are unable to develop and generate additional demand for our products, serious harm could result to our business.

• We may not be competitive, and increased competition could seriously harm our business. Our focus on a solutions-oriented approach may not be successful.

• We face risks related to product quality and performance claims and other litigation that could have a material adverse effect on our relationships with customers and our business, results of operations, cash flow and financial condition. We may face other claims and litigation in the future that could harm our business and impair our liquidity.

• Loss of key personnel or our failure to attract, train and retain additional personnel could negatively affect our operating results and revenues and seriously harm our company.

• We face other risks indicated in Item 1A, “Risk Factors,” in our 2007 Annual Report on Form 10-K.

Many of these risks and uncertainties are beyond our control and, in many cases, we cannot accurately predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. When used in this document, the words “believes,” “plans,” “expects,” “anticipates,” “intends,” “continue,” “may,” “will,” “should” or the negative of such terms and similar expressions as they relate to us, our customers or our management are intended to identify forward-looking statements.

References in this report to the terms “optimal” and “optimization” and words to that effect are not intended to connote the mathematically optimal solution, but may connote near-optimal solutions, which reflect practical considerations such as customer requirements as to response time, precision of the results and other commercial factors.

Overview

Nature of Operations

We are a provider of supply chain management solutions, consisting of various software and service offerings. In addition to application software, we offer hosted software solutions, such as business optimization and technical consulting, managed services, training, solution maintenance, software upgrades and development. We operate our business in one business segment. Supply chain management is the set of processes, technology and expertise involved in managing supply, demand and fulfillment throughout divisions within a company and with its customers, suppliers and partners. The goals of our solutions include increasing supply chain efficiency and enhancing customer and supplier relationships by managing variability, reducing complexity, improving operational visibility, increasing operating velocity and integrating planning and execution. Our offerings are designed to help customers better achieve the following critical business objectives:

Visibility – a clear and unobstructed view up and down the supply chain

Planning – supply chain optimization to match supply and demand considering system-wide constraints

Collaboration – interoperability with supply chain partners and elimination of functional silos

Control – management of data and business processes across the extended supply chain

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Revenue Categories

We recognize revenue for software and our related service offerings in accordance with Statement of Position (SOP) 81-1, “Accounting for Certain Construction Type and Certain Production Type Contracts,” SOP 97-2, “Software Revenue Recognition,” as modified by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain Transactions,” SEC Staff Accounting Bulletin (SAB) 104, “Revenue Recognition,” and SAB 103, “Update of Codification of Staff Accounting Bulletins,” and SEC Staff Accounting Bulletin “Topic 13, Revenue Recognition.”

Software Solutions. Software solutions revenue includes core license revenue, recurring license revenue, and fees received to develop the licensed functionality. We recognize these revenues under SOP 97-2 or SOP 81-1 based on our evaluation of whether the associated services are essential to the licensed software as described within SOP 97-2. If the services are considered essential, revenue is generally recognized on a percentage of completion basis under SOP 81-1. Services are considered essential to the software when they involve significant modifications or additions to the software features and functionality. In addition, we have several subscription and other recurring revenue transactions, which are recognized ratably over the life of each contract.

Services. Services revenue is primarily derived from fees for services that are not essential to the software, including implementation, integration, training and consulting, and is generally recognized when services are performed. In addition, services revenue may include fees received from arrangements to customize or enhance previously purchased licensed software, when such services are not essential to the previously licensed software. Services revenue also includes reimbursable expense revenue, with the related costs of reimbursable expenses included in cost of services.

Maintenance. Maintenance revenue consists of fees generated by providing support services, such as telephone support, and unspecified upgrades/enhancements on a when-and-if available basis. A customer typically prepays maintenance and support fees for an initial period, and the related revenue is deferred and generally recognized over the term of such initial period. Maintenance is renewable by the customer on an annual basis thereafter. Rates for maintenance, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the contract.

Contract Revenue. As explained in more detail below, we do not consider contract revenue to be an indication of the current performance of our business. We collected the cash associated with contract revenue in prior periods and recorded the revenue as we fulfilled the contract obligations. As of March 31, 2007 our deferred contract revenue balance was zero.

Transition to a Solutions-Oriented Provider

Our software and service offerings have changed in recent years in response to market demands as well as the introduction of new technology and products. We are transitioning our business approach to being a solutions-oriented provider, and accordingly have experienced a shift to a greater level of services revenue versus software solutions revenue.

Beginning in 2006, we increased our hiring of services personnel based on our expectations regarding the demand for our services and our existing services backlog. In addition to generating increased services revenue from the increased headcount, we have also increased the utilization of our services personnel so more revenue is generated for each person and have been successful at strategically placing certain of our research and development staff on billable services projects when their skill sets are appropriate.

The focus on services impacts our mix of revenues and profitability because services will typically earn a lower margin than software solutions. These changes also influence the proportion of revenue recognized on a percentage of completion basis or subscription basis. We now expect a higher proportion of our software solutions revenue will be recognized under a percentage of completion basis or subscription basis, rather than being recognized in the period the contract is signed.

Key Performance Indicators and Operating Metrics

The markets in which we operate are highly competitive. Our competitors are diverse and offer a variety of solutions targeting various segments of the extended supply chain as well as the enterprise as a whole. Some competitors offer suites of applications, while most offer solutions designed to target specific processes or industries.

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We believe our principal competitors continue to strengthen, in part based on consolidation within the industry. In addition, our shift to a more solutions-oriented approach, where services are more critical, increases our exposure to competition from offshore providers and consulting companies. All of these factors are creating pricing pressure for our software and service offerings. However, we believe our focus on a solutions-oriented approach that leverages our deep supply chain expertise differentiates us from our competitors.

In managing our business and reviewing our results, management focuses most intently on our revenue generation process, including bookings, backlog, operating revenue (total revenue excluding contract revenue), cash flow from operations and liquidity.

Bookings. We define bookings as the total value of non-contingent fees payable to the company pursuant to the terms of duly executed contracts. Bookings are expected to result in revenue as products are delivered or services are performed, and may reflect contracts from which revenue will be recognized over multi-year periods, however there can be no assurance that bookings will result in future revenue. Bookings do not include amounts subject to contingencies, such as optional renewal periods, amounts subject to a customer’s internal approvals, amounts subject to customer specific cancellation provisions and amounts that are refundable for reasons outside of our standard warranty provisions. Based on the nature of the transactions, certain of our subscription bookings have termination provisions upon payment of a penalty. Because our revenues are recognized under several different accounting standards and thus are subject to period-to-period variability, we closely monitor our bookings as a leading indicator of future revenues and the overall performance of our business.

Total bookings for the three months ended June 30, 2008 and June 30, 2007 were $64.1 million and $75.0 million, respectively, a decrease of 15% or $10.9 million. Included in total bookings for the second quarter of 2007 are $13.1 million related to the renewal of two supply chain leader agreements from 2004. Total bookings for the six months ended June 30, 2008 and June 30, 2007 were $130.5 million and $136.5 million, respectively, a decline of approximately 4% or $6.0 million.

Backlog. Backlog represents the balance of bookings that has not been recognized as revenue. The amount of backlog for which we have received payment is recorded as deferred revenue on our condensed consolidated balance sheet. We review our backlog to assess future revenue that may be recognized from bookings in previous fiscal periods. This review allows us to determine whether we are recognizing more or less revenue compared to the bookings in that period and whether our backlog is increasing or decreasing.

Revenue. In our internal analysis of revenue, we focus on operating revenue (total revenue excluding contract revenue). Contract revenue is the result of the recognition of certain revenue that was carried on our balance sheet as a portion of deferred revenue and was a result of our 2003 financial restatement. Inclusion of contract revenue in the evaluation of our performance would skew comparisons of our periodic results since recognition of that revenue was based on fulfillment of contractual obligations which often required only minimal cash outlays and generally did not involve any significant activity in the period of recognition. Additionally, the cash associated with contract revenue had been collected in prior periods. All remaining contract revenue was recognized by March 31, 2007, so it is not relevant to our on-going operations and we exclude it from comparisons to prior period results.

For the three months ended June 30, 2008 operating revenue (total revenue excluding contract revenue) was down 0.4% or $0.3 million compared to the same period in 2007, and for the six months ended June 30, 2008 operating revenue was down 0.6% or $0.8 million compared to the same period in 2007. Our annual operating revenue was approximately $257.9 million, $275.6 million and $294.3 million in 2007, 2006 and 2005, respectively. These declines represent annual declines of 6% for each period. As part of our transition to being a solutions-oriented provider, we have experienced a shift to a greater level of services revenue, which has partially offset our decline in software solutions and maintenance revenue.

Software solutions revenue increased 10% or $1.2 million for the three months ended June 30, 2008 compared to the same period in 2007, and declined 2% or $0.6 million for the six months ended June 30, 2008 compared to the same period in 2007. The primary reason for the increase is that during the second quarter of 2008 we recognized approximately $5.5 million from prior period bookings versus approximately $3.4 million in the second quarter of 2007. During the 12 months ended December 31, 2006 and the six months ended June 30, 2008, we have recognized more

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revenue from backlog than from new software solutions bookings. We monitor whether we are recognizing more or less revenue in each period compared to the amount we book in that period as an indicator of whether we are adding to or subtracting from our backlog and deferred revenue. We have generally been recognizing more revenue in each quarter than the corresponding amount of bookings, leading to a decline in our backlog. As a result, in order to increase future revenues, our future bookings need to increase and consistently exceed our recognized revenue.

	Twelve Months Ended					Six Months Ended
	December 31, 2006			December 31, 2007		June 30, 2008
Additions to Backlog:
Software Solutions Bookings	$	49,540		$	54,556	$	16,940
Platform Technology/Source Code Bookings		10,480			500		—
Net Additions to Backlog		60,020			55,056		16,940
Less: Software Solutions Revenue Recognized		76,243			47,721		24,241
Increase/(Decrease) in Backlog	$	(16,223	)	$	7,335	$	(7,301	)

Services revenue decreased 3% or $1.0 million for the three months ended June 30, 2008 when compared to the same period in 2007, and decreased 1% or $0.9 million for the six months ended June 30, 2008 when compared to the same period in 2007. This decline in services revenue is primarily due to a mix shift in the type of services work performed in the second quarter of 2008. We expect services revenue to continue to be a larger percentage of our total revenue than it has been in previous years. Services revenue generally earns a lower margin than our other revenue types.

Maintenance revenue declined 2% or $0.4 million for the three months ended June 30, 2008 when compared to the same period in 2007, and increased 2% or $0.7 million for the six months ended June 30, 2008 when compared to the same period in 2007. Declines in maintenance revenue occur when customers fail to renew their maintenance agreements or renew them at lower rates.

Operating Cash Flow and Liquidity. We closely monitor our operating cash flow, working capital and cash levels. In doing so, we attempt to limit our restricted cash and cash balances held by foreign subsidiaries.

Our operating cash flow for the six months ended June 30, 2008 was approximately $20.4 million compared to operating cash flow of $5.1 million in the six months ended June 30, 2007. The main components of our cash flow improvement are as follows: Higher cash inflows of approximately $7.1 million, which includes higher collections of approximately $4.8 million and a net tax refund from an international tax authority of approximately $1.0 million for previously paid taxes, and lower cash disbursements of approximately $7.9 million, consisting of lower annual bonus payments and lower non-operating legal and legal-litigation payments.

Our working capital was approximately $159.2 million at June 30, 2008, an improvement from the $73.8 million balance at March 31, 2008 and the $63.6 million at December 31, 2007. The increase in current assets during the second quarter of 2008 includes the effect of the SAP litigation settlement for $83.3 million. The chart below shows the components of our working capital and the dollar changes from period to period for 2006 and 2007 and the first and second quarters of 2008.

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	December 31, 2006		December 31, 2007		March 31, 2008		June 30, 2008
Total cash	$	114,045	$	129,434	$	138,862	$	149,729
Accounts receivable		25,677		25,108		27,446		29,020
Other current assets, net		9,231		7,746		10,797		91,868
Total current assets		148,953		162,288		177,105		270,617
Current liabilities		57,538		37,008		34,314		39,008
Deferred revenue		74,047		61,715		68,986		72,408
Current portion long-term debt		—		—		—		—
Total current liabilities		131,585		98,723		103,300		111,416
Working capital	$	17,368	$	63,565	$	73,805	$	159,201
Dollar change from previous period	$	51,704	$	46,197	$	10,240	$	85,396
Net cash	$	30,223	$	44,981	$	54,252	$	64,961

In addition to assessing our liquidity based on operating cash flow and working capital, management also considers our cash balances and our net cash balance, which we define as the sum of our total cash and cash equivalents and restricted cash minus our total short-term and long-term debt. As the table above indicates, our cash position and net cash position has improved.

Application of Critical Accounting Policies and Accounting Estimates

There have been no changes during the second quarter of 2008 to the critical accounting policies or the areas that involve the use of significant judgments and estimates we described in our 2007 Annual Report on Form 10-K.

Analysis of Financial Results – Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007.

Summary of Second Quarter 2008 Results

• Total revenue decreased $0.3 million from the same period in 2007

• Total (benefit) costs and expenses decreased $82.3 million, reflecting the SAP litigation settlement of $81.3 net of $2.0 million of external litigation expense, from the same period in 2007

• Net income applicable to common stockholders was $80.7 million, reflecting the SAP litigation settlement of $81.3 net of $2.0 million of legal expense, compared to $1.6 million in the same period in 2007

• Diluted earnings per share were $3.05 for the second quarter of 2008 and $0.06 for the second quarter of 2007

• Cash flow from operations was $11.5 million versus cash flow from operations of $11.6 million in the 2007 period

• Total bookings were $64.1 million versus $75.0 million in the same period in 2007

Revenues

The following table sets forth revenues and the percentages of total revenues of selected items reflected in our condensed consolidated statements of operations and comprehensive income for the three months ended June 30, 2008 and June 30, 2007. The period-to-period comparisons of financial results are not necessarily indicative of future results.

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	Three Months Ended June 30, 2008		Percent of Revenue		Three Months Ended June 30, 2007		Percent of Revenue		Change 2008 versus 2007
									Three months ended June 30
									$ Change			% Change
SOP 97-2 recognition	$	1,427	2	%	$	3,180	5	%	$	(1,753	)	-55	%
SOP 81-1 recognition		5,392	8	%		2,552	4	%		2,840		111	%
Recurring items		5,750	9	%		5,680	9	%		70		1	%
Total Software solutions		12,569	19	%		11,412	18	%		1,157		10	%
Services		30,508	48	%		31,553	48	%		(1,045	)	-3	%
Maintenance		21,651	33	%		22,018	34	%		(367	)	-2	%
Total revenues	$	64,728	100	%	$	64,983	100	%	$	(255	)	—

Software Solutions Revenue. Total software solutions revenue increased 10% or $1.2 million for the three months ended June 30, 2008 compared to the same period in 2007. The components of the changes in software solutions revenue are explained below.

The primary cause of the decline in revenue recognized under SOP 97-2 for the three months ended June 30, 2008 is due to declines in the number and size of deals being recognized from current quarter bookings as well as a decrease in the number and size of deals recognized from backlog. During the three months ended June 30, 2008 we recognized revenue related to 13 contracts at an average of $0.1 million per contract compared to 20 contracts at an average of $0.2 million per contract in the comparable period of 2007.

Revenue recognized under SOP 81-1 is dependent upon the amount of work performed on software solutions projects and milestones met during the applicable period on projects booked in both current and prior periods and typically has a longer recognition period than revenue recognized under SOP 97-2. During the three months ended June 30, 2008 we recognized revenue related to 23 projects at an average of $0.2 million per project compared to 13 projects at an average of $0.2 million in the comparable period of 2007.

Revenue from recurring items was relatively unchanged, increasing $0.1 million for the three months ended June 30, 2008 when compared to the same period in 2007.

Services Revenue. Services revenue decreased 3% or $1.0 million for the three months ended June 30, 2008 compared to the same period in 2007 primarily due to a lower number of hours worked on services projects, due to personal working on software solutions projects,

Services revenue is dependent upon a number of factors, including:

• the number, value and rate per hour of services transactions booked during the current and preceding periods,

• the mix of our projects between services projects and software solutions (81-1) projects,

• the number and availability of service resources actively engaged on billable projects,

• the timing of milestone acceptance for engagements contractually requiring customer sign-off, and

• the timing of cash payments when collectibility is uncertain

Maintenance Revenue. Maintenance revenue was relatively unchanged, decreasing 2% or $0.4 million for the three months ended June 30, 2008 compared to the same period in 2007. This decrease was partially related to the delay of some maintenance renewals that had been expected in the second quarter of 2008, which are subject to continued renewal efforts in the third quarter of 2008.

Maintenance revenue varies from period-to-period based on several factors, including:

• initial maintenance from new Software solutions bookings,

• the timing of negotiating and signing of maintenance renewals,

• completing a renewal several months into the annual maintenance period resulting in a one-time catch up for the period that maintenance services were performed prior to signature of the contract. A similar catch-up of revenue occurs due to the timing of cash receipts for cash basis customers when cash is not received until several months into the maintenance period,

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• renewals that occur on less favorable terms than in the prior period, and

• customers that do not renew their maintenance agreements.

International Revenue. Our international revenues included in the categories discussed above are primarily generated from customers located in Europe, Asia, Latin America and Canada. International revenue totaled $28.7 million, or 44% of total revenue, in the three months ended June 30, 2008 compared to $28.0 million, or 43% of total revenue, in the same period in 2007.

Customer Concentration. During the periods presented, no individual customer accounted for more than 10% of total revenues.

Impact of Indian Rupee on Expenses

Assuming a constant currency exchange rate for our rupee expenditures in 2008 as we experienced in 2007, the impact of rupee depreciation was approximately $0.1 million for the three months ended June 30, 2008.

Cost of Revenues

The following table sets forth cost of revenues and the gross margins of selected items reflected in our condensed consolidated statements of operations and comprehensive income for the three months ended June 30, 2008 and June 30, 2007. The period-to period comparisons of financial results are not necessarily indicative of future results.

	Three Months Ended June 30, 2008		Gross Margin		Three Months Ended June 30, 2007		Gross Margin		Change 2008 versus 2007
									Three months ended June 30
									$ Change			% Change
Software solutions	$	2,874	77	%	$	2,175	81	%	$	699		32	%
Services		23,624	23	%		24,467	22	%		(843	)	-3	%
Maintenance		2,655	88	%		2,800	87	%		(145	)	-5	%
Amortization of acquired technology		—	—			6	—			(6	)	-100	%
Total cost of revenues	$	29,153			$	29,448			$	(295	)	-1	%

Cost of Software Solutions. These costs consist of:

• Salaries and other related costs of employees who provide essential services to customize or enhance the software for the customer

• Commissions paid to non-customer third parties in connection with joint marketing and other related agreements, which are generally expensed when they become payable

• Royalty fees associated with third-party software utilized with our technology. Such royalties are generally expensed when the products are shipped; however, royalties associated with fixed cost arrangements are generally expensed over the period of the arrangement

• The cost of user product documentation

• The cost of delivery of software

• Provisions for the estimated costs of servicing customer claims, which we accrue on a case-by-case basis

Cost of software solutions increased 32% or $0.7 million for the three months ended June 30, 2008 compared to the same period in 2007 primarily because of an increase in the number of hours worked on projects requiring essential services.

During the three months ended June 30, 2008 and June 30, 2007, the costs attributable to the performance of essential services related to SOP 81-1 was $1.9 million and $0.8 million, respectively. The remaining costs of software solutions are not directly attributable to specific arrangements, so we do not believe there is a reasonable basis to calculate the cost of each type of software solutions transaction or the resulting contribution margin.

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Cost of Services. These costs consist of expenses associated with the delivery of non-essential services, such as implementation, integration, process consulting and training. Cost of services decreased 3% or $0.8 million for the three months ended June 30, 2008 compared to the same period in 2007. This decrease was related primarily to a decrease in employee-related costs of $2.2 million partially offset by an increase in travel and entertainment expense of $0.8 million. The decrease in employee related costs was driven by a shift of approximately 28 associates from the services organization to the sales organization. This shift was done as part of our refocus in late 2007 to a sales approach centered on customer business units.

Cost of Maintenance. These costs consist of expenses including support services such as telephone support and unspecified upgrades/enhancements provided on a when-and-if-available basis. Cost of maintenance decreased 5% or $0.1 million for the three months ended June 30, 2008 compared to the same period in 2007. This decrease was primarily related to a decrease in travel and entertainment expense.

Amortization of Acquired Technology. In connection with our business acquisitions, we acquired developed technology that we offer as a part of our solutions. In accordance with applicable accounting standards, the amortization of acquired technology is included as a part of our cost of revenues because it relates to software products that are marketed to potential customers.

Operating Expenses

The following table sets forth operating expenses and the percentages of total revenue for those operating expenses as reported in our condensed consolidated statements of operations and comprehensive income. The period-to-period comparisons of financial results are not necessarily indicative of future results.

	Three Months Ended June 30, 2008			Percent of Revenue		Three Months Ended June 30, 2007			Percent of Revenue		Change 2008 versus 2007
											Three months ended June 30
											$ Change			% Change
Sales and marketing	$	13,072		20	%	$	12,957		20	%	$	115		1	%
Research and development		7,541		12	%		8,750		13	%		(1,209	)	-14	%
General and administrative		10,919		17	%		10,549		16	%		370		4	%
Amortization of intangibles		25		—			25		—			—		—
Restructuring charges and adjustments		—		—			(49	)	—			49		-100	%
Costs and expenses, subtotal		31,557					32,232					(675	)	-2	%
Intellectual property settlement, net		(81,315	)				—					(81,315	)	—
Total operating (benefit), expense	$	(49,758	)			$	32,232				$	(81,990	)	-254	%

Sales and Marketing Expense. These expenses consist primarily of personnel costs, commissions, office facilities, travel and promotional events such as trade shows, seminars, technical conferences, advertising and public relations programs. For the three months ended June 30, 2008, sales and marketing expense increased 1% or $0.1 million when compared to the same period in 2007.

Research and Development Expense. These expenses consist of costs related to software development and product enhancements to existing software. Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. To date, the establishment of technological feasibility of our products and general release of such software has substantially coincided. As a result, software development costs qualifying for capitalization have been insignificant; therefore, we have not capitalized any software development costs other than those recorded in connection with our acquisitions. The primary component of research and development expense is employee-related cost. For the three months ended June 30, 2008, the decrease in research and development expense included a $0.4 million decrease in subcontractor expense and a $0.2 million decrease in employee-related costs. The decrease in employee-related expenses is due to a 14% decrease in average headcount when compared to the same period in 2007.

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General and Administrative Expense. These expenses include the personnel and other costs of our finance, legal, accounting, human resources, information systems and executive departments, as well as external legal costs. General and administrative expense for the three months ended June 30, 2008 increased 4% or $0.4 million compared to the same period in 2007 primarily due to an increase in legal and litigation related expenses of $2.1 million, partially offset by decreases in employee-related expense of $0.7 million, a decrease in non-income taxes of $0.7 million and a decrease in travel and entertainment expense of $0.3 million. The increase in legal and litigation related expenses is primarily due to $1.8 million of expenses related to the resolution of certain litigation activities, which date back to 2005. The decrease in employee related expenses is reflective of a decrease of 11% in average headcount when compared to the same period in 2007.

Amortization of Intangible Assets and Impairment of Intangible Assets. From time to time, we have sought to enhance our product offerings through technology and business acquisitions. When an acquisition of a business is accounted for using the purchase method, the amount of the purchase price is allocated to the fair value of assets acquired, net of liabilities assumed. Any excess purchase price is allocated to goodwill. Intangible assets are amortized over their estimated useful lives, while goodwill is only written down if and when it is deemed to be impaired.

Restructuring Expense. During the three months ended June 30, 2008 we incurred no restructuring expense. In the three months ended June 30, 2007 we made adjustments to our restructuring accrual.

Intellectual Property Settlement, Net. On June 23, 2008, we reached a settlement with SAP to settle existing patent litigation between i2 and SAP. Under the terms of the settlement, SAP agreed to pay i2 $83.3 million. We recorded the $83.3 million net of external litigation expenses of $2.0 million for the three months ended June 30, 2008.

Non-Operating (Expense), Net

For the three months ended June 30, 2008 and June 30, 2007, non-operating (expense), net, was as follows:

	Three Months Ended June 30, 2008			Three Months Ended June 30, 2007			Change 2008 versus 2007
							Three months ended June 30
							$ Change		% Change
Interest income	$	932		$	1,302		(370	)	-28	%
Interest expense		(1,236	)		(1,236	)	—		—
Foreign currency hedge and transaction losses, net		(464	)		(74	)	390		527	%
Other income (expense), net		(335	)		(231	)	(104	)	-45	%
Total non-operating income (expense), net	$	(1,103	)	$	(239	)	(864	)	-362	%

Interest income decreased in the three-month period ended June 30, 2008 compared to the same period in 2007 due to lower investment yields on average cash balances, offset partially by higher average cash balances. For the three months ended June 30, 2008, average cash balances increased 26.4% from the three months ended June 30, 2007. The average rate earned for the three months ended June 30, 2008 was 2.5%, and for June 30, 2007 was 4.56%.

Interest expense was flat for the three months ended June 30, 2008 as compared to the same period in 2007.

The market interest rates on investments and the relative exchange values of foreign currencies are influenced by the monetary and fiscal policies of the governments in the countries in which we operate. The nature, timing and extent of any impact on our financial statements resulting from changes in those governments’ policies are not predictable. Risks associated with market interest rates and foreign exchange rates are discussed below under the section captioned “Sensitivity to Market Risks.”

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Provision for Income Taxes

We recorded income tax expense of approximately $2.7 million for the three months ended June 30, 2008 and $0.7 million for the three months ended June 30, 2007, representing effective income tax rates of 3.2% and 24.1%, respectively. Various factors affect our effective income tax rate including, among others, changes in our valuation allowance, the effect of foreign operations, state income taxes (net of federal income tax benefits), certain non-deductible meals and entertainment expenses, research and development tax credits, and the effect of foreign withholding taxes. Our effective income tax rates during the three months ended June 30, 2008 and June 30, 2007 differ from the U.S. statutory rate primarily due to the effect these items have on our valuation allowance.

Income tax expense included the effect of foreign withholding taxes of $0.6 million for the three months ended June 30, 2008 and $1.0 million for the three months ended June 30, 2007. Foreign withholding taxes are incurred on certain payments from international customers and are recorded upon receipt of such payments which are received net of the withheld taxes. Foreign withholding taxes generally are available to reduce domestic federal regular income tax. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these withheld taxes increase our income tax expense.

During the three months ended June 30, 2008 we recorded a benefit to operating expense of approximately $83.3 million related to the settlement of the SAP patent litigation. We utilized net operating loss carryforwards and other tax attributes to reduce taxes on the settlement. Accordingly, we recorded federal and state alternative minimum tax (AMT) of approximately $1.1 million and $0.1 million, respectively, and other state income taxes of approximately $0.2 million in income tax expense during the three months ended June 30, 2008 related to the settlement. Alternative minimum tax generally is available to reduce regular income tax in the future. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these amounts increase our income tax expense.

Income tax expense during the three months ended June 30, 2007 included a benefit of approximately $0.8 million as a result of the favorable resolution of our United Kingdom tax examination related to the 2003 tax year.

Analysis of Financial Results—Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007

Summary of Year-to-Date June 30, 2008 Results

• Total revenue decreased $3.3 million from the same period in 2007

• Total (benefit) costs and expenses decreased $83.9, reflecting the SAP litigation settlement of $79.9 net of $3.5 million of external litigation expenses, from the same period in 2007

• Net income applicable to common stockholders was $83.3 million, reflecting the SAP litigation settlement of $79.8 million net of $3.5 million of external litigation expense, compared to $5.1 million in the same period in 2007

• Diluted earnings per share were $3.15 for the six months ended June 30, 2008 and $0.19 for the same period in 2007

• Cash flow from operations was $20.4 million versus cash flow from operations of $5.1 million in the 2007 period

• Total bookings were $130.5 million versus $136.5 million in the same period in 2007

Revenues

The following table sets forth revenues and the percentages of total revenues of selected items reflected in our condensed consolidated statements of operations and comprehensive income for the six months ended June 30, 2008 and June 30, 2007. The period-to-period comparisons of financial results are not necessarily indicative of future results.

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	Six Months Ended June 30, 2008		Percent of Revenue		Six Months Ended June 30, 2007		Percent of Revenue		Change 2008 versus 2007
									Six months ended June 30
									$ Change			% Change
SOP 97-2 recognition	$	1,803	2	%	$	5,785	4	%	$	(3,982	)	-69	%
SOP 81-1 recognition		10,460	8	%		7,457	6	%		3,003		40	%
Recurring items		11,978	9	%		11,603	9	%		375		3	%
Total Software solutions		24,241	19	%		24,845	19	%		(604	)	-2	%
Services		59,350	47	%		60,248	46	%		(898	)	-1	%
Maintenance		43,713	34	%		43,027	33	%		686		2	%
Contract		—	—			2,450	2	%		(2,450	)	-100	%
Total revenues	$	127,304	100	%	$	130,570	100	%	$	(3,266	)	-3	%

Software Solutions Revenue. Total software solutions revenue decreased 2% or $0.6 million for the six months ended June 30, 2008 compared to the same period in 2007. The components of the changes in software solutions revenue are explained below.

The primary cause of the decline in revenue recognized under SOP 97-2 for the six months ended June 30, 2008 is due to declines in the number and size of deals being recognized from current quarter bookings as well as a decrease in the number and size of deals recognized from backlog. During the six months ended June 30, 2008 we recognized revenue related to 19 contracts at an average of $0.1 million per contract compared to 36 contracts at an average of $0.2 million per contract in the comparable period of 2007.

Revenue recognized under SOP 81-1 is dependent upon the amount of work performed on software solutions projects and milestones met during the applicable period on projects booked in prior periods. During the six months ended June 30, 2008 we recognized revenue under 23 projects at an average of $0.5 million per project compared to 25 projects at an average of $0.3 million per project in the comparable period of 2007.

Revenue from recurring items was relatively unchanged, increasing $0.4 million for the six months ended June 30, 2008 when compared to the same period in 2007.

Services Revenue. Services revenue was relatively unchanged decreasing 1% or $0.9 million for the six months ended June 30, 2008 compared to the same period in 2007.

Maintenance Revenue. Maintenance revenue increased 2% or $0.7 million for the six months ended June 30, 2008 compared to the same period in 2007.

International Revenue. Our international revenues included in the categories discussed above are primarily generated from customers located in Europe, Asia, Latin America and Canada. International revenue totaled $52.9 million, or 42% of total revenue, in the six months ended June 30, 2008 compared to $55.5 million, or 43% of total revenue, in the same period in 2007. International revenue remained relatively consistent in the six-month periods ended June 30, 2008 and June 30, 2007.

Customer Concentration. During the periods presented, no individual customer accounted for more than 10% of total revenues.

Impact of Indian Rupee on Expenses

During the six months ended June 30, 2008 we experienced margin compression compared to the six months ended June 30, 2007, as a result of appreciation in the Indian rupee. Our rupee-denominated expenses increased modestly during 2008, but this translated into a 14% increase in our dollar-denominated expenses in our India operations. If we assume the same currency exchange rate for our rupee expenditures in 2008 as we experienced in 2007, the impact of rupee appreciation was approximately $0.6 million for the six months ended June 30, 2008.

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Cost of Revenues

The following table sets forth cost of revenues and the gross margins of selected items reflected in our condensed consolidated statements of operations and comprehensive income for the six months ended June 30, 2008 and June 30, 2007. The period-to period comparisons of financial results are not necessarily indicative of future results.

	Six Months Ended June 30, 2008		Gross Margin		Six Months Ended June 30, 2007		Gross Margin		Change 2008 versus 2007
									Six months ended June 30
									$ Change			% Change
Software solutions	$	5,488	77	%	$	4,649	81	%	$	839		18	%
Services		46,095	22	%		48,310	20	%		(2,215	)	-5	%
Maintenance		5,498	87	%		5,737	87	%		(239	)	-4	%
Amortization of acquired technology		4	—			12	—			(8	)	-67	%
Total cost of revenues	$	57,085			$	58,708			$	(1,623	)	-3	%

Cost of Software Solutions. Cost of software solutions increased 18% or $0.8 million for the six months ended June 30, 2008 compared to the same period in 2007 primarily because of an increase in the number of hours worked on projects requiring essential services.

During the six months ended June 30, 2008 and June 30, 2007, the costs attributable to the performance of essential services related to software solutions projects recognized under SOP 81-1 was $3.8 million and $1.2 million, respectively.

Cost of Services. These costs consist of expenses associated with the delivery of non-essential services, such as implementation, integration, process consulting and training. Cost of services decreased 5% or $2.2 million for the six months ended June 30, 2008 compared to the same period in 2007. This decrease was primarily related to a decrease in employee related costs of $3.1 million partially offset by an increase in travel and entertainment of $0.8 million. The decrease in employee related costs was driven by a shift of approximately 28 associates from the services organization to the sales organization. This shift was done as part of our refocus in late 2007 to a sales approach centered on customer business units.

Cost of Maintenance. These costs consist of expenses including support services such as telephone support and unspecified upgrades/enhancements provided on a when-and-if-available basis. Cost of maintenance decreased 4% or $0.2 million for the three months ended June 30, 2008 compared to the same period in 2007. This decrease was primarily related to a decrease in travel and entertainment expense.

Amortization of Acquired Technology. In connection with our business acquisitions, we acquired developed technology that we offer as a part of our solutions. In accordance with applicable accounting standards, the amortization of acquired technology is included as a part of our cost of revenues because it relates to software products that are marketed to potential customers.

Operating Expenses

The following table sets forth operating expenses and the percentages of total revenue for those operating expenses as reported in our condensed consolidated statements of operations and comprehensive income. The period-to-period comparisons of financial results are not necessarily indicative of future results.

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	Six Months Ended June 30, 2008			Percent of Revenue		Six Months Ended June 30, 2007			Percent of Revenue		Change 2008 versus 2007
											Six months ended June 30
											$ Change			% Change
Sales and marketing	$	25,022		20	%	$	24,654		19	%	$	368		1	%
Research and development .		15,174		12	%		17,555		13	%		(2,381	)	-14	%
General and administrative		20,428		16	%		20,928		16	%		(500	)	-2	%
Amortization of intangibles		50		—			28		—			22		79	%
Restructuring charges and adjustments.		—		—			(75	)	—			75		-100	%
Costs and expenses, subtotal		60,674					63,090					(2,416	)	-4	%
Intellectual property settlement, net		(79,860	)				—					(79,860	)	—
Total operating (benefit), expense	$	(19,186	)			$	63,090				$	(82,276	)	-130	%

Sales and Marketing Expense. For the six months ended June 30, 2008, the increase in sales and marketing expense included an increase in employee related costs of $1.6 million (including $1.4 million of employee commissions expense and $0.7 million of benefits expense). This increase in employee related costs was partially offset by a decrease in trade show expense of $0.2 million.

Research and Development Expense. For the six months ended June 30, 2008, the decrease in research and development expense included a decrease in employee-related costs $0.8 million, a decrease in subcontractor cost of $0.6 million, a decrease in travel and entertainment of $0.2 million and a decrease in equipment cost of $0.2 million.

General and Administrative Expense. General and administrative expense for the six months ended June 30, 2008 decreased 2% or $0.5 million compared to the same period in 2007 primarily due to a decrease in employee related expense of $1.7 million, a decrease in equipment expense of $0.9 million, a decrease in subcontractor expense of $0.6 million and a decrease in travel and entertainment expense of $0.5. These decreases in expenses were partially offset by an increase legal and litigation related expenses of $1.8 million related to the resolution of certain litigation activities, which date back to 2005. The decrease in employee related expenses is reflective of a decrease of 16% in average headcount when compared to the same period in 2007.

Amortization of Intangible Assets and Impairment of Intangible Assets. From time to time, we have sought to enhance our product offerings through technology and business acquisitions. When an acquisition of a business is accounted for using the purchase method, the amount of the purchase price is allocated to the fair value of assets acquired, net of liabilities assumed. Any excess purchase price is allocated to goodwill. Intangible assets are amortized over their estimated useful lives, while goodwill is only written down if it is deemed to be impaired.

Restructuring Expense. During the six months ended June 30, 2008 we had no restructuring expense. In the three months ended June 30, 2007 we had adjustments to our restructuring accrual.

Intellectual Property Settlement, Net. On June 23, 2008, we reached a settlement with SAP to settle existing patent litigation between i2 and SAP. Under the terms of the settlement, SAP agreed to pay i2 $83.3 million. We recorded the $83.3 million net of legal expense of $3.5 million for the six months ended June 30, 2008.

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Non-Operating (Expense), Net

For the six months ended June 30, 2008 and June 30, 2007, non-operating (expense), net, was as follows:

	Six Months Ended June 30, 2008			Six Months Ended June 30, 2007			Change 2008 versus 2007
							Six months ended June 30
							$ Change		% Change
Interest income	$	2,127		$	2,648		(521	)	-20	%
Interest expense		(2,475	)		(2,476	)	(1	)	—
Foreign currency hedge and transaction losses, net.		(605	)		(191	)	414		217	%
Other income (expense), net		284			(553	)	837		151	%
Total non-operating (expense), net	$	(669	)	$	(572	)	(97	)	-17	%

Interest income decreased in the six-month period ended June 30, 2008 compared to the same period in 2007 due to lower yields on average cash balances, partially offset by higher average cash balances. For the six months ended June 30, 2008, average cash balances increased 25.4%. The average rate earned for the six months ended June 30, 2008 was 2.85%, and for June 30, 2007 was 4.61%.

Interest expense was unchanged for the three months ended June 30, 2008 as compared to the same period in 2007.

Provision for Income Taxes

We recorded income tax expense of approximately $3.8 million for the six months ended June 30, 2008 and $1.6 million for the six months ended June 30, 2007, representing effective income tax rates of 4.3% and 19.5%, respectively. Various factors affect our effective income tax rate including, among others, changes in our valuation allowance, the effect of foreign operations, state income taxes (net of federal income tax benefits), certain non-deductible meals and entertainment expenses, research and development tax credits, and the effect of foreign withholding taxes. Our effective income tax rates during the six months ended June 30, 2008 and June 30, 2007 differ from the U.S. statutory rate primarily due to the effect these items have on our valuation allowance.

Income tax expense included the effect of foreign withholding taxes of $1.1 million for the six months ended June 30, 2008 and $1.3 million for the six months ended June 30, 2007. Foreign withholding taxes are incurred on certain payments from international customers and are recorded upon receipt of such payments which are received net of the withheld taxes Foreign withholding taxes generally are available to reduce domestic federal regular income tax. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these withheld taxes increase our income tax expense.

During the six months ended June 30, 2008 we recorded a benefit to operating expense of approximately $83.3 million related to the settlement of the SAP patent litigation. We utilized net operating loss carryforwards and other tax attributes to reduce taxes on the settlement. Accordingly, we recorded federal and state alternative minimum tax (AMT) of approximately $1.1 million and $0.1 million, respectively, and other state income taxes of approximately $0.2 million in income tax expense during the six months ended June 30, 2008 related to the settlement. Alternative minimum tax generally is available to reduce regular income tax in the future. Due to our net operating loss carryforwards and associated valuation allowance against our domestic deferred tax assets, these amounts increase our income tax expense.

Income tax expense during the six months ended June 30, 2008 includes the effect of a refund of approximately $1.0 million related to our international operations.

Income tax expense during the six months ended June 30, 2007 included a benefit of approximately $0.8 million as a result of the favorable resolution of our United Kingdom tax examination related to the 2003 tax year.

Contractual Obligations

During the three-month and six-month periods ended June 30, 2008, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in our 2007 Annual Report on Form 10-K.

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Off-Balance-Sheet Arrangements

As of June 30, 2008, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Liquidity and Capital Resources

Our working capital was $159.2 million at June 30, 2008 compared to $63.6 million at December 31, 2007, an improvement of $95.6 million or 150.3%. The improvement resulted from a $108.3 million increase in current assets, comprised of an increase of $84.1 million in other current assets, $20.3 million in cash, including restricted cash and an increase of $3.9 million in accounts receivable. The increase in other current assets reflects the effect of the SAP litigation settlement of $83.3 million. This increase in current assets was partially offset by an increase in current liabilities of $12.7 million (comprised of an increase in deferred revenue of $10.7 million, an increase in accounts payable of $1.2 million, and an increase in accrued liabilities of $1.1 million partially offset by a decrease in accrued compensation and related expenses of $0.3 million).

Our working capital balance at June 30, 2008 and December 31, 2007 included deferred revenue. At June 30, 2008 and December 31, 2007, we had approximately $72.4 million and $61.7 million, respectively, of deferred revenue recorded as a current liability, representing pre-paid revenue for all of our different revenue categories. Our deferred revenue balance includes a margin to be earned when it is recognized, so the conversion of the liability to revenue will require cash outflows that are less than the amount of the liability.

Our cash and cash equivalents increased $22.1 million during the six months ended June 30, 2008. This increase is primarily the result of $20.4 million of cash provided by operating activities and $1.2 million of cash provided by investing activities.

During the six months ended June 30, 2008, cash provided by operating activities was approximately $20.4 million. Management tracks projected cash collections and projected cash outflows to monitor short-term liquidity requirements and to make decisions about future resource allocations and take actions to adjust our expenses with the goal of remaining cash flow positive from operations on an annual basis.

Cash provided by investing activities was approximately $1.2 million during the six months ended June 30, 2008. We had a decrease in restricted cash of approximately $1.8 million partially offset by purchases of property, plant and equipment of $0.6 million.

During the six months ended June 30, 2008, cash provided by financing activities was minimal and related to proceeds for the issuance of common stock related to the exercise of stock options.

At June 30, 2008, we had a net cash balance of $65.0 million compared to a net cash balance of $45.0 million at December 31, 2007. We define net cash as the sum of our total cash and cash equivalents and restricted cash minus our total short-term and long-term debt.

We maintain a $15.0 million letter of credit line. Under this line, we are required to maintain restricted cash (in an amount equal to 125% of the outstanding letters of credit) in a depository account maintained by the lender to secure letters of credit issued in connection with the line. The line has no financial covenants and expires on December 15, 2008. As of June 30, 2008, $4.4 million in letters of credit were outstanding under this line and $5.6 million in restricted cash was pledged as collateral.

We had $86.3 million in face value of our 5% senior convertible notes outstanding at June 30, 2008. Holders of our senior convertible notes have the right to require us to repurchase all or any portion of the senior convertible notes on November 15, 2010 and may convert the senior convertible notes at any time on or after May 15, 2010. In addition, holders of the senior convertible notes may convert the senior convertible notes prior to May 15, 2010 upon the occurrence of any of the following events:

• if the senior convertible notes have been called for redemption;

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• upon certain dividends or distributions to all holders of our common stock;

• upon the occurrence of specified corporate transactions constituting a “fundamental change” (the occurrence of a “change in control” or a “termination of trading,” each as defined in the indenture governing our senior convertible notes);

• if the average of the trading prices for the senior convertible notes during any five consecutive trading-day period is less than 98% of the average of the conversion values for the senior convertible notes (the product of the last reported sale price of our common stock and the conversion rate) during that period; or

• at any time after May 15, 2008 if the closing sale price of our common stock is equal to or greater than $23.21 for at least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter.

Upon conversion of the senior convertible notes, we will be required to satisfy our conversion obligation with respect to the principal amount of the senior convertible notes to be converted in cash, with any remaining amount to be satisfied in shares of our common stock.

The indenture governing the 5% senior convertible notes contains a debt incurrence covenant that places restrictions on the amount and type of additional indebtedness that we can incur. Such covenant specifies that we shall not, and that we shall not permit any of our subsidiaries to, directly or indirectly, incur or guarantee or assume any indebtedness other than “permitted indebtedness.” Permitted indebtedness is defined in the indenture to include, among others, the following categories of indebtedness: (i) all indebtedness outstanding on November 23, 2005; (ii) indebtedness under the senior convertible notes; (iii) indebtedness under our $15.0 million letter of credit line; (iv) between $25.0 million and $50.0 million of additional senior secured indebtedness (the maximum permitted amount to be determined by application of a formula contained in the indenture); and (v) at least $100.0 million of additional subordinated indebtedness (the maximum permitted amount to be determined by application of a formula contained in the indenture).

Sensitivity to Market Risks

Foreign Currency Risk. Revenues originating outside of the United States, a portion of which are denominated in foreign currencies, totaled 44% and 43% for the three months ended June 30, 2008 and June 30, 2007, respectively, and totaled 42% and 43% for the six months ended June 30, 2008 and June 30, 2007, respectively. Since we conduct business on a global basis in various foreign currencies, we are exposed to movements in foreign currency exchange rates. We utilize a foreign currency-hedging program that uses foreign currency forward exchange contracts to hedge various nonfunctional currency exposures. The objective of this program is to reduce the effect of changes in foreign currency exchange rates on our results of operations. Furthermore, our goal is to offset foreign currency transaction gains and losses recorded for accounting purposes with gains and losses realized on the forward contracts. Our hedging activities cannot completely protect us from the risk of foreign currency losses as our currency exposures are constantly changing and not all of these exposures are hedged. A large portion of our employee base is located in India, and as a result, a significant portion of our fixed expenses are denominated in the Indian Rupee (INR). Therefore, as the INR exchange rate fluctuates against the U.S. Dollar (USD), the resulting impact on our consolidated USD expenses can be significant.

Interest Rate Risk. Our investments are subject to interest rate risk. Interest rate risk is the risk that our financial condition and results of operations could be adversely affected due to movements in interest rates. We typically invest our cash in a variety of interest-earning financial instruments, including bank time deposits, money market funds and taxable and tax-exempt variable-rate and fixed-rate obligations of corporations and federal, state and local governmental entities and agencies. These investments are primarily denominated in U.S. Dollars. Cash balances in foreign currencies overseas are primarily operating balances and are generally invested in short-term time deposits of the local operating bank. Due to the demand nature of our money market funds and the short-term nature of our time deposits and debt securities portfolio, these assets are sensitive to changes in interest rates. The Federal Reserve Board influences the general direction of market interest rates in the U.S. where the majority of our cash and investments are held. As of June 30, 2008 and 2007, the weighted-average yield on cash and cash equivalent balances was 2.5% and 5.2%, respectively. If overall interest rates fell by 100 basis points in the third quarter of 2008, our interest income would decline approximately $0.4 million for the quarter, assuming cash and cash equivalent levels consistent with June 30, 2008 levels.

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Credit Risk. Financial assets that potentially subject us to a concentration of credit risk consist principally of investments and accounts receivable. During the third quarter of 2007, we shifted our investments from commercial paper into money-market instruments due to the volatility in the commercial paper markets. Cash on deposit is held with financial institutions with high credit standings. Debt security investments are generally in highly-rated corporations and municipalities as well as agencies of the U.S. government; however, a significant portion of these investments are in corporate debt securities, which carry a higher level of risk compared to municipal and U.S. government-backed securities. Our customer base consists of large numbers of geographically diverse enterprises dispersed across many industries. As a result, concentration of credit risk with respect to accounts receivable is not significant. However, we periodically perform credit evaluations for most of our customers and maintain reserves for potential losses. In certain situations we may seek letters of credit to be issued on behalf of some customers to mitigate our exposure to credit risk. We currently use foreign exchange contracts to hedge the risk associated with receivables denominated in foreign currencies. Risk of non-performance by counterparties to such contracts is minimal due to the size and credit standings of the financial institutions involved.

Inflation. Inflation has not had a material impact on our results of operations or financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information is included in the section captioned “Sensitivity to Market Risks,” included in Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (Exchange Act), our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” as of the end of the period covered by this report. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures of our company that are designed to ensure that information required to be disclosed by our company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports we file or submit under the Exchange Act is accumulated and communicated to our company’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by our company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to provide reasonable assurance that such information is accumulated and communicated to our company’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that any system of controls, however well designed and operated, is based in part upon certain assumptions and can provide only reasonable, and not absolute, assurance that the objectives of the system are met.

Changes in Internal Control over Financial Reporting. As required by Rule 13a-15(d) under the Exchange Act, our management, including our CEO and CFO, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on our evaluation, during our most recent fiscal quarter there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended March 31, 2008, we did not timely file an Item 5.02 Form 8-K related to the resignation of an officer of the Company. We have implemented improvements to our disclosure controls, including a notification process which is designed to provide for the timely disclosure of executive resignations. We plan to formalize these improvements with the audit committee during the quarter ending September 30, 2008. We have re-evaluated our internal controls in light of these matters and concluded the late filing did not occur as a result of a material weakness.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 7 – Commitments and Contingencies in our Notes to Condensed Consolidated Financial Statements is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed under the heading “Risk Factors” in Item 1A of our 2007 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 29, 2008, we held an annual meeting of our stockholders for the following purpose:

To elect J. Coley Clark, Richard L. Hunter and Lloyd G. Waterhouse as Class II directors to serve until the annual stockholders’ meeting in 2011, and until their respective successors have been elected and qualified.

Mr. Clark was elected with 17,255,914 common shares voting for his election, all outstanding Series B preferred shares voting for his election and 143,416 common shares withholding their vote. Mr. Hunter was elected with 17,255,975 common shares voting for his election, all outstanding Series B preferred shares voting for his election and 143,355 common shares withholding their vote. Mr. Waterhouse was elected with 17,212,654 common shares voting for his election, all outstanding Series B preferred shares voting for his election and 186,676 common shares withholding their vote.

The terms of office of Stephen P. Bradley, Richard L. Clemmer and David L. Pope, all Class I directors and Sanjiv S. Sidhu, Michael J. Simmons and Jackson L. Wilson, Jr. all Class III directors, continued after the meeting. Harvey B. Cash and Michael E. McGrath did not stand for re-election at the annual meeting.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS.

(a) Exhibits

Exhibit Number	Description
3.1	— Amended and Restated Bylaws of the Company that amended the advance notice provisions of Section 2.5 of the Bylaws relating to stockholder proposals and stockholder nominees to the Company’s Board of Directors (filed as exhibit 9.1 to the 8-K filed by i2 on April 29, 2008).
10.1	— Employment Agreement between the Company and Jackson L. Wilson, Jr. (filed as Exhibit 10.1 to the 8-K filed by i2 on May 23, 2008).

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10.2	— Amended and Restated Executive Retention Agreement between the Company and Pallab K. Chatterjee (filed as Exhibit 10.2 to the 8-K filed by i2 on May 23, 2008).
10.3	— Amendment to Executive Retention Agreement between the Company and Michael J. Berry (filed as Exhibit 10.3 to the 8-K filed by i2 on May 23, 2008).
10.4	— Settlement Agreement dated June 23, 2008 between the Company and SAP America, Inc. and SAP AG..
31.1	— Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of Pallab K. Chatterjee, Chief Executive Officer (Principal Executive Officer) of i2.
31.2	— Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of Michael J. Berry, Executive Vice President, Finance and Accounting, and Chief Financial Officer (Principal Accounting and Financial Officer) of i2.
32.1	— Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Pallab K. Chatterjee, Chief Executive Officer (Principal Executive Officer) of i2.
32.2	— Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Michael J. Berry, Executive Vice President, Finance and Accounting, and Chief Financial Officer (Principal Accounting and Financial Officer) of i2.

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SIGNATURES

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

	i2 TECHNOLOGIES, INC.
August 7, 2008	By:	/s/ Michael J. Berry
		Michael J. Berry Executive Vice President, Finance and Accounting, and Chief Financial Officer (On behalf of the Registrant and as Principal Accounting and Financial Officer)

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EX-10.4

Exhibit 10.4

SETTLEMENT AGREEMENT

This Settlement Agreement (the “Agreement”) is made effective as of this 23rd day of June, 2008 (the “Effective Date”), among:

On the one hand:

SAP America, Inc., a Delaware corporation, and SAP AG, a German corporation and the parent of SAP America, Inc.; and

On the other hand:

i2 Technologies US, Inc., a Nevada corporation, and i2 Technologies, Inc., a Delaware corporation.

Recitals

A. On September 5, 2006, i2 Technologies US, Inc. and i2 Technologies, Inc. filed a lawsuit against SAP AG and SAP America, Inc. for infringement of U.S. Patents Nos. 5,764,543; 5,930,156; 5,983,194; 6,055,519; 6,167,380; 6,188,989; and 7,085,729 in the action of i2 Technologies US, Inc. and i2 Technologies, Inc. v. SAP AG and SAP America, Inc., Civil Action No. 2-06-cv352-CE, pending as of the Effective Date in the United States District Court for the Eastern District of Texas (the “Texas Action”). SAP America, Inc. and SAP AG have denied the claims asserted against them in the Texas Action, and have asserted counterclaims against i2 Technologies, Inc. in that action.

B. On August 15, 2007, SAP AG filed a lawsuit against i2 Technologies, Inc. for infringement of U.S. Patents Nos. 6,407,761 and 6,750,766 in the action of SAP AG v. i2 Technologies, Inc., Civil Action No. 4:07-cv-04187-SBA, pending as of the Effective Date in the United States District Court for the Northern District of California (the “California Action”). Subsequently, SAP AG was granted leave by the court to amend its complaint to add a claim for infringement of U.S. Patent No. 7,222,369. i2 Technologies, Inc. has denied the claims asserted against it in the California Action, and has asserted counterclaims against SAP AG in that action.

C. The Parties have an extensive history as partners and competitors and they desire to settle the Texas Action, the California Action, and all potential disputes between them pursuant to the terms of this Settlement Agreement.

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Settlement Agreement

NOW, THEREFORE, in consideration of the foregoing premises and of the terms and conditions of this Agreement, SAP AG, SAP America, Inc. and i2 Technologies, Inc. (singularly referred to herein as a “Party” and jointly as the “Parties”) hereby agree as follows:

1. DEFINITIONS

1.1 “Affiliate” means, with respect to a Party, an Entity which on or after the Effective Date directly or indirectly controls, is controlled by or is under common control with such Party, whether through the ownership of securities, as a result of contract or otherwise, it being understood that the ownership of securities or other instruments representing fifty percent (50%) or more of the outstanding voting power of a particular Entity shall constitute control for purposes of this definition.

1.2 “California Action” shall have the meaning set forth in the Recitals.

1.3 “Change of Control” means: (a) the direct or indirect acquisition (except for transactions described in clause (b) of this paragraph below), whether in one or a series of transactions by any Entity or related Entities of (i) ownership, beneficial or otherwise, of issued and outstanding shares of capital stock of a Party, the result of which acquisition is that such Entity or such group possesses 50% or more of the combined voting power of all then-issued and outstanding capital stock of such Party, or (ii) the power to elect, appoint, or cause the election or appointment of at least a majority of the members of the board of directors (or such other governing body that exercises a similar level of control over such Entity in the event a Party or any successor Entity is not a corporation); or (b) a merger, consolidation or other reorganization or recapitalization of a Party with an Entity or a direct or indirect subsidiary of such Entity, provided that the result of such merger, consolidation or other reorganization or recapitalization, whether in one or a series of related transactions, is that the holders of the outstanding voting stock of such Party immediately prior to such consummation do not possess, whether directly or indirectly, immediately after the consummation of such transaction, in excess of 50% of the combined voting power of all then-issued and outstanding voting stock of the merged, consolidated, reorganized or recapitalized Entity, its direct or indirect parent, or the surviving Entity of such transaction.

1.4 “Entity” means any individual, trust, corporation, partnership, joint venture, limited liability company, association, unincorporated organization or other legal or governmental entity.

1.5 “Foundry Product” means:

(a) a product manufactured by a Party or its Affiliate for or on behalf of a specific third party, using designs or specifications received in a substantially completed form from that third party, for resale or re-license to or on behalf of that third party for its commercialization of such products, except in the case in which (i) such Party or its Affiliate owns the design or specification of such product and the product is not specifically designed for commercial exploitation substantially only by such third party; or (ii) such design or specification resulted from a bona fide joint development or joint participation between a Party or its Affiliate and such third party, including but not limited to a standards body or community organization and the resulting products, services or components provided by such Party or its Affiliate meet the definition of that Party’s Licensed Products as set forth herein; or (iii) such product is a customized version of an i2 Licensed Product, in the case of i2, or an SAP Licensed Product, in the case of SAP, and such third party is an end user who uses such customized version solely for its own end use, or (iv) such product is a custom product designed to be used in conjunction with an i2 Licensed Product, in the case of i2, or an SAP Licensed Product, in the case of SAP, and such third party is an end user who uses such custom product solely for its own end use; or

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Settlement Agreement

(b) a product or service designed by or for a specific third party and sold, leased or otherwise transferred through or by a Party or its Affiliate for the sole purpose of attempting to make such product or service licensed or immune under the Patent rights of the other Party or its Affiliate that are the subject of this Agreement so that any third party can receive the benefit of such license or immunity with respect to such product or service.

1.6 “Have Made” means the right to have i2 Licensed Products or SAP Licensed Products, as the case may be, made by another manufacturer solely for the sale or license by the Parties hereto and their Affiliates, but only if the design and specifications for such Licensed Products are furnished by i2 or SAP or their respective Affiliates to the manufacturer, the manufacturer reasonably adheres to the design and specifications so furnished, and the manufacturer shall not receive any implied or express license rights hereunder other than the limited right to make the Licensed Products for sale or license by i2 or SAP or their Affiliates under the provisions of this Agreement.

1.7 “i2” means, collectively, i2 Technologies US, Inc. and i2 Technologies, Inc.

1.8 “i2 Authorized Developer” means any i2 Customer, any i2 Vendor, or any other third party authorized by i2 or an Affiliate of i2 to create (i) an i2 Licensed Product, (ii) a derivative work or modification of any i2 Licensed Product, and/or (iii) a product, service, or technology that utilizes or invokes functions, features, services or technology of an i2 Licensed Product.

1.9 “i2 Customer” means any direct or indirect customer of i2 or any Affiliate of i2, including but not limited to end users of any i2 Licensed Product.

1.10 “i2 Licensed Combination” means the combination of (i) an i2 Offering or a part thereof with (ii) another i2 Offering, or a part thereof, or a part of an i2 Offering referenced in clause (i) above, even if the i2 Offerings are purchased at different times and through different channels or the combination is created by or for the end user or by one of i2’s or its Affiliate’s distribution channels. For the purposes of clarification, an i2 Licensed Combination may be formed by the invocation from an application of services contained in or offered by an i2 Offering, rather than the actual combination of code.

1.11 “i2 Licensed Patents” means:

(a) all Patents issued anywhere in the world to or otherwise owned by i2 or an Affiliate of i2 as of the Effective Date, and all Patent applications (including provisional and non-provisional applications) filed by or on behalf of i2 or an Affiliate of i2 anywhere in the world as of the Effective Date, including but not limited to those Patents and Patent applications listed in Exhibit D;

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Settlement Agreement

(b) all U.S. or foreign Patents or Patent applications that now or in the future claim priority to any of the Patents and Patent applications recited in clause (a);

(c) all divisional, continuation, continuation-in-part, re-issue, substitute, reexamination, renewal, extension, CPA and RCE applications and Patents based on any of the Patents or Patent applications recited in clauses (a) or (b);

(d) any Patents which may be granted anywhere in the world on any of the applications recited in clauses (a), (b), or (c); and

(e) any other Patents that as of the Effective Date are licensed to i2 or an Affiliate of i2 and with respect to which i2 or an Affiliate of i2 has the right to grant licenses within the scope of the licenses granted by i2 in Section 2.1 of this Agreement.

1.12 “i2 Licensed Process” means any process or method claimed in any of the i2 Licensed Patents.

1.13 “i2 Licensed Products” means:

(a) any i2 Offering,

(b) any derivative works, modifications, configurations, customizations, or extensions of any i2 Offering lawfully created by an i2 Authorized Developer, i2 Vendor, or i2 Customer if such derivative work, modification, configuration, customization or extension would not infringe an SAP Licensed Patent, whether directly or through inducement of or contribution to infringement, but for its being based on the i2 Offering from which it was derived, modified, configured, customized or extended,

(c) any i2 Licensed Combination, and

(d) any product, service or technology of a third party to the extent that it or a combination of it with an i2 Offering utilizes or invokes functions, features, services or technology, including but not limited to enterprise services, contained in or invocable from any i2 Offering, or to the extent it is developed in conformance to a specification specifically licensed by i2 or its Affiliate to such third party, if such third party product, service or technology would not infringe an SAP Licensed Patent, whether directly or through inducement of or contribution to infringement, but for its use of functions, features, services or technology contained in or invocable from the i2 Offering or but for its development in conformance to a specification specifically licensed by i2 or its Affiliate to such third party;

provided, however, that in no event shall “i2 Licensed Products” include any Foundry Products.

1.14 “i2 Offering” means any past, present or future software or hardware product, service, technology, specification, or platform that is sold, licensed, offered, imported, or provided by i2 or an Affiliate of i2 and that in the absence of this Agreement would infringe, whether directly or through inducement of or contribution to infringement by another, at least one claim of an SAP Licensed Patent.

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1.15 “i2 Vendor” means any third party authorized by i2 to license or resell, install, configure, maintain and/or customize any i2 Offering or provide training or consulting services related thereto, including system integrators, resellers, connector vendors, value added resellers, OEMs and partners.

1.16 “Patents” means utility patents, utility models and invention certificates but does not include design patents or similar rights protecting ornamental designs.

1.17 “SAP” means, collectively, SAP AG and SAP America, Inc.

1.18 “SAP Authorized Developer” means any SAP Customer, any SAP Vendor, or any other third party authorized by SAP or an Affiliate of SAP to create (i) an SAP Licensed Product, (ii) a derivative work or modification of any SAP Licensed Product, and/or (iii) a product, service, or technology that utilizes or invokes functions, features, services or technology of an SAP Licensed Product.

1.19 “SAP Customer” means any direct or indirect customer of SAP or any Affiliate of SAP, including but not limited to end users of any SAP Licensed Product.

1.20 “SAP Licensed Combination” means the combination of (i) an SAP Offering or a part thereof with (ii) another SAP Offering, or a part thereof, or a part of an SAP Offering referenced in clause (i) above, even if the SAP Offerings are purchased at different times and through different channels or the combination is created by or for the end user or by one of SAP’s or its Affiliate’s distribution channels. For the purposes of clarification, an SAP Licensed Combination may be formed by the invocation from an application of services contained in or offered by an SAP Offering, rather than the actual combination of code.

1.21 “SAP Licensed Patents” means:

(a) U.S. Patents Nos. 6,407,761; 6,750,766; and 7,222,369;

(b) all U.S. or foreign Patents or Patent applications that now or in the future claim priority to any of the Patents recited in clause (a);

(c) all divisional, continuation, continuation-in-part, re-issue, substitute, reexamination, renewal, extension, CPA and RCE applications and Patents based on any of the Patents or Patent applications recited in clauses (a) or (b);

(d) any Patents which may be granted anywhere in the world on any of the applications recited in clauses (b) or (c); and

(e) any other Patents that as of the Effective Date are licensed to SAP or an Affiliate of SAP and with respect to which SAP or an Affiliate of SAP has the right to grant licenses within the scope of the licenses and immunities granted by SAP in Sections 2.2 and 2.3 of this Agreement.

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Settlement Agreement

1.22 “SAP Licensed Process” means any process or method claimed in any of the SAP Licensed Patents.

1.23 “SAP Licensed Products” means:

(a) any SAP Offering,

(b) any derivative works, modifications, configurations, customizations, or extensions of any SAP Offering lawfully created by an SAP Authorized Developer, SAP Vendor, or SAP Customer if such derivative work, modification, configuration, customization or extension would not infringe an i2 Licensed Patent, whether directly or through inducement of or contribution to infringement, but for its being based on the SAP Offering from which it was derived, modified, configured, customized or extended,

(c) any SAP Licensed Combination, and

(d) any product, service or technology of a third party to the extent that it or a combination of it with an SAP Offering utilizes or invokes functions, features, services or technology, including but not limited to enterprise services, contained in or invocable from any SAP Offering, or to the extent it is developed in conformance to a specification specifically licensed by SAP or its Affiliate to such third party, if such third party product, service or technology would not infringe an i2 Licensed Patent, whether directly or through inducement of or contribution to infringement, but for its use of functions, features, services or technology contained in or invocable from the SAP Offering or but for its development in conformance to a specification specifically licensed by SAP or its Affiliate to such third party;

provided, however, that in no event shall “SAP Licensed Products” include any Foundry Products.

1.24 “SAP Non-Assert Patents” means the following Patents other than SAP Licensed Patents:

(a) all Patents issued anywhere in the world to or otherwise owned by SAP or an Affiliate of SAP as of the Effective Date, and all Patent applications (including provisional and non-provisional applications) filed by or on behalf of SAP or an Affiliate of SAP anywhere in the world as of the Effective Date;

(b) all U.S. or foreign Patents or Patent applications that now or in the future claim priority to any of the Patents and Patent applications recited in clause (a);

(c) all divisional, continuation, continuation-in-part, re-issue, substitute, reexamination, renewal, extension, CPA and RCE applications and Patents based on any of the Patents or Patent applications recited in clauses (a) or (b);

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(d) any Patents which may be granted anywhere in the world on any of the applications recited in clauses (a), (b), or (c); and

(e) any other Patents that as of the Effective Date are licensed to SAP or an Affiliate of SAP and with respect to which SAP or an Affiliate of SAP has the right to grant immunities within the scope of the immunities granted by SAP in Section 2.3 of this Agreement.

1.25 “SAP Non-Assert Process” means any process or method claimed in any of the SAP Non-Assert Patents.

1.26 “SAP Offering” means any past, present or future software or hardware product, service, technology, specification, or platform that is sold, licensed, offered, imported, or provided by SAP or an Affiliate of SAP and that in the absence of this Agreement would infringe, whether directly or through inducement of or contribution to infringement by another, at least one claim of an i2 Licensed Patent.

1.27 “SAP Vendor” means any third party authorized by SAP to license or resell, install, configure, maintain and/or customize any SAP Offering or provide training or consulting services related thereto, including system integrators, resellers, connector vendors, value added resellers, OEMs and partners.

1.27 “Texas Action” shall have the meaning set forth in the Recitals.

2. GRANT OF LICENSES AND COVENANT NOT TO SUE

2.1 License Grants by i2.

(a) i2 grants to SAP and its Affiliates, SAP Vendors, SAP Customers (whether direct or indirect) and SAP Authorized Developers, an irrevocable, non-royalty bearing, fully paid-up, non-exclusive, worldwide, license, without the right to sublicense, under the i2 Licensed Patents to practice, design, make, Have Made, copy, operate, have operated, use, sell, offer to sell, license, and import SAP Licensed Products, and to practice any i2 Licensed Process involved in the manufacture or use of such SAP Licensed Products.

(b) i2 grants an irrevocable, non-royalty bearing, fully paid-up, non-exclusive worldwide, license, without the right to sublicense, under the i2 Licensed Patents to any supplier or provider to SAP or any Affiliate of SAP to make, Have Made, copy, use, sell, offer to sell, license, or import any component, part or portion of an SAP Licensed Product for or on behalf of SAP or its Affiliate and to practice any i2 Licensed Process involved in the manufacture or use of such component, part or portion of an SAP Licensed Product for or on behalf of SAP or its Affiliate; and

(c) The licenses granted in this Section 2.1 extend to activities of SAP and its Affiliates, SAP Vendors, SAP Customers and SAP Authorized Developers that would otherwise be deemed indirect infringement as further described in 35 USC Section 271. Other than the payments called for pursuant to Section 4 of this Agreement, no royalties or additional payments of any kind shall be required in order to maintain the foregoing licenses in full force.

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(d) If a third party making products under have-made rights transfers such products to any person or entity other than SAP, an Affiliate of SAP, an SAP Vendor, an SAP Authorized Developer, or supplier or provider to SAP or an Affiliate of SAP, those products will not be considered to be SAP Licensed Products and will not be within the scope of the license rights set forth in this Section 2.1.

2.2 License Grants by SAP.

(a) SAP grants to i2 and its Affiliates, i2 Vendors, i2 Customers (whether direct or indirect) and i2 Authorized Developers, an irrevocable, non-royalty bearing, fully paid-up, non-exclusive, worldwide, license, without the right to sublicense, under the SAP Licensed Patents to practice, design, make, Have Made, copy, operate, have operated, use, sell, offer to sell, license, and import i2 Licensed Products, and to practice any SAP Licensed Process involved in the manufacture or use of such i2 Licensed Products.

(b) SAP hereby grants an irrevocable, non-royalty bearing, fully paid-up, non-exclusive worldwide, limited license, without the right to sublicense, under the SAP Licensed Patents to any supplier or provider to i2 or any Affiliate of i2 to make, Have Made, copy, use, sell, offer to sell, license or import any component, part or portion of an i2 Licensed Product for or on behalf of i2 or its Affiliate and to practice any SAP Licensed Process involved in the manufacture or use of such component, part or portion of an i2 Licensed Product for or on behalf of i2 or its Affiliate; and

(c) The licenses granted in this Section 2.2 extend to activities of i2 and its Affiliates, i2 Vendors, i2 Customers and i2 Authorized Developers that would otherwise be deemed indirect infringement as further described in 35 USC Section 271. No royalties or additional payments of any kind shall be required in order to maintain the foregoing licenses in full force.

(d) If a third party making products under have-made rights transfers such products to any person or entity other than i2, an Affiliate of i2, an i2 Vendor, an i2 Authorized Developer, or supplier or provider to i2 or an Affiliate of i2, those products will not be considered to be i2 Licensed Products and will not be within the scope of the license rights set forth in this Section 2.2.

2.3 Covenant Not to Sue. SAP covenants that neither SAP nor any of its Affiliates shall at any time sue:

(a) i2 or any of its Affiliates, i2 Vendors, i2 Customers (whether direct or indirect) or i2 Authorized Developers for any claim that the practicing, design, manufacture, copying, use, sale, offer for sale, licensing, or importation at any time before the fifth anniversary of the Effective Date of any i2 Licensed Product, or that the practicing of an SAP Non-Assert Process involved in the manufacture or use of an i2 Licensed Product at any time before the fifth anniversary of the Effective Date, constitutes direct infringement, indirect infringement, contributory infringement, or inducement of infringement of any SAP Non-Assert Patents; or

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(b) any supplier or provider to i2 or any Affiliate of i2 for any claim that the manufacture, copying, use, sale, offer for sale, licensing or importation of any component, part or portion of an i2 Licensed Product for or on behalf of i2 or its Affiliate at any time before the fifth anniversary of the Effective Date, or that the practicing of an SAP Non-Assert Process involved in the manufacture or use of such component, part or portion of an i2 Licensed Product for or on behalf of i2 or its Affiliate at any time before the fifth anniversary of the Effective Date, constitutes direct infringement, indirect infringement, contributory infringement, or inducement of infringement of any SAP Non-Assert Patents.

(c) For clarity, nothing in this Agreement (including the releases set forth in Section 3.2) shall prohibit SAP or its Affiliates from instituting legal proceedings and seeking any and all remedies for infringement of any Non-Assert Patents based upon any acts taken after the fifth anniversary of the Effective Date, including but not limited to distribution of products after the fifth anniversary of the Effective Date manufactured before the fifth anniversary of the Effective Date.

2.4 Duration. The licenses set forth in Section 2.1 will extend to the full end of the term of the last to expire of the i2 Licensed Patents. The licenses set forth in Section 2.2 will extend to the full end of the term of the last to expire of the SAP Licensed Patents.

2.5 No Transfer and No Other Licenses. SAP has no right and agrees not to transfer any of the rights set forth in Section 2.1 except as permitted in Section 6.11 below. i2 has no right and agrees not to transfer any of the rights set forth in Sections 2.2 and 2.3 except as permitted in Section 6.11 below. Except as expressly set forth in Sections 2.1, 2.2, 2.3 and 3, no other license, right, or immunity is granted herein by a Party or its Affiliates, directly or by implication, estoppel or otherwise, and no such license or other right will arise from the consummation of this Agreement or from any acts, statements or dealings leading to such consummation. However, each Party and its Affiliates shall be entitled to assert that the other Party or its Affiliates, successors or assigns is otherwise barred or estopped from asserting a Licensed Patent based on activities not arising from this Agreement as an affirmative defense or counterclaim to any claim relating to the Licensed Patents brought by the licensing Party or any other Entity. Neither Party has any obligation hereunder to furnish or disclose to the other Party any technical or other information or computer programs.

2.6 Spin Off of Business. In the event that a Party elects to spin off to an Entity (a “Spin Off Entity”) any part of its business to which one or more Licensed Patents relate, whether or not such Entity is an Affiliate of such Party, then:

(a) such Party shall give prompt written notice of such spin off to the other Party and of any assignment made pursuant to the provisions of this Section 2.6; and

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(b) the license rights granted by i2 in Section 2.1, or the license rights and covenant not to sue granted by SAP in Sections 2.2 and 2.3, as the case may be, shall continue to apply to such Spin Off Entity and its Affiliates, and as the case may be, its Authorized Developers, Customers and Vendors, but only with respect to (1) those SAP Licensed Products or i2 Licensed Products, as the case may be, actually distributed or generally available to Customers prior to the date such spin off is consummated (“Spin Off Licensed Products”) and (2) any future versions of Spin Off Licensed Products, but only with respect to those portions of such future versions that use or embody features, functionality, and/or technology used or embodied in the Spin Off Licensed Products prior to the date such spin off is consummated. Features, functionality and/or technology beyond that used or embodied in the Spin Off Licensed Products prior to the date such spin off is consummated will not be licensed or within the covenant not to sue, as the case may be, in such future versions, and new products or services of the Spin Off Entity will not be licensed or subject to the covenant not to sue. In addition, in the event of such an assignment, the licenses and the covenant not to sue granted to the Spin Off Entity shall be subject to the following limitations in the following two circumstances:

(i) If the Spin Off Entity itself had total revenues in the twelve (12) months immediately prior to the spin off, or is owned or controlled by an Entity that had total revenues attributable to sales or licensing of software, computer technology and/or information technology and related services in the twelve (12) months immediately prior to the spin off, equal to or exceeding three billion U.S. dollars (US$3,000,000,000), then the licenses and the covenant not to sue granted to the Spin Off Entity shall automatically become limited in the twelve (12) months immediately following such spin off to the lesser of (i) a fifteen percent (15%) increase in total volume of each Spin Off Licensed Product sold or licensed by the Spin Off Entity and its Affiliates over that sold by such Party and its Affiliates before the spin off and (ii) a volume of each Spin Off Licensed Product sold or licensed by the Spin Off Entity and its Affiliates that generate revenue to such Spin Off Entity and its Affiliates equal to no more than the revenue generated to such Party and its Affiliates by such Spin Off Licensed Product in the twelve (12) months preceding such spin off plus fifteen percent (15%); and shall be limited, in each of the successive twelve-month periods following such spin off, to the lesser of (i) the total volume of each Spin Off Licensed Product sold or licensed by the Spin Off Entity and its Affiliates in the immediately preceding twelve-month period plus fifteen percent (15%) and (ii) a volume of each Spin Off Licensed Product that generates revenue to such Spin Off Entity and its Affiliates equal to no more than the total amount of revenue generated to such Spin Off Entity and its Affiliates by such Spin Off Licensed Product during the immediately preceding twelve-month period plus fifteen percent (15%); and

(ii) If the Spin Off Entity itself had total revenues in the twelve (12) months immediately prior to the spin off, or is owned or controlled by an Entity that had total revenues attributable to sales or licensing of software, computer technology and/or information technology and related services in the twelve (12) months immediately prior to the spin off, equal to or exceeding one billion U.S. dollars (US$1,000,000,000) but less than three billion U.S. dollars (US$3,000,000,000), then the licenses and the covenant not to sue granted to the Spin Off Entity shall automatically become subject to the same limitations set forth in the preceding clause (i), except that the applicable percentages shall be twenty-five percent (25%) rather than fifteen percent (15%).

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(c) The provisions and limitations of this Section 2.6 shall apply to any subsequent spin offs that may be made by any Spin Off Entity.

3. RELEASES AND DISMISSAL OF LITIGATION

3.1 i2 Releases.

(a) i2, on behalf of itself and its Affiliates and their respective successors and assigns, irrevocably releases, acquits and forever discharges SAP and its Affiliates and their respective officers, directors, employees, agents, predecessors, successors, assigns, representatives, and attorneys (collectively, “SAP Releasees”), in each case from any and all claims or liabilities of any kind, at law, in equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, from all causes of action of any kind or legal theory relating in any way to actions taken before the Effective Date by the SAP Releasees; provided, however, that nothing contained within this release shall be deemed to release SAP or its Affiliates from any of its duties or obligations set forth under this Agreement.

(b) i2, on behalf of itself and its Affiliates and their respective successors and assigns, irrevocably releases, acquits and forever discharges SAP Authorized Developers, SAP Customers, SAP Vendors, and any supplier or provider to SAP or any Affiliate of SAP, and their respective officers, directors, employees, agents, predecessors, successors, assigns, representatives, and attorneys, in each case from any and all claims or liabilities of any kind, at law, in equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, from all causes of action of any kind or legal theory relating in any way to actions taken prior to the Effective Date which would have been licensed pursuant to Section 2.1 of this Agreement had this Agreement been in effect at the time such actions were taken.

3.2 SAP Releases.

(a) SAP, on behalf of itself and its Affiliates and their respective successors and assigns, irrevocably releases, acquits and forever discharges i2 and its Affiliates and their respective officers, directors, employees, agents, predecessors, successors, assigns, representatives, and attorneys (collectively, “i2 Releasees”), in each case from any and all claims or liabilities of any kind, at law, in equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, from all causes of action of any kind or legal theory relating in any way to actions taken before the Effective Date by the i2 Releasees; provided, however, that nothing contained within this release shall be deemed to release i2 or its Affiliates from any of its duties or obligations set forth under this Agreement.

(b) SAP, on behalf of itself and its Affiliates and their respective successors and assigns, irrevocably releases, acquits and forever discharges i2 Authorized Developers, i2 Customers, i2 Vendors, and any supplier or provider to i2 or any Affiliate of i2, and their respective officers, directors, employees, agents, predecessors, successors, assigns, representatives, and attorneys, in each case from any and all claims or liabilities of any kind, at

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law, in equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, from all causes of action of any kind or legal theory relating in any way to actions taken prior to the Effective Date which would have been licensed pursuant to Section 2.2 of this Agreement or would have been within the scope of the covenant not to sue set forth in Section 2.3 of this Agreement had this Agreement been in effect at the time such actions were taken.

3.3 General Releases. The releases by i2 and SAP in this Agreement include an express, informed, knowing and voluntary waiver and relinquishment to the fullest extent permitted by law as expressly stated in Sections 3.1 and 3.2 above. In this connection, the Parties acknowledge that they may have sustained damages, losses, costs or expenses arising from or related to claims, counterclaims, causes of action or liabilities that are presently unknown and unsuspected and that such claims, counterclaims, causes of action, liabilities, damages, losses, costs or expenses as may have been sustained may give rise to additional damages, losses, costs or expenses in the future. The Parties hereto further acknowledge that they have negotiated this Agreement taking into account presently unsuspected and unknown claims, counterclaims, causes of action, liabilities, damages, losses, costs and expenses, and the Parties hereto voluntarily and with full knowledge of its significance, expressly waive and relinquish any and all rights they may have under any state or federal statute, rule or common law principle, in law or equity, relating to limitations on general releases, including but not limited to such rights under Section 1542 of the California Civil Code (or statutes of similar import in other states), which provides as follows:

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.

3.4 Dismissal of the Texas Action and the California Action With Prejudice. Within five (5) business days after receipt by i2 of the “Payment” set forth in Section 4 below, the Parties shall cause their respective attorneys to file with the United States District Court for the Eastern District of Texas a fully executed Proposed Stipulation and Order of Dismissal with Prejudice in the form attached hereto as Exhibit A, and to file with the United States District Court for the Northern District of California a fully executed Proposed Stipulation and Order of Dismissal with Prejudice in the form attached hereto as Exhibit B, with each side to bear its own fees and costs arising from or related to the Texas Action and the California Action.

3.5 Additional Documents. Each Party shall execute all such further and additional documents as may be necessary or desirable to carry out the provisions of this Section 3.

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4. FEES

4.1 Payment. In full consideration of the releases, licenses, covenant not to sue and other rights granted herein, SAP AG shall, in accordance with the provisions of Section 4.3 below, pay to i2 the amount of fifty million U.S. dollars (US$50,000,000) plus an additional amount (the “Additional Amount”) determined in accordance with the provisions of Exhibit E (the total of $50,000,000 plus the Additional Amount being referred to as the “Payment”) via wire transfer to the following account:

Bank Name:	JP Morgan Chase Bank Texas
Bank Address:	Dallas, TX 75201
For:	i2 Technologies Inc.
Address:	1170 Luna Road
	Dallas, TX 75234
Account #:	32407006380
Routing#:	113000609
SWIFT code:	CHASUS33TEX

4.2 Fees and Costs. Each Party to this Agreement shall bear its own fees and costs, including attorneys’ fees, incurred in connection with the negotiation and drafting of this Agreement and in connection with any and all disputes between the Parties related to the Texas Action and the California Action.

4.3 Income Taxes and Procedure for Payment.

(a) Immediately upon execution of this Agreement, the Parties shall use their best efforts to obtain a stay of all proceedings in the Texas Action and the California Action pending execution of the procedures set forth in this Section 4.3 for making the Payment.

(b) Income taxes on the Payment will be borne by i2. Under German tax law, SAP is obligated to withhold the withholding tax in the case of license payments to recipients of compensation located abroad. (§ 50d EStG). This obligation can be ignored if SAP has been provided with an application of tax exemption in case of license payments. SAP will send to i2 within five (5) business days after execution of this Agreement a prepared application form of exemption from the German withholding tax. i2 shall promptly fill in and sign the application and return it to SAP together with a form 6166 Certification of Licensor as United States resident for U.S. taxation to:

SAP AG

Corporate Tax, attention Roland Schmidt

Dietmar-Hopp-Allee 16

69190 Walldorf

Germany

SAP shall, within five (5) business days after the Additional Amount has been determined in accordance with the procedures set forth in Exhibit E and SAP has received the signed application together with form 6166 from i2, forward these documents to the competent authorities Bundeszentralamt für Steuern to apply for the exemption certificate on behalf of i2. After the Bundeszentralamt für Steuern has issued the exemption certificate, SAP will remit the Payment to i2 within ten (10) business days without any withholding tax deductions. In the event that the Bundeszentralamt für Steuern denies issuance of the exemption certificate, then SAP shall gross up the amount of the Payment such that the amount received by i2 net of all

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withholding taxes shall equal the agreed amount set forth in Section 4.1 above, and shall remit such net amount to i2 within ten (10) business days of final denial of the exemption certificate by the Bundeszentralamt für Steuern.

4.4 Other Taxes. All taxes or customs duties on the Payment except income or corporation taxes will be borne by SAP.

4.5 Nonrefundable. The amount payable pursuant to Section 4.1 is nonrefundable for any reason, including the case that one or more of the i2 Licensed Patents are found to be invalid or unenforceable.

5. REPRESENTATIONS AND WARRANTIES AND INDEMNITY

5.1 Mutual Representations and Warranties. Each Party represents and warrants, solely to and for the benefit of the others, that:

(a) it has the full right, power and authority to enter into this Agreement and perform its obligations hereunder, to grant the releases set forth in this Agreement, and to grant the licenses and covenant not to sue, as the case may be, set forth in this Agreement;

(b) its performance of this Agreement shall not conflict with or result in a breach or violation of any of the terms or provisions or constitute a default under any other agreement by which it is bound or to which its assets are subject; and

(c) when executed and delivered, this Agreement shall constitute a legal, valid and binding obligation enforceable against it in accordance with its terms.

5.2 Representations and Warranties of i2. i2 represents and warrants to SAP that:

(a) i2 has not granted and will not grant any license or right in the i2 Licensed Patents that interferes or conflicts with any of the rights granted in Section 2.1 of this Agreement, and will take no action or omit to take any action that would prevent or hinder the exercise of the license rights granted in Section 2.1 of this Agreement and that i2 will bind any of its Affiliates or successors or assigns to the same obligation; and

(b) i2 has as of the Effective Date and throughout the term of this Agreement will continue to have (or shall cause to have) all rights in the i2 Licensed Patents necessary to allow SAP, its Affiliates, and their SAP Customers, SAP Vendors, SAP Authorized Developers, and suppliers and providers to SAP to exercise the license rights granted in Section 2.1 of this Agreement without any restriction or charge, and no entity other than i2, duly acting on behalf of itself and its Affiliates, is required to act in order to fully effectuate the licenses and releases of the scope contemplated in this Agreement.

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5.3 Representations and Warranties of SAP. SAP represents and warrants to i2 that:

(a) SAP has not granted and will not grant any license or right in the SAP Licensed Patents that interferes or conflicts with any of the rights granted in Section 2.2 of this Agreement, and will take no action or omit to take any action that would prevent or hinder the exercise of the license rights granted in Section 2.2 of this Agreement and that SAP will bind any of its Affiliates or successors or assigns to the same obligation; and

(b) SAP has as of the Effective Date and throughout the term of this Agreement will continue to have (or shall cause to have) all rights in the SAP Licensed Patents necessary to allow i2 and its Affiliates to exercise the license rights granted in Section 2.2 of this Agreement without any restriction or charge, and no entity other than SAP, duly acting on behalf of itself and its Affiliates, is required to act in order to fully effectuate the licenses and releases of the scope contemplated in this Agreement.

5.4 Indemnity.

(a) By i2. i2 and its Affiliates and successors and assigns shall indemnify, defend and hold harmless SAP, its Affiliates and their successors and assigns against their actual costs, attorneys’ fees, damages and other fees incurred, in the event of an actual or threatened claim of patent infringement made by i2 or any of its Affiliates under any of the i2 Licensed Patents against any Entity (including but not limited to SAP or its Affiliates) licensed pursuant to Section 2.1 above based upon any acts that were within the scope of the license of Section 2.1 at the time such acts were performed, provided that i2 or any of its Affiliates continues to assert any such actual or threatened claim of patent infringement after a period of thirty (30) days have elapsed after receipt of written notice from SAP that such acts by such Entity were licensed pursuant to Section 2.1 above. During this thirty (30) days period, the Parties shall cooperate in good faith in order to determine whether or not the claim made by i2 is made based upon acts by such Entity that were licensed pursuant to Section 2.1.

(b) By SAP. SAP and its Affiliates and successors and assigns shall indemnify, defend and hold harmless i2 and its Affiliates and their successors and assigns against their actual costs, attorneys’ fees, damages and other fees incurred, in the event of an actual or threatened claim of patent infringement made by SAP or any of its Affiliates in breach of the covenant not to sue set forth in Section 2.3 or made by SAP or any of its Affiliates under any of the SAP Licensed Patents against any Entity (including but not limited to i2 or its Affiliates) licensed pursuant to Section 2.2 above based upon any acts that were within the scope of the license of Section 2.2 at the time such acts were performed, provided that SAP or any of its Affiliates continues to assert any such actual or threatened claim of patent infringement after a period of thirty (30) days have elapsed after receipt of written notice from i2 that such claim is in breach of the covenant not to sue set forth in Section 2.3 or that such acts by such Entity were licensed pursuant to Section 2.2 above. During this thirty (30) days period, the Parties shall cooperate in good faith in order to determine whether or not the claim made by SAP is in breach of the covenant not to sue set forth in Section 2.3 or is made based upon acts by such Entity that were licensed pursuant to Section 2.2.

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5.5 General Disclaimer. Except as expressly set forth in Sections 5.1 and 5.2, the Licensed Patents are licensed “AS IS” without warranty of any kind, and each party hereby disclaims all other warranties, express, implied, and statutory, including but not limited to all implied warranties of merchantability, non-infringement and fitness for a particular purpose.

6. GENERAL

6.1 Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all promises or understandings made prior to or contemporaneously herewith with respect to such subject matter.

6.2 Severability. In the event that any provision of this Agreement is deemed invalid, unenforceable or void by a final, non-appealable judgment of a court of competent jurisdiction in a proceeding initiated by a third party, the remainder of this Agreement shall be interpreted to the extent possible to effect the overall intention of the Parties at the Effective Date.

6.3 Multiple Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

6.4 Modification. This Agreement may not be amended, modified or altered in any way, except in a writing identified as such and signed by all Parties hereto.

6.5 Confidentiality. From and after the Effective Date, neither Party shall disclose the terms of this Agreement without the prior written consent of the other Party, except that a Party may make any of the following disclosures without prior written consent of the other Party:

(a) to any governmental or regulatory body including any stock exchanges having jurisdiction and/or regulatory obligations specifically requiring such disclosure;

(b) in response to a valid subpoena or as otherwise may be required by law;

(c) for the purposes of disclosure in connection with the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, and any other reports filed with the Securities and Exchange Commission, or any other filings, reports or disclosures that may be required under applicable laws or regulations; provided that before such disclosure (i) the Party making the disclosure shall use its best efforts to redact portions of this Agreement to the extent permitted by applicable law and regulations; and (ii) the disclosing Party shall provide the other Party with an opportunity to review and comment on the proposed redacted disclosure. To the extent one Party makes a disclosure of terms of this Agreement in accordance with this clause (c), the other Party shall be free to disclose the same terms of this Agreement in its own filings, reports or disclosures that may be required under applicable laws or regulations. The Parties agree that, in the event a Party includes only a summary of this Agreement in a filing, report or disclosure required under applicable laws or regulations, as opposed to the language of the Agreement itself, such Party shall, unless otherwise agreed by the Parties, use a summary in substantially the form set forth in Exhibit C hereto;

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(d) to a Party’s accountants, legal counsel, tax advisors and other financial and legal advisors, subject to obligations of confidentiality and/or privilege;

(e) as required during the course of litigation and subject to protective order; provided, however, that any production under a protective order would be protected under an “Attorney Eyes Only” or higher confidentiality obligation; and

(f) in confidence, in connection with a proposed merger, acquisition or similar transaction.

6.6 Publicity. Each Party shall maintain this Agreement in confidence and shall not disclose or otherwise discuss this Agreement, or its terms and conditions, except as expressly set forth in this Section 6.6. The Parties will mutually agree to a press release concerning this Agreement within ten (10) business days after execution of this Agreement and shall each promptly issue the agreed press release thereafter; other than such agreed press release, neither Party shall issue any press release relating to this Agreement. Each Party may disclose this Agreement and its terms and conditions as necessary to its respective accountants, Affiliates, legal counsel, tax advisors, insurance carriers, and bankers, or as may be required by law, rule, regulation or in connection with any court order, subpoena or valid process of law. Notwithstanding anything in this Section 6.6 to the contrary, (i) either Party may state that “i2 and SAP have entered into a patent license and settlement agreement,” and (ii) each Party may inform the Entities covered by the licenses, releases, and covenant not to sue, as the case may be, set forth in Sections 2 and 3 above that they are so covered.

6.7 Notices. Any notices given hereunder shall be in writing, will reference this Patent License and Settlement Agreement and will be deemed given when: (i) delivered personally; (ii) when sent by confirmed telex or facsimile; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a commercial overnight carrier, with written verification of receipt. All communications will be sent to the addresses set forth below or such other addresses as may be designated by a Party by giving written notice to the other Party pursuant to this Section 6.7:

Notices to i2:

i2 Technologies Inc.

Attention: General Counsel

1170 Luna Road

Dallas, TX 75234

With a copy, which shall not constitute notice, to:

McKool Smith, P.C.

Attn: Theodore Stevenson III

300 Crescent Court, Suite 1500

Dallas, TX 75201

Fax: (214) 978-4288

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Notices to SAP:

SAP Labs, LLC

3421 Hillview Avenue

Palo Alto, CA 94304

Attention: Chief Intellectual Property Officer

Fax: (650) 849-4344

With a copy to:

SAP AG

Dietmar-Hopp-Allee 16

69190 Walldorf

Germany

Attention: Intellectual Property Counsel, Global IP Dept.

Fax: +49 6227 7 42060

6.8 Non-Waiver. The waiver of any breach of any provision of this Agreement shall not be deemed to be a waiver of any other breach of the same or any other provision of this Agreement.

6.9 Non-Agency. Nothing contained in this Agreement or the performance thereof is intended to or shall be construed to create any relationship of agency, partnership or joint venture between or among the Parties.

6.10 Enforcing Licensed Patents. Nothing in this Agreement shall be construed as an agreement by either Party to bring actions or suits against third parties for infringement of its Licensed Patents, or conferring any right to the other Party or its Affiliates to bring actions or suits against third parties for infringement of its Licensed Patents.

Page 18

Settlement Agreement

6.11 Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, which will not be unreasonably withheld, except that a Party may assign this Agreement without the other Party’s written consent and subject to the provisions of Section 2.6 in connection with a Change of Control of such Party, and the license rights granted in Section 2.1 or 2.2 above and the covenant not to sue in Section 2.3, as the case may be, shall continue to apply to the Entity surviving such Change of Control (the “Surviving Entity”) and its Affiliates, and as the case may be, its Authorized Developers, Customers and Vendors, but only with respect to (i) those SAP Licensed Products or i2 Licensed Products, as the case may be, actually distributed or generally available to Customers prior to the date such Change of Control is consummated (“Surviving Entity Licensed Products”) and (ii) any future versions of Surviving Entity Licensed Products, but only with respect to those portions of such future versions that use or embody features, functionality, and/or technology used or embodied in the Surviving Entity Licensed Products prior to the date such Change of Control is consummated. Features, functionality and/or technology beyond that used or embodied in the Surviving Entity Licensed Products prior to the date such Change of Control is consummated will not be licensed or within the covenant not to sue, as the case may be, in such future versions, and new products or services of the Surviving Entity will not be licensed or subject to the covenant not to sue. In addition, in the event of such an assignment, the licenses and the covenant not to sue granted to the Surviving Entity shall be subject to the following limitations in the following two circumstances:

(a) If the Surviving Entity itself had total revenues in the twelve (12) months immediately prior to the Change of Control, or is owned or controlled by an Entity that had total revenues attributable to sales or licensing of software, computer technology and/or information technology and related services in the twelve (12) months immediately prior to the Change of Control, equal to or exceeding three billion U.S. dollars (US$3,000,000,000), then the licenses and the covenant not to sue granted to the Surviving Entity shall automatically become limited in the twelve (12) months immediately following such Change of Control to the lesser of (i) a fifteen percent (15%) increase in total volume of each Surviving Entity Licensed Product sold or licensed by the Surviving Entity and its Affiliates over that sold by such Party and its Affiliates before the Change of Control and (ii) a volume of each Surviving Entity Licensed Product sold or licensed by the Surviving Entity and its Affiliates that generate revenue to such Surviving Entity and its Affiliates equal to no more than the revenue generated to such Party and its Affiliates by such Surviving Entity Licensed Product in the twelve (12) months preceding such Change of Control plus fifteen percent (15%); and shall be limited, in each of the successive twelve-month periods following such Change of Control, to the lesser of (i) the total volume of each Surviving Entity Licensed Product sold or licensed by the Surviving Entity and its Affiliates in the immediately preceding twelve-month period plus fifteen percent (15%) and (ii) a volume of each Surviving Entity Licensed Product that generates revenue to such Surviving Entity and its Affiliates equal to no more than the total amount of revenue generated to such Surviving Entity and its Affiliates by such Surviving Entity Licensed Product during the immediately preceding twelve-month period plus fifteen percent (15%); and

(b) If the Surviving Entity itself had total revenues in the twelve (12) months immediately prior to the Change of Control, or is owned or controlled by an Entity that had total revenues attributable to sales or licensing of software, computer technology and/or information technology and related services in the twelve (12) months immediately prior to the Change of Control, equal to or exceeding one billion U.S. dollars (US$1,000,000,000) but less than three billion U.S. dollars (US$3,000,000,000), then the licenses and the covenant not to sue granted to the Surviving Entity shall automatically become subject to the same limitations set forth in the preceding clause (a), except that the applicable percentages shall be twenty-five percent (25%) rather than fifteen percent (15%).

(c) The provisions and limitations of this Section 6.11 shall apply to any subsequent assignments by any Surviving Entity that may undergo a Change of Control.

(d) Each Party shall give prompt written notice to the other Party of any assignment made pursuant to the provisions of this Section 6.11. Any attempted or purported assignment or delegation by a Party in violation of this Section 6.11 or Section 2.6 shall be null and void. Subject to the foregoing, this Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and permitted assigns. For the avoidance of doubt, the licenses granted herein shall run with the Licensed Patents irrespective of future transfers, assignments, or licenses of such Licensed Patents. Nothing in this provision shall restrict or prevent a Party from transferring, assigning or licensing any of its Licensed Patents without prior written notice or consent of the other Party, but subject to the rights and licenses granted hereunder. Each Party agrees, however, to provide the other Party with notice of any transfer or assignment of any Licensed Patent.

Page 19

Settlement Agreement

6.12 Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to or application of choice of law rules or principles.

6.13 Cumulation. All rights and remedies enumerated in this Agreement will be cumulative and none will exclude any other right or remedy permitted herein or by law.

6.14 Representation by Counsel. Each of the Parties acknowledges that it has been represented by counsel in connection with the negotiation, drafting and execution of this Agreement. The language used in this Agreement shall be deemed to be language chosen by all Parties to express their mutual intent, and no rule of strict construction against any Party shall be applied to any term or provision hereof.

6.15 Captions. The captions to the sections or subsections of this Agreement are solely for the convenience of the Parties, are not a part of this Agreement, and shall not be used for the interpretation of, or determination of the validity of, this Agreement or any provision hereof.

6.16 Bankruptcy. Each Party acknowledges that all rights and licenses granted by it under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. Each Party acknowledges that if it, as a debtor in possession or a trustee-in-bankruptcy in a case under the Bankruptcy Code, rejects this Agreement, the other Party may elect to retain its license rights under this Agreement as provided in Section 365(n) of the Bankruptcy Code. Each Party irrevocably waives all arguments and defenses arising under 11 U.S.C. 365(c)(1) or successor provisions to the effect that applicable law excuses the Party, other than the debtor, from accepting performance from or rendering performance to an entity other than the debtor or debtor in possession as a basis for opposing assumption of the Agreement by the other Party in a case under Chapter 11 of the Bankruptcy Code to the extent that such consent is required under 11 U.S.C. § 365(c)(1) or any successor statute. Any Change of Control resulting from any such bankruptcy proceeding shall remain subject to Section 6.11 above

6.17 Dispute Resolution. The Parties will attempt to resolve by mediation using Hesha Abrams, if reasonably available, any dispute or claim arising out of or relating to this Agreement within thirty (30) days of one Party giving notice of the dispute or claim to the other Party. In the event such dispute or claim cannot be resolved within such thirty (30) days, then either Party may serve the other Party with a notice of arbitration, and in such event, the dispute or claim will be submitted to binding arbitration in Dallas, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association (AAA) then in force and the Federal Arbitration Act. The terms of this Agreement shall control in the event of any inconsistency between it and the AAA rules. The arbitration will be conducted by a single arbitrator who shall have substantial experience in patent law and who shall apply Delaware law and applicable federal law to the dispute or claim. The arbitrator will be selected by mutual agreement of the

Page 20

Settlement Agreement

Parties, and in the event the Parties are unable to agree within thirty (30) days of one Party’s notification of their intention to initiate arbitration, then each Party shall nominate a person unaffiliated with the Party to select the arbitrator, and the two nominees shall then mutually select the arbitrator. Judgment on the award may be entered in any court of competent jurisdiction. The statute of limitations and doctrines of laches, estoppel and the like which would apply to a lawsuit will apply in arbitration, and invocation of arbitration will be equivalent to beginning a lawsuit for this purpose. The prevailing party in the arbitration proceeding, as determined by the arbitrator, shall be entitled to recover its reasonable attorneys fees and costs for the arbitration, including the fees of the arbitrator and the arbitration fees of the AAA, from the other Party. This dispute resolution provision is applicable only to the Parties and their Affiliates and their respective successors and assigns, and does not apply to other Entities.

[remainder of this page intentionally left blank]

Page 21

Settlement Agreement

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed through its duly authorized representative below.

SAP AG	I2 Technologies, Inc.
By:	By:
Printed Name:	Printed Name:
Title:	Title:
SAP AG	I2 Technologies US, Inc.
By:	By:
Printed Name:	Printed Name:
Title:	Title:
SAP America, Inc.
By:
Printed Name:
Title:

Page 22

Settlement Agreement

Exhibit A

Proposed Stipulation and Order of Dismissal with Prejudice

(Texas Action)

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

i2 Technologies US, Inc., and i2 Technologies, Inc., Plaintiffs,
v.	Civil Action No. 2-06-CV-352-CE
SAP AG, and SAP America, Inc., Defendants.	JURY TRIAL REQUESTED

STIPULATION OF DISMISSAL WITH PREJUDICE

Come now Plaintiffs i2 Technologies US, Inc. and i2 Technologies, Inc. (collectively, “i2”) and files this stipulation of dismissal as to Defendants SAG AG, and SAP America, Inc. (collectively, “SAP”). i2 has agreed to dismiss all claims asserted against SAP in this case with prejudice in accordance with a Patent License and Settlement Agreement. Accordingly, pursuant to Federal Rule of Civil Procedure 41(a)(1), i2 stipulates to the dismissal with prejudice of all claims asserted in this case against SAP. The parties further stipulate that they shall bear their own attorneys’ fees, expenses, and costs.

Page 23

Settlement Agreement

Dated: June __, 2008.	Respectfully submitted,
	McKOOL SMITH, P.C.
	/s/ Sam Baxter
	Sam Baxter, Lead Attorney Texas State Bar No. 01938000 sbaxter@mckoolsmith.com McKool Smith, P.C. 104 East Houston, Suite 300 Marshall, Texas 75670 Telephone: (903) 923-9000 Facsimile: (903) 923-9099 Theodore Stevenson, III Texas State Bar No. 19196650 tstevenson@mckoolsmith.com David Sochia Texas State Bar No. 00797470 dsochia@mckoolsmith.com William E. Davis, III Texas State Bar No. 24047416 wdavis@mckoolsmith.com McKool Smith, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: (214) 978-4000 Telecopier: (214) 978-4044 Andrew W. Spangler Texas State Bar No. 24041960 spangler@spanglerlawpc.com Spangler Law P.C. 208 N. Green St., Suite 300 Longview, Texas 75601 Telephone: (903) 753-9300 Telecopier: (903) 553-0403 ATTORNEYS FOR PLAINTIFFS i2 TECHNOLOGIES US, INC. AND i2 TECHNOLOGIES, INC.

Page 24

Settlement Agreement

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document was served on counsel of record via ECF or U.S. Mail on this              day of June, 2008.

/s/ William E. Davis, III

William E. Davis, III

CERTIFICATE OF CONFERENCE

I hereby certify that counsel for i2 conferred with counsel for SAP on the relief requested in this motion pursuant to L.R. CV-7(h) and that the parties agree to the relief requested.

/s/ William E. Davis, III

William E. Davis, III

Page 25

Settlement Agreement

Exhibit B

Proposed Stipulation and Order of Dismissal with Prejudice

(California Action)

DAVID L. HAYES (CSB No. 122894)     (dhayes@fenwick.com) MICHAEL J. SACKSTEDER (CSB No. 191605)     (msacksteder@fenwick.com) FENWICK & WEST LLP 555 California Street 12th Floor San Francisco, CA 94104
Telephone: Facsimile:	(415) 875-2300 (415) 281-1350
SAINA S. SHAMILOV (CSB No. 216636)     (sshamilov@fenwick.com) TODD R. GREGORIAN (CSB NO. 236096)     (tgregorian@fenwick.com) FENWICK & WEST LLP Silicon Valley Center, 801 California Street Mountain View, CA 94041
Telephone: Facsimile:	(650) 988-8500 (650) 938-5200
Attorneys for Plaintiff SAP AKTIENGESELLSCHAFT

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

SAP AKTIENGESELLSCHAFT, a German corporation, Plaintiff, v. i2 TECHNOLOGIES, INC., a Delaware corporation, Defendant. Case No. 4:07-cv-04187 SBA   STIPULATION OF DISMISSAL BETWEEN PLAINTIFF SAP AKTIENGESELLSCHAFT AND DEFENDANT i2 TECHNOLOGIES AND [PROPOSED] ORDER

Page 1

Settlement Agreement

The parties having agreed to a settlement of this matter without admissions of any kind, IT IS HEREBY STIPULATED by and between the plaintiff/counterclaim defendant, SAP Aktiengesellschaft., and the defendant/counterclaimant, i2 Technologies, Inc., through their designated counsel:

1. Pursuant to Fed. R. Civ. P. 41, the above captioned action, including all claims and counterclaims that were asserted or could be asserted in the action with respect to United States Patent Nos. 6,407,761 , 6,750,766 , and 7,222,369, is hereby DISMISSED WITH PREJUDICE.

2. Each party shall bear its own attorneys’ fees and costs.

IT IS SO STIPULATED, THROUGH COUNSEL OF RECORD.

Dated: June     , 2008	FENWICK & WEST LLP
	By:	/s/ Michael Sacksteder
		Michael Sacksteder
	Attorneys for Plaintiff SAP Aktiengesellschaft
Dated: June     , 2008
	By:	/s/ Jason Sonoda
		Jason Sonoda
	Attorneys for Defendant i2 Technologies, Inc.
PURSUANT TO STIPULATION, IT IS SO ORDERED.
Dated:                     , 2008
		The Honorable Saundra Brown Armstrong United States District Judge Northern District of California

Page 2

Settlement Agreement

Exhibit C

Summary of the Agreement

On June 23, 2008, i2 Technologies, Inc., and SAP AG and SAP America, Inc. (collectively, “SAP”), entered into a Settlement Agreement (the “Agreement”) to settle the existing patent litigation between the companies. Under the terms of the Agreement, each party will license to the other party certain patents in exchange for a one-time cash payment of              U.S. dollars (US$             ). In addition, each party has agreed not to pursue legal action against the other party for its actions taken to enforce any of the licensed patents prior to the effective date of the Agreement. The Agreement also provides for general releases, indemnification for its violation, and dismisses the existing litigations between the parties with prejudice.

[The following paragraph is for use solely by SAP in connection with its annual report and its Form 20-F filing with the SEC]

In the event of a change of control transaction, rights granted in the Agreement shall continue to apply to the Entity surviving the change of control (the “Surviving Entity”) for those products actually distributed or generally available to customers prior to the date such change of control is consummated. If the Surviving Entity itself has total annual revenues immediately before the change of control equal to or exceeding three billion U.S. dollars (US$3,000,000,000), then the rights shall automatically become limited to cover fifteen percent (15%) annual growth. If the Surviving Entity itself has total annual revenues immediately before the change of control between one and three billion U.S. dollars (US$1,000,000,000 to US$3,000,000,000), then the rights shall automatically become limited to cover twenty-five percent (25%) annual growth.

Page 1

Settlement Agreement

Exhibit D

Partial Listing of i2’s Issued Patents and Patents Applications

as of the Effective Date

ISSUED PATENTS

Status	Serial No. & Patent No.	Title of Invention
Issued	11/319,929	Estimating Base Sales Volume
Issued: 3/27/2007	7,197,473
Expires: 4/9/2021
Issued	08/314,073	Software System Utilizing a Filtered Priority Queue and Method of Operation
Issued: 5/13/1997	5,630,123
Expires: 9/28/2014
Issued	08/491,167	System and Method for Managing Available to Promise Product (ATP)
Issued: 2/13/2001	6,188,989
Expires: 6/16/2015
Issued	08/491,153	Extensible Model Network Representation System for Process Planning
Issued: 6/9/1998	5,764,543
Expires:
Issued	08/491,121	Model-Independent and Interactive Report Generation System and Method of Operation
Issued: 11/3/1998	5,832,532
Expires:
Issued	08/491,168	Stategy Driven Planning System and Method of Operation
Issued: 12/1/1998	5,845,258
Expires: 6/16/2015

Page 2

Settlement Agreement

Issued	08/697,261	System and Method for Extended Enterprise Planning Across a Supply Chain
Issued: 10/26/1999	5,974,395
Expires:
Issued	08/802,434	System and Method for Allocating Manufactured Products to Sellers
Issued: 12/26/2000	6,167,380
Expires: 2/18/2017
Issued	08/806,222	Software System Utilizing a Filtered Priority Queue and Method of Operation
Issued: 4/25/2000	6,055,533
Expires: 2/25/2017
Issued	08/800,717	System for Optimizing a Network Plan and Method of Operation
Issued: 8/24/1999	5,943,244
Expires: 2/17/2017
Issued	08/805,683	Factory Network Having Planning Coordination Systems for Coordinating Separate Factory Planning Systems and a Method of Operation
Issued: 11/9/1999	5,983,194
Expires: 2/25/2017

Page 3

Settlement Agreement

Issued	08/917,151	System and Process for Inter-Domain Planning Analysis and Optimization Using Model Agents as Partial Replicas of Remote Domains
Issued: 11/30/1999	5,995,945
Expires: 8/25/2017
Issued	08/918,227	System and Process for Inter-Domain Interaction Across an Inter-Domain Connectivity Plane
Issued: 8/3/1999	5,931,900
Expires: 8/25/2017
Issued	08/918,222	System and Process Having a Universal Adapter Framework and Providing a Global User Interface and Global Messaging Bus
Issued: 4/24/2001	6,222,533
Expires: 8/25/2017
Issued	09/036,903	Method and Apparatus for Optimizing Constraint Models
Issued: 2/29/2000	6,031,984
Expires:
Issued	08/947,544	Framework for Negotiation and Tracking of Sale of Goods
Issued: 4/25/2000	6,055,519
Expires: 10/11/2017
Issued	09/195,332	Computer-Implemented Product Valuation Tool
Issued: 5/20/2008	7,376,578
Expires: 11/18/2018

Page 4

Settlement Agreement

Issued	09/057,036	Extensible Model Network Representation System for Process Planning
Issued: 7/27/1999	5,930,156
Expires: 4/8/2018
Issued	09/026,752	Computer Implemented Planning System and Process Providing Mechanism for Grouping and Prioritizing Consumer Objects Based on Multiple Criteria
Issued: 4/4/2000	6,047,290
Expires: 2/20/2018
Issued	09/059,223	Model-Independent and Interactive Report Generation Sysem and Method of Operation
Issued: 8/10/1999	5,937,155
Expires: 4/13/2018
Issued	09/359,175	Computer-Implemented Value Management Tool for an Asset Intensive Manufacturer
Issued: 7/24/2001	6,266,655
Expires:
Issued	09/092,348	System and Process Allowing Collaboration Within and Between Enterprises for Optimal Decision Making
Issued: 9/12/2000	6,119,149
Expires:

Page 5

Settlement Agreement

Issued	09/371,821	Data Structure and Operations for Time-Varying Variable in an Enterprise Model
Issued: 4/16/2002	6,374,249
Expires:
Issued	09/325,937	Computer Implemented Scheduling System and Process Using Abstract Local Search Technique
Issued: 9/24/2002	6,456,996
Expires:
Issued	09/322,430	Computer Implemented System and Method for High Level Controlled Searching Through a Problem Space
Issued: 5/15/2001	6,233,572
Expires:
Issued	09/374,461	System and Method for Visually Representing a Supply Chain
Issued: 6/10/2003	6,577,304
Expires: 8/13/2019
Issued	09/397,423	System and Method for Displaying Planning Information Associated with a Supply Chain
Issued: 9/20/2005	6,947,905
Expires: 9/17/2019

Page 6

Settlement Agreement

Issued	09/154,373	Computer-Implemented Product Development Planning Method
Issued: 5/15/2001	6,233,493
Expires: 9/16/2018
Issued	09/397,473	System and Method for Displaying Logistics Information Associated with a Supply Chain
Issued: 11/26/2002	6,486,899
Expires: 9/17/2019
Issued	09/156,722	Computer Workspace Providing Event Management Based on a Permissibility Framework
Issued: 9/11/2001	6,289,385
Expires:
Issued	09/156,265	System and Method for Remotely Accessing Data
Issued: 12/25/2001	6,334,146
Expires:
Issued	09/156,264	Communication Across One or More Enterprise Boundaries Regarding the Occurrence of a Workflow Event
Issued: 5/20/2003	6,567,783
Expires:

Page 7

Settlement Agreement

Issued	09/156,333	Synchronizing One or More Workflows Using One or More Synchronization-Join Activities that Include Synchroization Logic
Issued: 5/28/2002	6,397,192
Expires:
Issued	09/156,334	Method and System for Managing Collaboration Within and Between Enterprises
Issued: 5/2/2006	7,039,597
Expires: 9/18/2018
Issued	09/156,342	System and Method for Event Notification Through a Firewall
Issued: 9/11/2001	6,289,384
Expires: 9/18/2018
Issued	09/154,661	Object-Oriented Workflow for Multi-Enterprise Collaboration
Issued: 5/28/2002	6,397,191
Expires:
Issued	09/156,434	Exemplar Workflow Used in the Design and Deployment of a Workflow for Multi-Enterprise Collaboration
Issued: 8/27/2002	6,442,528
Expires:
Issued	09/398,170	System and Method for Multi-Enterprise Supply Chain Optimization
Issued: 8/21/2007	7,260,550
Expires: 9/17/2019

Page 8

Settlement Agreement

Issued	09/398,171	System and Method for Managing ATP Data in a Distributed Supply Chain Planning Environment
Issued: 11/8/2005	6,963,847
Expires: 9/17/2019
Issued	09/397,818	Binary Trees for Detecting Inventory Problems in an Enterprise Model
Issued: 9/13/2005	6,944,598
Expires: 9/17/2019
Issued	09/408,336	Binary Tree with Override Nodes for Representing a Time-Varying Function in an Enterprise Model
Issued: 11/20/2001	6,321,230
Expires:
Issued	09/305,580	Graph-Based Schedule Builder for Tightly Constrained Scheduling Problems
Issued: 12/3/2002	6,490,566
Expires: 5/5/2019
Issued	09/241,361	System and Method for Generating Dependent Data
Issued: 8/27/2002	6,442,554
Expires: 1/29/2019
Issued	09/292,528	System and Method for Optimizing the Allocation of a Resource
Issued: 4/16/2002	6,374,227
Expires:

Page 9

Settlement Agreement

Issued	09/282,912	Three-Dimensional Production Schedule Display for Computer-Implemented Production Management System
Issued: 4/9/2002	6,370,509
Expires:
Issued	09/292,644	System and Method for Optimizing the Allocation of a Resource
Issued: 11/20/2001	6,321,207
Expires:
Issued	09/362,776	Method for Planning Key Component Purchases to Optimize Revenue
Issued: 11/30/2004	6,826,538
Expires:
Issued	09/411,069	System and Process for Inter-Domain Planning Analysis and Optimization Using Model Agents as Partial Replicas of Remote Domains
Issued: 12/18/2001	6,332 ,130
Expires:

Page 10

Settlement Agreement

Issued	09/415,052	System and Method for Performing a Business Process in a Multi-Enterprise, Collaborating Network
Issued: 8/14/2007	7,257,541
Expires: 10/8/2019
Issued	09/415,507	Method and System for Optimizing Request-Promise Workflows
Issued: 5/17/2005	6,895,384
Expires:
Issued	09/534,915	System and Method for Managing Event Publication and Subscription
Issued: 3/25/2008	7,349,945
Expires: 3/23/2020
Issued	09/520,669	System and Method for Collaborative Batch Aggregation and Scheduling
Issued: 5/6/2003	6,560,501
Expires:
Issued	09/608,792	Warranty Transaction System and Method
Issued: 8/23/2005	6,934,686
Expires: 12/10/2023
Issued	09/494,162	System and Method Providing a Three-Dimensional Display of Values Relative to Comparison Values
Issued: 10/8/2002	6,462,736
Expires: 1/25/2020

Page 11

Settlement Agreement

Issued	09/504,247	System and Method for Allocating Manufactured Products to Sellers
Issued: 8/1/2006	7,085,729
Expires: 2/15/2020
Issued	09/535,905	System and Method for Providing Cross-Dimensional Computation and Data Access in an On-Line Analytical Processing (OLAP) Environment
Issued: 6/3/2003	6,574,619
Expires: 3/24/2020
Issued	09/548,466	Method and System for Multi-Enterprise Optimization Using Flexible Trade Contracts
Issued: 5/13/2008	7,373,323
Expires: 4/13/2020
Issued	09/580,327	System and Method for Retrieving Data from a Database Using a Data Management System
Issued: 10/18/2005	6,957,234
Expires: 5/26/2020
Issued	09/679,464	System and Method for Service Transaction Brokering Among Distributed Marketplaces
Issued: 7/26/2005	6,922,675
Expires:

Page 12

Settlement Agreement

Issued	09/773,685	System and Method for Developing Software Applications Using an Extended XML-Based Framework
Issued: 1/18/2005	6,845,499
Expires:
Issued	09/631,367	System and Process Allowing Collaboration Within and Between Enterprises for Optimal Decision Making
Issued: 12/18/2001	6,332,155
Expires:
Issued	09/930,673	Network Application Program Interface Facilitating Communication in a Distributed Network Environment
Issued: 5/8/2007	7,216,142
Expires: 12/21/2023
Issued	09/771,207	System and Method for Demand Planning Using Sequential Forecasting
Issued: 10/3/2006	7,117,164
Expires: 8/19/2023

Page 13

Settlement Agreement

Issued	09/675,780	System and Method for Transforming Custom Content Generation Tags Associated with Web Pages
Issued: 8/8/2006	7,089,330
Expires: 6/22/2024
Issued	09/941,960	Value Chain Management
Issued: 3/25/2008	7,349,861
Expires: 3/20/2025
Issued	09/745,979	System and Method for Generating Market Pricing Information for Non-Fungible Items
Issued: 5/27/2008	7,379,898
Expires: 9/29/2024
Issued	09/742,851	System and Method for Retrieving Information According to Improved Matching Criteria
Issued: 3/16/2004	6,708,174
Expires:
Issued	09/745,374	System and Method for Migrating Data in an Electronic Commerce System
Issued: 11/20/2007	7,299,255
Expires: 9/15/2024
Issued	09/745,980	System and Method for Selective Database Indexing
Issued: 3/16/2004	6,708,161
Expires:

Page 14

Settlement Agreement

Issued	09/925,149	Generating an Order Plan for a Supply Chain Network
Issued: 2/13/2007	7,177,827
Expires: 6/7/2023
Issued	09/841,320	Extreme Capacity Management in an Electronic Marketplace Environment
Issued: 5/6/2008	7,370,009
Expires: 5/3/2025
Issued	09/842,297	Guided Buying Decision Support in an Electronic Marketplace Environment
Issued: 12/27/2005	6,980,966
Expires: 4/2/2024
Issued	09/953,462	Providing Decision Support Based on Past Participant Performance Within an Electronic Marketplace Environment
Issued: 11/8/2005	6,963,849
Expires: 3/12/2024
Issued	09/940,764	Generation and Execution of Custom Requests for Quote
Issued: 6/10/2008	7,386,475
Expires: 6/20/2025
Issued	09/972,383	Fulfillment Management System for Managing ATP Data in a Distributed Supply Chain Environment
Issued: 7/24/2007	7,249,044
Expires: 7/16/2024
Issued	10/033,103	Redistribution of Parts in a Disbribution Network
Issued: 5/1/2007	7,210,624
Expires: 4/22/2024

Page 15

Settlement Agreement

Issued	10/032,971	Optimized Deployment of Parts in a Distribution Network
Issued: 2/26/2008	7,337,031
Expires: 4/29/2025
Issued	09/832,576	System and Method for Lean Inventory Management
Issued: 8/8/2006	7,089,196
Expires: 11/7/2023
Issued	09/825,083	System and Method for Allocating Data in a Hierarchical Organization of Data
Issued: 1/17/2006	6,988,104
Expires: 1/18/2023
Issued	09/755,751	System and Method for Remotely Monitoring and Managing Applications Across Multiple Domains
Issued: 6/13/2006	7,062,540
Expires: 2/20/2024
Issued	09/834,836	Synchronization of Planning Information in a High Availability Planning and Scheduling Architecture
Issued: 5/9/2006	7,043,444
Expires: 4/13/2024
Issued	09/829,476	Estimating Base Sales Volume Using a Low-Pass Filter Approach
Issued: 4/11/2006	7,028,000
Expires: 12/24/2023
Issued	09/834,802	Local and Remote Client-Server Interface Transparency in Distributed Software Systems
Issued: 6/13/2006	7,062,542
Expires: 5/7/2024

Page 16

Settlement Agreement

Issued	09/895,528	System and Method for Campaign Planning
Issued: 5/6/2003	6,560,502
Expires:
Issued	09/858,322	Pre-Qualifying Sellers During the Matching Phase of an Electronic Commerce Transaction
Issued: 3/25/2008	7,349,868
Expires: 2/23/2024
Issued	09/892,300	Providing Market Feedback Associated with Electronic Commerce Transactions to Sellers
Issued: 2/12/2008	7,330,829
Expires: 2/14/2024
Issued	09/858,269	Facilitating Electronic Commerce Transactions Using Buyer Profiles
Issued: 1/3/2006	6,983,276
Expires: 4/12/2024
Issued	09/884,393	Distributed Processing of Search Results in an Electronic Commerce System
Issued: 10/24/2006	7,127,416
Expires: 10/19/2023
Issued	09/895,489	Protecting Content from Unauthorized Reproduction
Issued: 3/18/2008	7,346,560
Expires: 3/10/2025
Issued	09/895,894	Protecting Content from Unauthorized Reproduction
Issued: 1/9/2007	7,162,453
Expires: 3/5/2024
Issued	09/884,007	Content Enhancement in an Electronic Marketplace
Issued: 8/28/2007	7,263,515
Expires: 8/27/2024

Page 17

Settlement Agreement

Issued	09/844,847	Optimization Using a Multi-Dimensional Data Model
Issued: 4/18/2006	7,031,955
Expires: 3/20/2024
Issued	09/835,003	High Availability Planning and Scheduling Architecture
Issued: 4/4/2006	7,024,371
Expires: 12/5/2023
Issued	09/949,378	Intelligent Order Promising
Issued: 6/20/2006	7,065,499
Expires: 2/26/2024
Issued	09/895,487	Demand Breakout For a Supply Chain
Issued: 7/24/2007	7,248,937
Expires: 7/5/2024
Issued	09/944,908	Conflict Detection and Resolution in Association with Data Allocation
Issued: 3/29/2005	6,873,994
Expires:
Issued	09/976,791	Sourcing of Bills of Materials
Issued: 5/23/2006	7,050,874
Expires: 1/25/2024
Issued	10/001,506	Third Party Document Storage and Reuse
Issued: 12/12/2006	7,149,744
Expires: 3/9/2024
Issued	09/999,524	Document Storage and Classification
Issued: 5/30/2006	7,054,841
Expires: 6/26/2023
Issued	10/164,516	Software Deployment System and Method
Issued: 7/4/2006	7,073,164
Expires: 7/5/2024
Issued	10/175,562	Matching and Cleansing of Part Data
Issued: 10/24/2006	7,127,458
Expires: 11/1/2023
Issued	10/037,695	Dynamic Load Balancing Using Semantic Traffic Monitoring
Issued: 8/17/2004	6,778,991
Expires:

Page 18

Settlement Agreement

Issued	10/032,945	Dynamic Database Redirection Using Semantic Taxonomy Information
Issued: 5/29/2007	7,225,146
Expires: 7/1/2024
Issued	10/086,761	Automatically Generating Graphical User Interface Elements at a Client System According to a Current Configuration Model
Issued: 12/6/2005	6,973,626
Expires: 4/11/2024
Issued	10/086,757	Using Connectors to Automatically Update Graphical User Interface Elements at a Client System According to an Updated State of a Configuration
Issued: 1/3/2006	6,983,421
Expires: 4/4/2024
Issued	09/800,169	Messaging System for Computers
Issued: 7/19/2005	6,920,476
Expires:
Issued	09/800,168	Computer Security System
Issued: 3/14/2006	7,013,485
Expires: 1/10/2024
Issued	09/686,470	Distributed Session Services
Issued: 9/20/2005	6,947,982
Expires: 3/10/2024
Issued	09/686,446	Rules-Based Notification System
Issued: 10/7/2003	6,631,363
Expires:

Page 19

Settlement Agreement

Issued	09/686,447	System and Method for Handling a Unit of Work
Issued: 8/1/2006	7,086,062
Expires: 8/2/2023
Issued	09/686,442	Customizable User Window
Issued: 2/15/2005	6,857,017
Expires:
Issued	09/686,731	Workflow Encapsulation in Stateless Environments
Issued: 3/29/2005	6,874,008
Expires:
Issued	09/652,520	Configurable Space-Time Performance Trade-Off in Multidimensional Data Base Systems
Issued: 1/4/2005	6,839,711
Expires:
Issued	09/684,075	Integrated System for Constraint-Based Portfolio and Pipeline Optimization
Issued: 10/31/2006	7,130,809
Expires: 5/3/2024
Issued	09/684,076	System for Scheduling and Product Planning
Issued: 11/21/2006	7,139,719
Expires: 1/16/2024
Issued	09/333,894	System and Method for Promising Delivery of Configured Products with Selected Optimizations
Issued: 5/2/2006	7,039,602
Expires: 6/14/2019
Issued	09/594,652	Product Substitution Search Algorithm
Issued: 10/3/2006	7,117,163
Expires: 7/30/2023

Page 20

Settlement Agreement

Issued	09/653,107	Multidimensional Database System with Intermediate Lockable Intersections
Issued: 12/2/2003	6,658,413
Expires:
Issued	09/551,899	Method and Apparatus for Supporting Multiple Alternative Graphical User Interfaces in Computer-Moderated Electronic Commerce
Issued: 2/21/2006	7,003,729
Expires: 4/19/2020
Issued	09/592,775	Electronic Marketplace Communication System
Issued: 10/2/2007	7,277,863
Expires: 2/10/2024
Issued	10/121,241	Computer-Implemented Automatic Classification of Product Description Information
Issued: 8/15/2006	7,093,233
Expires: 8/7/2024
Issued	10/008,733	Consolidation of Multiple Source Content Schemas in to a Single Target Content Schema
Issued: 8/31/2004	6,785,689
Expires:

Page 21

Settlement Agreement

Issued	10/072,399	Sorted-Paged Retrieval of Hierachical Data from Relational Databases
Issued: 5/24/2005	6,898,593
Expires:
Issued	09/962,663	Routing Shipments According to Criticality
Issued: 12/27/2005	6,980,885
Expires: 7/20/2023
Issued	09/998,459	Mapping Between Part Numbers that are Based on Different Part Numbering Schemes
Issued: 1/17/2006	6,988,111
Expires: 11/20/2023
Issued	10/008,898	Computer-Implemented PDF Document Management
Issued: 5/17/2005	6,895,550
Expires:
Issued	09/409,069	Multi-Dimensional Data Management System
Issued: 4/2/2002	6,366,922
Expires:
Issued	08/951,714	Modeling of Object-Oriented Database Structures, Translation to Relational Database Structures, and Dynamic Searches Thereon
Issued: 4/16/2002	6,374,252
Expires: 10/16/2017
Issued	08/747,164	Search Engine for Remote Access to Database Management Systems
Issued: 1/2/2001	6,169,992
Expires:

Page 22

Settlement Agreement

Issued	08/527,161	Method and Apparatus for Concurrency in an Object Oriented Database Using Lock Inhereitance Based on Class Objects
Issued: 4/21/1998	5,742,813
Expires:
Issued	08/339,481	Object Oriented Database Management System
Issued: 11/17/1998	5,838,965
Expires:
Issued	08/745,255	Dynamically Selectable Language Display System for Object Oriented Database Management System
Issued: 7/7/1998	5,778,356
Expires:
Issued	08/526,555	Method and System for Comparing Attributes in an Object-Oriented Management System
Issued: 11/10/1998	5,835,910
Expires:
Issued	10/059,645	Filtered Peer-to-Peer Business Communication in a Distributed Computer Environment
Issued: 6/10/2008	7,386,459
Expires: 5/29/2025

Page 23

Settlement Agreement

Issued	09/998,363	Distributed Automated Software Graphical User Interface (GUI) Testing
Issued: 5/30/2006	7,055,137
Expires: 9/9/2023
Issued	09/992,283	Generating a Risk Assessment Regarding a Software Implementation Project
Issued: 4/15/2008	7,359,865
Expires: 4/15/2025
Issued	10/028,480	Graphical Design and Automatic Generation of Supply Chain collaboration Services Capable of Understanding Supply Chain Semantics
Issued: 5/2/2006	7,039,562
Expires: 5/1/2024
Issued	10/035,712	Reproducible Selection of Members in a Hierarchy
Issued: 1/29/2008	7,324,983
Expires: 12/29/2024
Issued	10/103,342	Generating a Sales Volume Forecast
Issued: 1/29/2008	7,324,955
Expires: 4/15/2025
Issued	10/090,342	Generating an Optimized Supplier Allocation Plan
Issued: 3/11/2008	7,343,311
Expires: 3/11/2025
Issued	10/119,990	Intelligent Fulfillment Agents
Issued: 5/20/2008	7,376,600
Expires: 5/17/2024
Issued	10/308,333	Operationalizing a Goal
Issued: 6/3/2008	7,383,240
Expires: 9/3/2025
Issued	10/279,182	Calculating Price Elasticity
Issued: 3/11/2008	7,343,355
Expires: 9/17/2025

Page 24

Settlement Agreement

Issued	10/139,102	Forecasting a Last Time Buy Quantity for a Service Part Using a Low-Pass Filter Approach
Issued: 7/31/2007	7,251,614
Expires: 8/12/2025
Issued	10/163,782	System and Method for Configuring Software Using a Business Modeling Tool
Issued: 5/1/2007	7,213,232
Expires: 4/30/2024
Issued	10/223,925	Push Planning for Unserviceable Parts to Facilitate Repair Planning in a Repair Network
Issued: 10/2/2007	7,277,862
Expires: 4/6/2026
Issued	10/274,761	Automatically Identifying a Program Error in a Computer Program
Issued: 5/2/2006	7,039,833
Expires: 5/7/2024
Issued	10/393,793	Collaboratively Solving an Optimization Problem Using First and Second Optimization Software Each Having at Least Partial Information Concerning the O
Issued: 5/4/2004	6,731,998
Expires:

Page 25

Settlement Agreement

Issued	10/755,437	Master Data Management System for Centrally Managing Cached Data Representing Core Enterprise Reference Data Maintained as Locked in True State Read Only Access Until Completion of Manipulation Process
Issued: 5/1/2007	7,213,037
Expires: 5/29/2025
Issued	10/414,892	Generating a Sampling Plan for Testing Generated Content
Issued: 3/15/2005	6,868,299
Expires:
Issued	10/840,928	Data Management System Providing a Data Thesaurus for Mapping Between Multiple Data Schemas or Between Multiple Domains within a Data Schema
Issued: 12/18/2007	7,310,646
Expires: 5/29/2025

Page 26

Settlement Agreement

Issued	10/704,080	Collaborative Batch Aggregation and Scheduling in a Manufacturing Environment
Issued: 12/28/2004	6,836,689
Expires:
Issued	10/940,851	Optimization Using a Multi-Dimensional Data Model
Issued: 9/4/2007	7,266,549
Expires: 8/6/2025
Issued	09/550,407	Building Business Objects and Business Software Applications Using Dynamic Object Definitions of Ingrediential Objects
Issued: 9/7/2004	6,789,252
Expires:
Issued	11/024,299	Collaborative Batch Aggregation and Scheduling in a Manufacturing Environment
Issued: 4/4/2006	7,024,265
Expires: 12/28/2024
Issued	09/162,221	Enterprise Interaction Hub for Managing an Enterprise Web System
Issued: 7/4/2000	6,085,220
Expires: 9/28/2018

Page 27

Settlement Agreement

Issued	09/036,010	System and Method for Maintaining a State for a User Session Using a Web System Having a Global Session Server
Issued: 6/13/2000	6,076,108
Expires: 3/6/2018
Issued	09/603,759	Enterprise Interaction Hub for Managing an Enterprise Web System
Issued: 3/19/2002	6,360,249
Expires: 7/28/2020
Issued	09/593,294	System and Method for Maintaining a State for a User Session Using a Web System
Issued: 11/12/2002	6,480,894
Expires: 5/30/2021

PENDING APPLICATIONS

Status	Serial No.	Title of Invention
Pending	90/008,630	Extensible Model Network Representation System for Process Planning
Filed on 5/10/2007
Pending	90/008,639	Framework for Negotiation and Tracking of Sale of Goods
Filed on 5/16/2007

Page 28

Settlement Agreement

Pending	11/875,548	Computer-Implemented Product Valuation Tool
Filed on 10/19/2007
Pending	11/524,153	Computer-Implemented Product Valuation Tool
Filed on 9/20/2006
Pending	90/008,645	Extensible Model Network Representation System for Process Planning
Filed on 5/10/2007
Pending	11/634,056	System and Method for Multi-Enterprise Supply Chain Optimization
Filed on 12/5/2006
Pending	11/875,270	Binary Trees for Detecting Inventory Problems in an Enterprise Model
Filed on 10/19/2007
Pending	11/174,931	Binary Trees for Detecting Inventory Problems in an Enterprise Model
Filed on 7/5/2005

Page 29

Settlement Agreement

Pending	11/773,901	System and Method for Performing a Business Process in a Multi-Enterprise, Collaborating Network
Filed on 7/5/2007
Pending	90/008,680	System and Method for Allocating Manufactured Products to Sellers
Filed on 6/1/2007
Pending	11/876,364	Method and System for Multi-Enterprise Optimization Using Flexible Trade Contracts
Filed on 10/22/2007
Pending	11/691,957	Method and System for Multi-Enterprise Optimization Using Flexible Trade Contracts
Filed on 3/27/2007
Pending	11/691,973	Method and System for Multi-Enterprise Optimization Using Flexible Trade Contracts
Filed on 3/27/2007

Page 30

Settlement Agreement

Pending	11/109,346	Application-Driven Scheduling System and Method
Filed on 4/19/2005
Pending	11/931,717	Value Chain Management
Filed on 10/31/2007
Pending	11/779,126	Value Chain Management
Filed on 7/17/2007
Pending	11/876,120	System and Method for Generating Market Pricing Information for Non-Fungible Items
Filed on 10/22/2007
Pending	11/099,859	System and Method for Identifying a Product
Filed on 4/6/2005
Pending	11/384,640	Generating an Optimized Price Schedule for a Product
Filed on 3/20/2006
Pending	11/875,209	Generating an Optimized Price Schedule for a Product
Filed on 10/19/2007

Page 31

Settlement Agreement

Pending	12/115,016	Generating an Optimized Price Schedule for a Product
Filed on 5/5/2008
Pending	11/120,588	Workflow Modeling Using an Acyclic Directed Graph Data Structure
Filed on 5/3/2005
Pending	11/875,159	Generating an Order Plan for a Supply Chain Network
Filed on 10/19/2007
Pending	11/545,308	Generating an Order Plan for a Supply Chain Network
Filed on 10/10/2006
Pending	11/751,348	Extreme Capacity Management in an Electronic Marketplace Environment
Filed on 5/21/2007
Pending	11/604,500	Generation and Execution of Custom Requests for Quote
Filed on 11/27/2006
Pending	11/875,115	Redistribution of Parts in a Distribution Network
Filed on 10/19/2007

Page 32

Settlement Agreement

Pending	12/031,975	Optimized Deployment of Parts in a Supply Chain Network
Filed on 2/15/2008
Pending	11/696,297	Redistribution of Parts in a Disbribution Network
Filed on 4/4/2007
Pending	11/876,210	Optimized Deployment of Parts in a Distribution Network
Filed on 10/22/2007
Pending	11/767,699	Optimized Deployment of Parts in a Distribution Network
Filed on 6/25/2007
Pending	11/872,940	Pre-Qualifying Sellers During the Matching Phase of an Electronic Commerce Transaction
Filed on 10/16/2007
Pending	11/877,825	Providing Market Feedback Associated with Electronic Commerce Transactions to Sellers
Filed on 10/24/2007
Pending	11/928,646	Content Enhancement for Analyzing Data in a Database
Filed on 10/30/2007

Page 33

Settlement Agreement

Pending	11/834,152	Content Enhancement for Analyzing Data in a Database
Filed on 8/6/2007
Pending	11/105,109	Providing Visualization of Market Offers Using a Multi-Dimensional Display Including Geometrically Shaped Icons
Filed on 4/13/2005
Pending	11/358,149	System and Method for Tracking Web Campaign Effectiveness
Filed on 2/21/2006
Pending	11/941,493	Customized State Machine and State Aggregation Technique for Processing Collaborative and Transactional Business Objects
Filed on 11/16/2007

Page 34

Settlement Agreement

Pending	11/876,483	Filtered Peer-to-Peer Business Communication in a Distributed Computer Environment
Filed on 10/22/2007
Pending	11/697,816	Facilitating the Negotiation of Standards for Inter-Enterprise Collaboration Between Trading Partners
Filed on 4/9/2007
Pending	11/877,252	Reproducible Selection of Members in a Hierarchy
Filed on 10/23/2007
Pending	11/876,984	Generating a Sales Volume Forecast
Filed on 10/23/2007
Pending	11/876,941	Generating an Optimized Supplier Allocation Plan
Filed on 10/23/2007
Pending	11/877,087	Intelligent Fulfillment Agents
Filed on 10/23/2007
Pending	11/185,169	Intelligent Fulfillment Agents
Filed on 7/20/2005

Page 35

Settlement Agreement

Pending	11/876,089	Calculating Price Elasticity
Filed on 10/22/2007
Pending	11/927,312	Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 10/29/2007
Pending	11/697,966	Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 4/9/2007
Pending	11/927,269	Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 10/29/2007

Page 36

Settlement Agreement

Pending	11/877,857	Data Management System Providing a Data Thesaurus for Mapping Between Multiple Data Schemas or Between Multiple Domains within a Data Schema
Filed on 10/24/2007
Pending	11/875,403	Demand Breakout for a Supply Chain
Filed on 10/19/2007
Pending	11/927,209	Enterprise Solution Framework Incorporating a Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 10/29/2007
Pending	11/760,229	Optimization Using a Multi-Dimensional Data Model
Filed on 6/8/2007

Page 37

Settlement Agreement

Pending	09/639,491	Computer-Implemented Monitoring and Management of Business Processes and Associated Resources
Filed on 8/15/2000
Pending	09/510,607	System and Method for Managing ATP
Filed on 2/22/2000
Pending	09/528,457	System and Method for Multi-Party Constrained Optimization
Filed on 3/17/2000
Pending	09/791,481	Electronic Marketplace Providing Service Parts Inventory Planning and Management
Filed on 2/22/2001
Pending	09/686,711	System and Method for Providing Electronic Financial Transaction Services
Filed on 10/10/2000

Page 38

Settlement Agreement

Pending	09/776,130	System and Method for Brokering Food Order Transactions Among a Plurality of Unaffiliated Sellers
Filed on 2/2/2001
Pending	09/675,415	System and Method for Rendering Content According to Availability Data for One or More Items
Filed on 9/29/2000
Pending	09/956,439	Generating an Ordering of Workflow Items Given a Partial Ordering and Extension Data
Filed on 9/18/2001
Pending	09/750,617	System and Method for Negotiating According to Improved Matching Criteria
Filed on 12/20/2000

Page 39

Settlement Agreement

Pending	09/745,978	System and Method for Facilitating Electronic Commerce Transactions
Filed on 12/22/2000
Pending	09/896,388	Generating an Optimized Price Schedule for a Product
Filed on 6/28/2001
Pending	09/972,127	Collaborative Fulfillment in a Distributed Supply Chain Environment
Filed on 10/4/2001
Pending	09/895,654	Translation Between Product Classification Schemas
Filed on 6/28/2001
Pending	09/895,525	Association of Data with a Product Classification Schema
Filed on 6/28/2001
Pending	09/859,266	Facilitating Electronic Commerce Transactions Using a Shared Product Data Repository
Filed on 5/16/2001

Page 40

Settlement Agreement

Pending	09/944,735	Information Exchange in an Electronic Trading Network
Filed on 8/31/2001
Pending	10/108,939	Determining a Combined Price Adjustment Applicable to a Base Price of an Item in a Purchase
Filed on 3/27/2002
Pending	10/011,572	Planning and Scheduling of Maintenance, Repair, and Overhaul Services
Filed on 11/12/2001
Pending	09/957,831	Baseline Cost Savings Analysis
Filed on 9/21/2001
Pending	10/004,725	Generating a Supply Chain Plan
Filed on 12/4/2001
Pending	10/120,571	Distributed Inventory Management
Filed on 4/10/2002
Pending	10/051,826	Technique for Electronic Commerce Communications
Filed on 1/16/2002
Pending	09/970,052	Displaying Market Data
Filed on 10/3/2001

Page 41

Settlement Agreement

Pending	10/428,991	Displaying Values Specified in a Number of Offers for a Number of Offer Variables with Respect to Price
Filed on 5/1/2003
Pending	09/970,371	Providing Visualization of Market Offers Using Patterns of Geometric Display Elements
Filed on 10/2/2001
Pending	09/976,750	Displaying Strikes Between Bids and Asks in a Market Over Time Using Polygons
Filed on 10/12/2001
Pending	09/945,297	Locally Generating Price Quotes Using One or More Pricing Tools Received From a Seller
Filed on 8/31/2001
Pending	10/378,802	Sourcing Under Quantity Pricing Rules
Filed on 3/3/2003
Pending	09/970,256	Facilitating Order Entry
Filed on 10/3/2001

Page 42

Settlement Agreement

Pending	09/978,926	Providing Decision Support Through Visualization of Participant Past Performance in an Electronic Commerce Environment
Filed on 10/16/2001
Pending	10/002,433	Order Acceleration Through User Document Storage Reuse
Filed on 10/23/2001
Pending	09/685,517	System and Method for Pricing Products
Filed on 10/9/2000
Pending	09/963,960	Large-Scale Supply Chain Planning System and Method
Filed on 9/25/2001
Pending	10/032,903	Generating, Updating, and Managing Multi-Taxonomy Environments
Filed on 10/19/2001
Pending	09/945,296	Dynamic Pricing in an Unbalanced Market
Filed on 8/31/2001

Page 43

Settlement Agreement

Pending	09/820,370	System and Method for Matching Buyers and Sellers in a Marketplace
Filed on 3/11/2001
Pending	09/688,032	System for Planning New Product Release
Filed on 10/8/2000
Pending	09/684,074	Consumer Purchasing System
Filed on 10/8/2000
Pending	09/680,603	System and Method for Displaying Graphs
Filed on 10/8/2000
Pending	10/103,384	Demand Planning Using Exchange Balances
Filed on 3/19/2002
Pending	09/971,718	Facilitating the Negotiation of Standards for Inter-Enterprise Collaboration Between Trading Partners
Filed on 10/4/2001
Pending	10/175,488	Continuous Production Planning Using a Transition Matrix
Filed on 6/19/2002

Page 44

Settlement Agreement

Pending	10/080,368	Facilitating Business Transactions Between Trading Networks
Filed on 2/21/2002
Pending	10/315,282	Generating an Optimized Pricing Plan
Filed on 12/9/2002
Pending	10/165,640	Managing Plan Problems Across Planning Cycles
Filed on 6/7/2002
Pending	10/672,537	Distributing Consumer Demand Upstream in a Supply Chain
Filed on 9/26/2003
Pending	10/103,383	Third Party Certification of Content in Electronic Commerce Transactions
Filed on 3/19/2002
Pending	10/164,448	Software Valuation Simulation Tool
Filed on 6/6/2002
Pending	10/223,845	On-Demand Repair Planning
Filed on 8/19/2002

Page 45

Settlement Agreement

Pending	10/224,240	Pull Planning for Serviceable Parts to Facilitate On-Demand Repair Planning
Filed on 8/19/2002
Pending	10/691,320	Pull Planning for Unserviceable Parts in Connection with On-Demand Repair Planning
Filed on 10/22/2003
Pending	10/847,422	Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 5/17/2004
Pending	10/847,037	Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 5/17/2004

Page 46

Settlement Agreement

Pending	10/611,560	Data Integration System with Programmatic Source and Target Interfaces
Filed on 6/30/2003
Pending	10/611,276	Data Integration System with Programmatic Source and Target Interfaces
Filed on 6/30/2003
Pending	10/611,779	Data Integration System with Programmatic Source and Target Interfaces
Filed on 6/30/2003
Pending	10/841,003	System Providing for Inventory Optimization in Association with a Centrally Managed Master Repository for Core Reference Data Associated with an Enter
Filed on 5/7/2004
Pending	10/836,002	Estimating Demand For a Supply Chain According to Order Lead Time
Filed on 4/29/2004

Page 47

Settlement Agreement

Pending	10/836,041	Determining a Policy Parameter for an Entity of a Supply Chain
Filed on 4/29/2004
Pending	10/836,448	Determining an Inventory Target for a Node of a Supply Chain
Filed on 4/29/2004
Pending	10/836,135	Optimizing an Inventory of a Supply Chain
Filed on 4/29/2004
Pending	10/836,042	Determining Order Lead Time for a Supply Chain Using a Probability Distribution for Expected Order Lead Time
Filed on 4/29/2004
Pending	10/739,979	System, Method, and Software for Multi-Party Constrained Optimization
Filed on 12/17/2003
Pending	10/894,248	Optimizing Inventory in Accordance with a Constrained Network
Filed on 7/19/2004

Page 48

Settlement Agreement

Pending	10/846,104	Incorporating a Repair Vendor Into Repair Planning for a Supply Chain
Filed on 5/14/2004
Pending	10/845,985	Repair Vendor Model for Multi-Echelon Repair Planning-Replenishment Orders
Filed on 5/14/2004
Pending	10/846,320	Planning a Supply of Items to a First Location Associated with a Supply Chain from One or More Second Locations Associated with the Supply Chain
Filed on 5/14/2004
Pending	10/823,056	Demand Breakout for a Supply Chain
Filed on 4/13/2004

Page 49

Settlement Agreement

Pending	10/847,009	Enterprise Solution Framework Incorporating a Master Data Management System for Centrally Managing Core Reference Data Associated with an Enterprise
Filed on 5/17/2004
Pending	11/218,876	System and Method for Network Visualization and Plan Review
Filed on 9/2/2005
Pending	11/682,772	Hierarchical Metrics Portal and Associated Method
Filed on 3/6/2007
Pending	11/474,317	System, Computer-Implemented Method, and Software for Vessel Scheduling for Product Distribution
Filed on 6/23/2006

Page 50

Settlement Agreement

Pending	11/700,387	System and Method for Supply Chain Planning as a Managed Service
Filed on 1/31/2007
Pending	11/371,985	Custom Application Builder for Supply Chain Management
Filed on 3/8/2006
Pending	11/371,960	Configurable State Model for Supply Chain Management
Filed on 3/8/2006
Pending	11/158,371	Program-Based Supply Chain Management
Filed on 6/20/2005
Pending	12/056,555	Generic Data Staging and Loading Using Enhanced Metadata and Associated Method
Filed on 3/27/2008
Pending	12/043,240	Sentient Optimization for Continuous Supply Chain Management
Filed on 3/6/2008

Page 51

Settlement Agreement

Pending	12/021,103	Time-Based Decomposition for Optimization of Master Planning Problems
Filed on 1/28/2008
Pending	12/021,088	Sub-Problem Optimization of Supply Chain Planning Problems
Filed on 1/28/2008
Pending	12/055,100	System and Method for Providing an Intelligent Configuration Rationalization Solution
Filed on 3/25/2008
Pending	12/102,247	Business-to-Business Internet Infrastructure
Filed on 4/14/2008
Pending	12/108,947	System and Method for Allocating Manufactured Products to Sellers Using Profitable Order Promising
Filed on 4/24/2008

Page 52

Settlement Agreement

Pending	11/872,464	System and Method for a Transportation Capacity Exchange
Filed on 10/15/2007
Pending	61/047,887	Dynamically Routing Salvage Orders and Associated Method
Filed on 4/25/2008

Page 53

Settlement Agreement

Exhibit E

Additional Amount to be Paid to i2

The Additional Amount to be paid to i2 shall be determined in accordance with the following procedure. The Parties shall submit to the judge in the Texas Action the list of 12 questions (the “Construction Questions”) set forth below relating to construction of 12 claim terms of the patents at issue in the Texas Action, the proper construction of which is in dispute and that have been the subject of full Markman briefings and a Markman hearing in the Texas Action. Eleven of the questions request the judge to determine whether i2’s proposed construction or SAP’s proposed construction is more correct, and one question asks the judge to determine whether a claim term is indefinite (the “Indefiniteness Question”), all of which the judge shall be asked to do based upon the Markman briefings previously submitted by the Parties and the Markman hearing. After the judge has answered all 12 Construction Questions, the Additional Amount shall be determined as follows:

1. For each Construction Question that the judge answers that i2’s proposed construction is more correct, the Additional Amount shall be increased by US$4,166,666.67.

2. For each Construction Question that the judge answers that SAP’s proposed construction is more correct, the Additional Amount shall be increased by zero.

3. If the judge answers the Indefiniteness Question “no,” then the Additional Amount shall be increased by US$4,166,666.67.

4. If the judge answers the Indefiniteness Question “yes,” then the Additional Amount shall be increased by zero.

The Construction Questions are set forth on the following Mediation Resolution Form:

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

i2 Technologies US, Inc., and i2 Technologies, Inc., Plaintiffs,
v.	Civil Action No. 2-06-CV-352-TJW
SAP AG, and SAP America, Inc. Defendants.	JURY TRIAL REQUESTED

Page 54

Settlement Agreement

MEDIATION RESOLUTION FORM

Supply Chain Modeling Patents

United States Patent No. 5,764,543; 5,930,156

1. Which of the following proposed constructions of “extension selector fields” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Extension selector fields	A field that extends a model type in order to support additional information	Two or more attribute fields having user-chosen values that specify one of a plurality of extensions

i2 or SAP:            

2. Which of the following proposed constructions of “optional extensions” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Optional extensions	Attributes that allow a user to customize the model	Two or more predefined fields that increase the total number of fields in a model

i2 or SAP:            

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Settlement Agreement

Negotiation Patent

United States Patent No. 6,055,519

3. Which of the following proposed constructions of “deal” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Deal	Information common to a request, promise, and acceptance	Information containing an object oriented description of a contract, that is common to a request, promise, and acceptance

i2 or SAP:            

4. Which of the following proposed constructions of “state of negotiation” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
State of negotiation	Information describing the status of the negotiation and relevant terms	One of a discernable set of conditions for a negotiation that is entered into via one or more transitions from other states

i2 or SAP:            

5. Which of the following proposed constructions of “object” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Object	An identifiable software component	An encapsulation of data and services that manipulate that data

i2 or SAP:            

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Settlement Agreement

Collaboration Patent

United States Patent No. 5,983,194

6. Which of the following proposed constructions of “demand” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Demand	Data representing a needed product	Data representing what kind and how many of a needed product, and when the product is needed

i2 or SAP:            

7. Is the claim term “planning capability data” indefinite?

Yes or No:            

8. Which of the following proposed constructions of “planning system” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Planning system	A manual or automatic system for generating a plan or schedule for a manufacturing process	A computer system for a factory that generates an output plan that accounts for actual demand and supply information

i2 or SAP:            

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Settlement Agreement

ATP Patents

United States Patent Nos. 6,188,989; 6,167,380; 7,085,729

9. Which of the following proposed constructions of “allocation value” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Allocation value	Unconsumed supply allocated to a seller	A value in a product forecast model that represents the sum of promised quantities from suppliers, and which does not change when customer orders are received

i2 or SAP:            

10. Which of the following proposed constructions of “available to promise” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Available to promise	Quantity of product that is available for delivery to a customer	Amount of product that is produced based on forecast orders and generated from supplier-side promises based on forecasted sales, not on specific customer orders

i2 or SAP:            

11. Which of the following proposed constructions of “commitment level” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Commitment level	Agreements to sell products to customers	A quantity of product that a seller obligates itself to sell such that it results in the generation of forecast requests to a supplier that result in the generation of promised supply

i2 or SAP:            

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Settlement Agreement

12. Which of the following proposed constructions of “product forecast model” does the Court find is more correct:

CLAIM ELEMENT	i2’S PROPOSAL	SAP’S PROPOSAL
Product forecast model	A representation of forecasted sales of a product	A data structure having allocated, requested and promised values

i2 or SAP:            

Page 59

Settlement Agreement

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Pallab K. Chatterjee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of i2 Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 7, 2008	By:	/s/ Pallab K. Chatterjee
		Name:	Pallab K. Chatterjee
		Title:	Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael J. Berry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of i2 Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 7, 2008	By:	/s/ Michael J. Berry
		Name: Michael J. Berry Title: Executive Vice President, Finance and Accounting, and Chief Financial Officer (Principal Accounting and Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of i2 Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Pallab K. Chatterjee, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Pallab K. Chatterjee

Pallab K. Chatterjee

Chief Executive Officer

(Principal Executive Officer)

August 7, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of i2 Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Berry, Executive Vice President, Finance and Accounting, and Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Michael J. Berry

Michael J. Berry

Executive Vice President, Finance and Accounting, and Chief Financial Officer

(Principal Accounting and Financial Officer)

August 7, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.